Posted: 14 Sep. 2020 4 min. read

Life Science’s supply chain responsibility in the light of Covid-19

 

The dramatic changes to the business environment amid COVID-19, including increased pressure from consumers and regulators on organizational behavior and transparency, has brought supply chain sustainability and governance into the spotlight. More companies are recognizing the need to become “responsible businesses” - in the Deloitte 2020 Extended Enterprise Risk (EERM) survey, respondents named responsible business as a top driver of investment in EERM for the first time in five years. The relationship between businesses and their end-to-end value chains – the ecosystems of partners that contribute to the creation and sale of products - is key to achieving responsible business.

The environment is a key area of focus for pharmaceutical companies striving to strengthen their position as responsible businesses. Historically, the pharmaceutical sector has been slow to act on environmental challenges caused by activities undertaken by third parties further down the value chain. For example, the issue of antimicrobial resistance (AMR) has consistently been flagged by the UN/WHO[1]/WEF[2] as one of the top global threats to human health, yet no clear solution has been identified to resolve the challenge. The pool of effective antibiotics diminishes every year, yet residues of these pharmaceuticals are still found in surface and ground water, soils and animal tissues around the world. This is leading to an increasing prevalence of drug-resistant strains of bacteria or “superbugs” with no effective treatments.  If life sciences / healthcare (LSHC) companies take this seriously, they will want to address changes beyond their own practices, and establish effective Third Party Risk Management (TPRM) processes to drive appropriate behaviors of third parties.  

COVID-19 Treatments Raise Concerns

While COVID-19 has motivated governments and companies to work 24x7 to find effective treatments and vaccines, it has also raised concerns around AMR and manufacturing practices. With healthcare systems around the world under immense pressure, it is leading to changes in treatment practices[3], one of which is a more liberal use of antibiotics, which studies show could have consequences for AMR.  While antibiotics do not treat viruses, they are used to treat people with secondary bacterial infections, which commonly arise when the immune system is compromised.

The 2009 H1N1 influenza pandemic, for example, claimed nearly 300,000 lives around the world. Many of those deaths—between 29% and 55%[4]—were caused by secondary bacterial pneumonia. Covid-19 data is limited, but early studies coming out of Asia estimate around 10%[5] of cases are developing secondary infections, with between 45-70%1,[6] of those people administered antibiotics. Despite WHO and many national guidelines warning about the overuse of antibiotics, this early data is raising concerns about the long-lasting impact to the already significant human health risk of AMR.

It will be a long time before the medical community fully understand the impact of drug-resistant secondary infections on the efforts to treat people during this pandemic. Tackling the problem of AMR remains as critical as ever, and legislators and regulators now have a greater incentive to act on this.

Organizations are asking themselves how their operations are contributing to the problem. Demonstrable, proactive and systematic management of third parties to address AMR is increasingly seen as business-critical by regulators, investors, customers and the public.  For example, the biggest sources of discharge into water systems come from farming, human and animal waste, and pharmaceutical manufacturing processes[7],[8]. To achieve responsible business status, organizations should consider the steps they can take to ensure they are doing the right thing across their entire value chains. With such an undeniable link to pharmaceutical manufacturing processes, it is usually most effective for LSHC businesses to drive improvements through robust TPRM programs.

Some countries were already beginning to target the issue, with India[9] taking a lead and proposing legislation in early 2020 to define concentration limits of antibiotics in water systems. The European Commission[10] published its strategic communication on Pharmaceuticals in the Environment (2019), highlighting the specific risk from antimicrobial manufacturing plants in countries exporting to the EU (although the EU is not without its issues). The COVID-19 crisis will push a long overdue rethink on how TPRM programs can help in tackling antimicrobial resistance globally. To create a stronger foundation of responsible business, companies should assess the risk the AMR problem poses to their operations and clearly demonstrate proactive management to ensure their value chains do not contribute to the problem.

Looking to the future, organizations should strive to see beyond their own operations so they can understand the entire ecosystem in which their businesses function, identify the risks involved and manage these proactively. As a starting point, they can join the AMR industry alliance and ensure their waste-management processes are aligned with robust standards such as the Pharmaceutical Supply Chain Initiative’s principles on the environment. By working along the value chain from supplier to consumer, businesses can get a broad view of the risks associated with their third-party relationships and work toward establishing transparency and trust.

 

[1] https://www.who.int/news-room/feature-stories/ten-threats-to-global-health-in-2019

[2] https://reports.weforum.org/global-risks-2018/anti-microbial-resistance/?doing_wp_cron=1591094853.5009839534759521484375

[3] Front. Microbiol., 13 May 2020 | https://doi.org/10.3389/fmicb.2020.01020

[4] https://www.statnews.com/2020/03/23/antibiotic-resistance-hidden-threat-lurking-behind-covid-19/

[5] Clinical Infectious Diseases, ciaa530, https://doi.org/10.1093/cid/ciaa530

[6] https://www.bmj.com/content/369/bmj.m1983

[7] https://www.amrindustryalliance.org/wp-content/uploads/2018/02/AMR_Industry_Alliance_Manufacturing_Framework.pdf

[8] https://wellcome.ac.uk/sites/default/files/antimicrobial-resistance-environment-report.pdf

[9] https://www.europeanpharmaceuticalreview.com/article/115074/limiting-antibiotic-manufacturing-discharge-in-indian-wastewater/

[10] https://ec.europa.eu/commission/news/pharmaceuticals-environment-2019-mar-11_en

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Key contact

Giles Dean

Giles Dean

Manager, Risk Advisory

As a member of the Deloitte UK Sustainability team, Giles serves as the lead for life sciences and healthcare. Through this role, Giles has experience supporting a variety of clients across ESG, de-carbonization, net-zero strategy and reporting. Giles joined Deloitte UK in 2014, serving a variety of public and private sector clients. He has specialized his industry focus in healthcare and life sciences. His experience includes organizational and regulatory compliance, risk identification and management, process risk mapping, and program management. He has a strong knowledge of EU healthcare and life sciences regulation, ABAC and the impact of Brexit on the life sciences industry. Giles earned a BSc in Environmental Science at the University of Sheffield and an MSc in Environmental Management at the University of Nottingham, since joining Deloitte he has worked with global member firms in 15 locations.