Dive Brief:
- Recognizing the weaknesses of the antibiotic supply chain, the Access to Medicine Foundation released a white paper outlining key ways to strengthen the supply chain and improve antibiotic access to patients.
- To fix shortages stemming from the low profit nature of the business, increasing demand, low production levels and an "oligopoly" of active pharmaceutical ingredient (API) manufacturers, the AMF suggested supply chains adopt better demand planning, procurement practices and inventory management techniques.
- The AMF also suggested doctors rely more on local manufacturing to ease pressure on the main four API manufacturers and make prices more competitive, which could jumpstart the antibiotic business.
Dive Insight:
According to AMF, the root cause of antibiotic shortages is just the nature of the business: it's a low profit industry because populations can build up resistance to the effects of antibiotics, so doctors have to be careful about how, when and where they prescribe them.
Since other, biologic treatments often generate more revenue, pharma companies aren't as incentivized to invest in antibiotic R&D and manufacturing, especially since antibiotic R&D is "risky and expensive."
It's not realistic to try to change how an industry is run, which is why the AMF suggests targeting supply chains as a way for the industry to cut costs, widen profit margins and distribute more antibiotics to populations that need them.
Demand planning, for example, goes hand-in-hand with inventory management. If manufacturers can better forecast and gauge demand to align with their inventory flow, then there will be less waste and more accurate distribution, which would lower costs.
"Pharmaceutical companies must bring a step change in their practices for stock and inventory management, improve their agility in response to shortages, and communicate information about their plans and stock data earlier and in more detail to more partners," the report said.
Sourcing and manufacturing locally could also strengthen the antibiotic supply chain, because it would allow supply chains to cut lead times and costs.
But strengthening the antibiotic supply chain is not just a benefit to the pharma industry — failure to do so could result in "financial consequences" like increased hospital, pharmacy and patient costs, which could trickle all the way back up to manufacturers.
"With little money to be made, more companies are exiting the market," the report concluded. "The majority that remain committed to producing these low-margin but crucial medicines are much smaller players. Smaller players may not be in a position to meet high demand, increasing the risk of shortages and adverse quality outcomes."