According to the Council on Foreign Relations, an estimated 80% 1 of the active ingredients used to make medications are imported from China. With the rapid growth of the coronavirus and its impact on China in particular, medical supply chain professionals are warning that there may be a disruption in the normal logistics processes between China and the United States.
Over the past several years, the United States medical system has become increasingly dependent on China. Not only does China export many of the medicine ingredients pharmaceutical companies use, but they also are a massive exporter of medical equipment like syringes and devices. Politicians have become increasingly concerned about this dependency over the past few years, and the sudden onset of coronavirus provides a cautionary tale about what can happen when too much of your supply chain is reliant on one geographic area.
Medical systems and providers should be sensitive to the fact that there may be delays in certain areas because of decreases in China’s productivity due to the illness. In the past, previous infectious disease threats have caused suppliers to purchase products from other countries to avoid disruptions. Experts also recommend that hospitals and other medical providers take stock of their inventory and consider contingency plans for if the illness spreads and causes further supply chain disruptions. The best thing to do is to prepare for every instance with back-up suppliers in mind.
Of course, all of this is happening amid providers adjusting to the Trump administration’s price transparency requirement. The issue of price transparency is making healthcare a shoppable, consumer-facing service. That means that many systems – similar to other industries in the private sector – will need to keep a closer eye on costs and predictability so that they can remain profitable and better differentiate themselves.
All healthcare organizations need to be prepared to pivot toward alternate supply chain methods to avoid any missteps in their business. The coronavirus is impacting pharmaceuticals, supplies, and overall supplier relationships at a vigorous pace. As a result, the healthcare industry is faced with a daunting task of keeping supply chain operations intact, while continuing to cater to patient needs.
1 U.S. Dependence on Pharmaceutical Products from China by Yanzhong Huang