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Sustainable trade

How to ensure resilience in biologics value chains

Published 04 April 2023

During the Covid pandemic, many governments took a “my nation first” approach, enacting policies that slowed the pandemic response and interrupted the production of life-saving therapies for other conditions. How can we apply the lessons from Covid to create more resilient global biologics value chains? A forthcoming analysis from Merck Life Science provides some guidance.

Ensuring the availability of biologics—a category of health products that encompasses therapies, vaccines, diagnostics, and gene therapy—is becoming a global health priority, as health systems improve, countries continue to grapple with the effects of Covid, and demand for these products soars across regions. In addition to its central role in healthcare delivery overall, biologics like vaccines, is a critically important tool during pandemics and other crises.

Unfortunately, during the Covid pandemic, many governments took a “my nation first” approach, enacting policies that created chaos in global biologics value chains. This slowed the pandemic response and interrupted the production of life-saving therapies for other conditions. More than 80 countries enacted national trade restrictions, worsening an already disparate distribution of equipment, consumables, and raw materials for producing biologics. The spike in demand created major challenges for producers upstream in the value chain, prompting industry leaders to consider new strategies for improving supply chain resilience post-pandemic.

How can we apply the lessons from Covid to create more resilient global value chains that can deliver biologics even in crisis conditions?

Forthcoming analysis from Merck Life Science seeks to answer this question. The report suggests strategies for resilience, identifying five key areas for action by companies and governments:

  • regionalization,
  • new risk management strategies,
  • reducing risk in investments,
  • action by regulators, and
  • enabling policies for biomanufacturing and R&D.

Regionalization: Companies and governments can focus on regional geographic diversity to help with risk mitigation and allow producers to respond more effectively to regional needs. For example, a hub model, with demand and manufacturing capacity, lined up to serve the needs of a particular region, and operating within an ecosystem with the right incentives, enabling policies, and regulatory framework seems promising. Regionalization can help offset risks associated with natural disasters, counterproductive national policies, and other challenges. Stakeholders can develop additional capacity at an appropriate pace and scale across countries and regions, rooted in a clear business case and, ideally, accompanied by government support and incentives. Collaboration between local producers and multinational technology transfer partners is an essential part of the equation.

New risk management strategies: Alongside regionalization, companies can apply risk management strategies like redundancy, stocking products, assessment of all tiers of the value chain, and digitization to boost the resilience of biopharma value chains. Building redundancy value chains does not typically make business sense, so government support will be required to maintain surge capacity and set up dual suppliers and facilities. Like government support, digitization and forecasting tools are a must for resilience. These systems send real-time alerts about events and signal shifts in demand, enabling companies to make informed decisions when prioritizing orders based on need, stock, and other criteria. Stocking biologics inputs is another promising strategy. It’s impossible to know in advance what health technologies will be developed and commercialized, and what will be necessary in a crisis, therefore stocking inputs is preferable to stocking finished products.

Reducing risk in risking investments: A key role for governments will be to reduce risk in investments and actions that can boost health security, but where private actors are unlikely to step forward due to the lack of a business case. For example, government support is important to the success of rapid, large-scale clinical trials for a pandemic vaccine and building extra manufacturing capacity. Government intervention in these areas was crucial to accelerating the Covid response. To build the foundation for biologics delivery in the future, governments can provide incentives to invest in surge capacity at existing facilities; cover the cost of stocking finished or intermediate products; and co-finance the construction of new facilities or the expansion or upgrading of existing ones. They can contract manufacturing capacity in advance, for use in the event of a crisis. They can also create pull mechanisms like advance purchase commitments, which is one incentive that was successfully deployed during the pandemic.

Action by regulators: Regulators and industry engaged in unprecedented ways during the Covid pandemic, with accelerated information exchange, adoption of new approaches such as emergency use authorization, and greater reliance on digital platforms and tools. Regulators also worked more closely with counterparts abroad. Authorities would be wise to coordinate and retain some of these regulatory innovations from the pandemic to expedite getting new treatments to patients during crises. Outside of crises, convergence among regulators on endpoints, the types of testing necessary for regulatory approval, and how to classify different types of treatments could help make new biologics available to patients more seamlessly. Governments can work towards the creation of globalized regulatory standards, to enhance efficiencies and enable faster patient access to new biologics.

Enabling policies for biomanufacturing and R&D: Innovators do not bring novel health technologies to society in a void. Their activities are necessarily influenced and shaped by the policy environments for conducting R&D, manufacturing, and commercialization activities. Governments are crucial partners for innovators, investing in education, instituting enabling policies for innovation and growth—such as IP and trade policies—and pursuing a vision and strategy for universal healthcare delivery. It is the responsibility of governments to provide leadership and coordination, including building the appropriate health infrastructure and funding mechanisms for crisis response and healthcare delivery for the long term.

Government actions have a major impact on the emerging strategies for biomanufacturing resilience described above. In relation to trade policy, once a country institutes policies like export restrictions, others may be tempted to follow until there is a policy arms race that undermines the global availability of biologics. This creates an impossible situation for companies focused on manufacturing and delivering products, given that value chains span borders. Also, regionalization will be less effective when there is escalating technology competition between countries. Biomanufacturing should be shielded from measures designed to restrict cooperation in cases where biotech is viewed as “strategic.”

The Merck Life Science analysis is intended to spark new conversations where practical experiences and insights of companies can help inform the healthcare and health security programs of governments and international health organizations. 

© The Hinrich Foundation. See our website Terms and conditions for our copyright and reprint policy. All statements of fact and the views, conclusions and recommendations expressed in this publication are the sole responsibility of the author(s).

Jennifer Brant is Executive Director of the Innovation Council, which brings together a diverse group of organizations – from academia and industry groups – that develop new vaccines, connected devices, seeds, and other technologies and solutions that will improve people’s lives.

Brant is also the CEO and Founder of Innovation Insights S.a.r.l., an advisory firm specialized in trade and innovation policy, with a roster of clients that includes UN agencies such as the World Intellectual Property Organization, as well as non-profit organizations.

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