Health Care Supply Chains after the Pandemic
June 16th, 2020 | Viewpoint
June 16th, 2020 | Viewpoint
COVID-19 is likely to have profound and long-term consequences on global health care supply chains, as did HIV. The HIV pandemic transformed health care supply chains globally and in particular in lower- and middle-income countries (LMICs), leading to:
In many ways, COVID-19 is a different type of pandemic. Less lethal but more infectious. An acute rather than a chronic condition. Less associated stigma.
The short-term effects of COVID-19 on global health care supply chains have been severe—factory and border closures, transportation disruption, shifting demand, and price increases—but what will the long-term consequences be? And how will global changes affect LMICs? Will we look back 20, or even 10 years from now, and recognize this moment as an inflection point for the health care supply chain in general, and in developing countries in particular? Will the changes be positive overall? Or will we revert to the same systems that left us unprepared for an international pandemic?
The short answer to these questions is that we don’t know. However, crises like pandemics tend to have lasting impacts, and it is likely that the short-term disruption of health care supply chains we are seeing will result in longer-term structural changes. JSI and some of our collaborators have been discussing what some of these changes might be, and what they might mean for LMICs.
What is interesting in LMICs is that many of the new private market entrants into the health care supply chain—like mPharma and MyDawa (see below)—offer strong technological solutions, which may help them survive and even prosper. While less fragmentation and more concentration in LMIC health care supply chains might be a good thing in the long run, it also introduces risks.
Mara Hansen Staples of Impact for Health has studied these innovators in health product distribution in Africa for years and says “it’s important that the market maintains space for these innovators to develop and find their way but at the same time help them to grow to scale.” So although there are new opportunities for innovators, there is risk, and their small size makes it difficult for them to exploit those opportunities.
For LMICs in particular, cost will remain a critical factor in sourcing decisions, and expanding local pharmaceutical manufacturing will remain a huge challenge. Serious trade-offs, not least for cost and quality, will need to be considered. The focus will likely be on increasing diversification with some onshoring of manufacturing as part of the equation, but this will require strong industrial policy by governments.
Risk planning will grow in importance, including for organizations in LMICs. Mukul Taperi, the managing director of Pregna, an India-based manufacturer of reproductive health devices, says his company had a risk-mitigation plan but it was focused on smaller, localized crises like fires or earthquakes, not a global pandemic. Pregna is now rethinking its entire risk-mitigation strategy.
Another aspect of flexibility seen recently is regulators and suppliers coming together to ensure products flow. DKT’s Purdy hopes that this move to more flexibility continues. “Regulatory issues are often the reason why products are unavailable in LMICs. Post-COVID-19 there may be an opportunity for more flexibility…there is a tendency to seek the perfect at the cost of the good-enough.”
The dominant public sector model in LMICs will struggle to provide direct delivery to patients. The private sector has already begun filling this gap and this trend is growing. MedRx Inc. is a direct-to-consumer service provider based in Accra, Ghana. Hansen-Staples of Impact for Health cites CEO Hayford Brako, who in early April said, “We have seen increases in the use of MedRx by both pharmacies and patients. We are getting a lot of calls because every pharmacy wants to be a part of our network, and definitely more patients getting on board because this is the easier way to buy medicines now.” Brako notes that in the past four weeks, the company witnessed a 30 percent increase in users ordering from pharmacies through its platform.
MyDawa, a licensed e-pharmacy operating in Nairobi, offers tele-pharmacy and delivery of health products to locations of the customer’s choice, including households, workplaces, and local shops. According to Hansen-Staples, Tony Wood, MyDawa’s managing director, said in early April that the company had noticed a significant increase in the sales of PPE, soap, and sanitizers. Meanwhile, South Africa is looking to expand its offering of medicine ATMs with Right ePharmacy, and the National Department of Health is fast-tracking expansion of its Collect & Go smart lockers. In May, 70 new locker sites were rolled out in Gauteng, Mpumalanga, and the Free State.
All these factors will play out over the coming years. Most—technology, increased role for the private sector, a focus on supply chain resilience, and patient-centricity—are not new, but will accelerate in the post-COVID-19 world. The fundamentals of supply chain management—the need for visibility, connectivity, flexibility, and efficiency—remain. Our guess is we are in for a period of major disruption and change, but it’s worth remembering that disruption does not necessarily mean negative outcomes. It is incumbent on all of us working in health supply chains to turn this disruptive event into positive change.
Written by: Paul Dowling, Senior Technical Advisor, Center for Health Logistics