The EU’s endless drug shortage, its fragile supply chains and the bizarre crab connection

European countries have been plagued by a persistent medicine shortage for the past few years. Supply chain disruptions and increased demand are driving the shortfall. There are potential solutions. And one could involve breeding a whole lot more crabs The blood of the horseshoe crab is used to test medicines and illustrates the fragility of pharmaceutical supply chains What crabs tell us about pharmaceutical supply chains The supply of medicine worldwide often relies on chemical wizardry, rare materials, and deeply convoluted supply chains. And nothing illustrates the complexity more than the fate of the South Carolina horseshoe crab. Bear with us. The blood of this unfortunate creature is the only non-synthetic source of limulus amebocyte lysate, LAL for short. It’s a substance that detects endotoxin, a deadly chemical that is produced by bacteria. The pharmaceutical industry uses this crab blood to ensure the safety of all kinds of medicines, from vaccines to insulin, along with implanted devices, such as heart stents. So far, so bad for the horseshoe crab So far, so bad for the horseshoe crab. But then Covid happened. Demand for vaccines soared, as did the need for more crab blood. And they couldn’t be bred fast enough. As crab numbers fell dramatically, the US biomedical sector, in particular, is still facing a chronic shortage. And here’s why this matters and why this crustacean is emblematic of a far wider problem for the global pharmaceutical industry. More than half of injectable medicines and implanted devices are tested using this horseshoe crab blood. And a desperate shortage shows us just how fragile supply chains in this sector are. This fragility, along with increasing global demand and lower prices in Europe than in the US, explains the persistent drug scarcity in Europe. The Netherlands is a case in point; the country’s medicine shortage has steadily increased over the past few years and will continue to do so for the foreseeable future. So what’s the solution? Reshoring is a viable medium-term option, but it’s going to require extra investments, possibly at the cost of efficiency. And that’s what we’re going to be delving into in this report. Medicine shortage in the Netherlands Number of times pharmacists had to tell patients a medicine was not available Here’s another fun fact: the average medicine travels around the world twice before ending up on the shelves of local pharmacies. It’s a feature of these complex supply chains. Materials are sourced from every corner of the globe, distribution is often ‘just in time’ to keep costs at a minimum, and production takes place in a few highly specialised factories. It’s worth pointing out there are only four global suppliers of the antibiotic benzathine penicillin G, and there are repeated shortages, for example. Any production or distribution misstep can lead to a global shortage This means that stocks of medicines tend to be low or non-existent because producers, governments and healthcare providers are not willing to pay the costs of additional inventory. Any misstep in the production and distribution process immediately leads to a global shortage of certain medicines. And here’s the bottom line: distribution and production combined explain 65% of drug shortages. Other factors also play a role. Demand for medicine has increased due to an ageing population and a rise in chronic illnesses in developed countries. Improved access to healthcare in developing countries with their increased wealth and rising populations also play a part, as do changes in quality controls and regulation shortages of raw materials. Reasons for medicine shortages Generic supply chains are more vulnerable than proprietary ones Although the supply chains of proprietary drugs, those medicines with a patent, experience the same problems as generic ones, problems in generic supply chains are more pronounced. Blame stiff competition for generics, razor-thin margins and short-term contracts. And the production of proprietary and generic drugs requires different expertise. This makes their production uninteresting for pharmaceutical companies which focus on proprietary medications. So, it is no surprise that we have recently seen spin-offs of Sandoz, Viatris and Zentiva. The companies that do produce generic medicines generally offshore production to countries with comparatively low wages and less stringent regulatory standards and are hence dependent on one or two highly specialised factories. These are often located in India or China, as you can see below. Share of production for European market of important generic drugs The dependence on generic drugs is rising At the same time, the share of generic drugs as a percentage of total prescriptions […]

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