Resilient supply chains are fundamental to ensuring continuity of supply and avoiding medicine shortages. Viatris believes that prioritizing supply chain resilience is a worthwhile investment for securing the availability of essential medicines across Europe, but current policy may discourage manufacturers from investing in resilience. We urge policymakers to align incentives so that manufacturers who invest in supply chain resilience are not put at a competitive disadvantage, as well as ensure that future policy is based on a clear understanding of how medicines supply chains function.

Understanding Global Manufacturing of Off-Patent Medicines

Off-patent medicine supply is based on a global network of suppliers with a robust ability to weather shocks affecting any particular region. The agility achieved through a global network improves manufacturers’ ability to respond to demand spikes and evolving patient needs. The global supply network is made up of local manufacturing facilities on every continent. Local manufacturing capacity is fundamental to ensuring supply resilience: these facilities contribute to the global network, however, local facilities seldom only supply for the local market. Supply chains for off-patent medicines are complex, with upwards of 350 globally sourced components needed to produce a final medicine product. It would be impractical for any facility to produce a finished medicine from start to finish using only locally-sourced materials. At Viatris, we have invested in local capacity building around the world to bolster our global network and support economic development, but emphasize that local manufacturing does not necessarily correlate with local supply resilience.

Recognition in Public Procurement

When price is the only criterion for awarding procurement contract, manufacturers lack the support to invest in supply chain resilience measures. Over the last decade, these tendering practices have led to the consolidation of manufacturers and suppliers as they strive to cut costs. Consolidation, or fewer manufacturers and suppliers, reduces market competition. It also leaves fewer alternatives in the case of a supply disruption, increasing the likelihood of medicine shortages. We believe that public procurement criteria should be diversified and consider supply chain resilience so that manufacturers making these investments are rewarded, rather than excluded for the additional costs imposed.

Consideration for supply resilience is part of broader procurement reforms based on the Most Economically Advantageous Tender (MEAT) principle supported by Viatris and the off-patent industry.

Learn more about our ideas for improving public procurement

Stockpiling

During the COVID-19 pandemic, many governments resorted to stockpiling in an effort to secure their supply of medicines. Extensive and uncoordinated national stockpiling is not a suitable measure for securing supply, as it fragments the European single market and only shifts shortages from one country to another. We urge policymakers to disincentivize national stockpiling requirements and instead streamline and modernize regulatory processes to facilitate the movement of stock between countries.

Regulatory Flexibility

Currently, due to small differences in regulatory requirements, it is often impossible to transfer stock from one EU country to another to meet unexpected demand due to small differences in regulatory requirements. The regulatory efficiency and harmonization measures in the EU Pharmaceutical Strategy should be fast tracked to improve supply flexibility. Allowances for multi-lingual packaging or e-leaflets and streamlining regulatory systems through digitalization would further optimize supply and reduce the risk of medicine shortages. Policymakers could also incentivize investment in manufacturing diversification and greener technologies by advancing the Medicines Security Act proposed by Medicines for Europe. As policymakers consider these and other measures to mitigate shortages, it's essential to maintain an open dialogue with the generics industry and Member States to determine the best course of action and avoid unintended consequences.