How healthcare supply chains are changing and how to adapt — Lorraine Marchand
It has never been more important for the healthcare supply chain to adapt and to adapt fast. COVID-19 is creating unprecedented demand for specific products and services like PPE, ventilators, respirators, intravenous solutions and much more. It is also illuminating critical weaknesses in the healthcare supply chain that must be addressed.
I participated in a webinar moderated by Joanne Moretti, Founder and CEO, JCurve Digital with guest, Jean Oliveri, Chief Operating Officer, Fictiv. Given our backgrounds in healthcare supply chain management, contract manufacturing, and market development, we examined trends shaping healthcare supply chains, strategies to meet critical challenges today and innovative models to ensure supply chain resilience in the future.
Our main takeaways:
- The ongoing storm of supply, demand and workplace disruption has exposed the shortcomings of existing supply chains.
- After COVID-19 the world will never be the same.
- Relevance has never been more important:
Now, as we deal with the urgent
Next, as we deal with the important
Forever, as we create a more agile, resilient and transparent global manufacturing ecosystem. Digital transformation is essential for a sustainable supply chain model.
Here’s a summary of my remarks:
It’s a sobering time because of COVID’s impact on people’s health and well being, but it also is a time of tremendous innovation and change. I see opportunities to improve pandemic preparedness, healthcare delivery and I see companies collaborating that otherwise are competitors. There also is an opportunity for new entrants to come into the healthcare market because they can fill supply chain gaps, helping to ensure manufacturing and distribution of healthcare equipment and devices.
Joanne asked whether things are getting better or are people still grappling with this disruption — particularly in the healthcare supply chain.
I mentioned the pace of change…I’ve been in the industry for more than 25 years, in global leadership roles in R&D at big pharma companies, contract research organizations and consultancies. My industry has a reputation for moving very slowly, some would say at glacier speed. But what I’ve seen over the past couple of months can’t be described as anything other than warp speed. I have never seen the healthcare industry mount such a rapid response as to this COVID crisis. So while I think it caught everyone off-guard and we were not prepared for the vastness of this pandemic, we have mounted a very fast response as an industry and we are trying to get ahead of things.
If we look at COVID and its impact around the globe, we can really see the impact of what we call the double supply chain shock. We know the virus started in China and impacted the four provinces where most of the medtech manufacturing occurs, representing more than 11,000 products. This set off the first shock slowing down manufacturing in the sector in Q1. As the virus rolled through Europe and North America, manufacturing in medtech hubs like Germany, Mexico and the US have been impacted in Q2, sending the second shock wave. Now, as we face winter in the southern hemisphere, the virus is already starting to move into South America, Australia, protracting the disruption to health and the economy.
We have seen cases in the US surpassing China, China leveling off as has Spain, Italy, and the EU and we are looking for the start of a recovery in Q2.
Economists have been predicting a V-shaped recovery because this is not an economic recession, it’s an act of nature. Once it’s safe, people will be back to work and the economy should return to normal over a several month period. However, it now looks as though recovery may be staged according to state readiness and even industry or sector, so recovery may look more like a W than a V and may go well into Q4.
I think most of us are aware that the CARES Act was approved by Congress. That is pumping two trillion dollars into the US economy. The good news there is that we have close to four billion dollars that’s being set aside for small business. The idea is to try to provide sustaining income for individuals and businesses so that this doesn’t completely wreck the economy now, but it’s also meant to help guide recovery over the next several months.
There are funds set aside for medtech improvements in manufacturing and supply chain to assist the FDA with its regulatory process and approvals. But also to help the FDA and other federal agencies make improvements so that they can monitor and track supply chain shortages faster and better.
We can’t return to the world as it was. We need to move forward to the future and that means new paradigms and new ecosystems, particularly around supply chains.
We continue to have this double challenge right now of urgent demand for PPE — ventilators, respirators, thermometers — very simple basic equipment that’s needed in the healthcare setting. But at the same time, we’ve got this pullback because of the delay and cancellation of elective surgical procedures.
As far as a recovery is concerned, companies that provide implantables for elective procedures like knees and hips will likely require 60 to 90 days to recover. It’s going to take time for procedures to be re-scheduled and for demand of necessary supplies and parts to resume. It will take about 90 days for dental and cosmetic procedures to recover.
And finally, it will take 4 to 6 months for demand to return for imaging and diagnostic procedures. Here I’m thinking about Intuitive Surgical and Hologic. That’s because hospitals need to be fully back online, functioning normally again, buying and investing in this large equipment, and scheduling procedures.
Then Joanne asked me to touch upon telemedicine.
Telemedicine is exploding. I think that this COVID crisis really created the tipping point for telehealth. It’s not just an option anymore, it’s essential. Especially if one has a chronic disease and can benefit from digital technologies that can communicate through one’s phone to patient and doctor. A great example is in diabetes where Dexcom and Abbott, who make the continuous glucose monitor, have gotten permission to bring those monitors into hospitals so that diabetes patients with COVID can continue to receive their diabetes treatment and be monitored regularly.
It’s also about getting those devices into people’s homes so that the elderly and those with chronic diseases can continue to monitor their conditions.
At the end, we briefly talked around the value of robotics. When I think about the three areas of clinical care: logistics — reconnaissance — communications, robotic technology meets needs in all of those areas. We’re seeing robots being used in hospital settings where it’s unsafe to have workers with the COVID patients. We can use robotics in the hospital or facility setting for logistics and for moving things around. And we can use robots for reconnaissance and communication.
All of these trends impacting the supply chain point to a new paradigm where supply chains will be globally networked, digitally enabled, agile and resilient.
If you’re interested in listening to the whole webinar, here is the link.
