Analysing supply relationships is key to avoiding supply bottlenecks

UM – 04/2023

Earlier this year, reports of almost all EU countries facing shortage of medicines in recent months made headlines. Antibiotics were particularly affected. Although the situation has improved somewhat by the end of winter fundamental problems remain. A study "The anatomy of the current shortage of antibiotics" by a newly founded institute "Supply Chain Intelligence Institute Austria (ASCII)" wants to show that: the problems are to a large extent one’s own making. The first step towards recovery: to deepen the knowledge of market interrelationships. To this end, the ASCII wants to deal with supply chain-related issues based on data. It is supported by the Complexity Science Hub (CSH), an association for the study of complex systems and one of four founding members of ASCII.

Analysing supply relationships

To make an initial contribution, a team led by physicist Peter Klimek has traced the global supply chains for six of the most commonly prescribed antibiotic groups over the last ten years. By considering production and import data, a sort of Atlas has been created that shows the degree of direct and indirect dependence of the countries on each other. This is also the case for Germany.

Global integration of Germany

A distinction is made between active ingredients, including penicillin, streptomycin, tetracycline, and unpackaged and packaged products. The Presentation shows, for example, that Germany is highly dependent on China for antibiotic active ingredients. However, the Indian market plays a more important role in the case of penicillin, in particular. The dependence on Italy and Belgium for tetracycline is greater. When it comes to packaged products, in contrast, the United States is the most important trading partner; both in terms of exports and imports. This is to show: The analysis of supply chain problems requires precise knowledge of the respective supply relationships.

Making data available

In order to remedy the situation in the short term and prevent shortage of antibiotics, the ASCII scientists recommend improving the data, planning and forecasting infrastructure. The focus should be on the shortage of non-substitutable medicinal products. Evidence-based demand planning could form the basis for building stable supply relationships that commit manufacturers over several years. Additional capacities could eliminate bottlenecks from the outset in emergencies. The recommendations can be found here.

Europe is well positioned

The ASCII maintains that the European Union (EU) is comparatively well positioned. With the single market, it would have a powerful instrument in its hands. Coordinated and more centralised EU stocks could help reduce overall safety stocks and create an efficient stockpiling system.  Further cooperation would also help with forecasting and procurement. In addition, reimbursement models in which development costs are decoupled from sales figures are proposed. The shortage of antibiotics must be addressed with focus on the risk of antibiotic resistance.