UK Medicines Shortages: Pharma Supply Chain Contagion More to Blame Than Brexit

UK Medicines Shortages: Brexit‘s Not Even Half the Issue, the Pharma Supply Chain Contagion is

Following the  announcement of a UK drug export ban, recent cases and Intersys research show that we don’t need to wait for international events for medicines shortages to be a real issue. Intersys Risk Director Catherine Geyman takes a closer look at the crisis. 

The drug export ban announced by the UK government last week [2 October] will be a wake-up call for the pharmaceuticals industry. But the question is, will the right lessons be learned?

The ban covers 24 drugs and is designed to protect against shortages of the medicines for NHS patients. The majority are HRT (hormone replacement therapy) drugs, used to treat symptoms associated with menopause, but the ban also cover some contraceptives, hepatitis B vaccines and adrenaline pens used in cases of severe allergies.

Although other European countries have introduced similar measures in the past, this move is unprecedented in the UK. Two things should probably be noted at the outset, though. The first is that, despite the timing – a month before the Prime Minister has committed to leave the EU – the government has explicitly stated that the move is unrelated to Brexit. Second, if anything, the ban fails to reflect how widespread shortages with medicines are.

A recent survey shows that, in the last six months, UK community pharmacy professionals have found shortages across every one of 36 categories of medicines. HRT drugs were the most likely to have proved difficult to source, with 84% of those pharmacists saying they’d had trouble, while more than two thirds said they’d seen a shortage of contraceptives, but more than half (58%) had problems getting hold of antiepileptic drugs; and 52% for Rubefacients, topical NSAIDS or capsaicin – drugs used as anti-inflammatories or pain relief.

“Our job role has changed into ‘medicines sourcing’, rather than advising,” as one pharmacist put it.

With friends like these…

Mylan Headquarters in Canonsburg, Pennsylvania

 

Even if it’s not Brexit, it’s possible, of course, for the reasons for such shortages to be merely temporary, which would suggest they would sort themselves out. And, indeed, in some cases drug companies say the shortage is simply down to demand. In a statement put out at the start of October, for instance, Janssen, a major producer of HRT patches, blamed an “unprecedented increase in demand” for the problem.

That only gives limited comfort, though. For a start, this excuse is unlikely to apply to every category where pharmacists are seeing shortages. Second, it fails to even explain continual problems with HRT – which go back years.

Last year, as part of a research project, Intersys conducted an in-depth analysis of all FDA Enforcement Reports (in other words, product recalls in the US) from 2012 to Feb 2018. Of the 18,684 identified products, the most recalled product was Estradiol (9.6% of recalls) and the 10th most recalled product was Progesterone (2.1% of recalls). Both are currently on the UK export ban list.

Indeed, as even Janssen’s statement recognised, the unprecedented demand for its product is partly the result of shortages of alternative products. So a peak in demand isn’t essentially the cause; it’s merely a symptom of an underlying, more fundamental problem.

In fact, take a look at an update of HRT supply shortages put out by the British Menopause Society a couple of months ago and a different and more worrying picture emerges. Of the products listed as short of supply, a majority are by Mylan – a name that will be familiar to regular readers.

Mylan has had significant trouble with some of its production plants – particularly that in its headquarters of Morgantown, West Virginia. This goes back to an FDA inspection last April that concluded with a Form 483 criticising poor quality control and equipment cleaning. In November, the FDA followed up with a warning letter, while the company continued with a “comprehensive restructuring and remediation plan”.  This work has significantly affected supply of a number of drugs produced at the plant.

It’s not clear whether this includes Mylan’s HRT products, but similar issues are definitely behind problems with the supply of adrenaline (which is another drug on the export ban list), due to problems with the manufacturing of Mylan’s EpiPens.

Here the problem is not Mylan’s own plant, but rather those of Pfizer Meridian Medical Technologies who make the pens on Mylan’s behalf. Following product recalls in March and April 2017, its plant in Missouri received an FDA inspection that September and a warning letter highlighting significant manufacturing quality violations. It’s been struggling ever since, and by last April, thousands of British patients faced shortages of EpiPens.

As recently as February this year, the US Attorney for Southern District of New York announced it was investigating why Pfizer continued to produce the pens after receiving dozens of complaints.

The jury is in: Manufacturing is the key

Conveyor belt worker operates a robot that transports insulin bags - modern factory for the production of medicines in the healthcare sector

 

The problems with Mylan’s production and the resulting medicine supply shortages are by no means unique. They powerfully illustrate a number of issues, though.

First, modern supply chains are invariably complex: As Mylan’s problems with Pfizer Meridian show, one of the reasons why production and regulatory risks are so difficult to manage is that pharma businesses have moved away from end-to-end operations encompassing R&D, manufacturing, distribution and sales. Today, they outsource many of these activities. Put simply, they’re often not doing the work themselves, which provides a challenge when it comes to oversight.

Second, it shows how international supply chains are. Problems in Missouri in the fullness of time mean difficulties for UK patients. (EpiPens have a 70% share of the UK market for those types of products.)

Finally, it illustrates that, while a sudden rush in demand can be behind medicines shortages, it’s not often the case. More usually, it’s some sort a production problem or regulatory issue.

Forewarned is forearmed

White lightbox with word product recall on wood background

 

It is easier to identify the problem than suggest how to solve it, of course. A few things jump out, though. Perhaps the main one is that, while predicting demand is an extremely complex and inaccurate art that will always present a challenge for pharmaceutical companies; it is not at the root cause of all or probably even most shortages. Supply chain interruptions from manufacturing deficiencies play a significant role too.

Due diligence of suppliers is obviously crucial, then, as is risk management. Outsourcing is here to stay, but reliance on a single manufacturer – and often a single site – at any point in the supply chain is a big potential danger. It’s striking how long, once regulators raise an issue with a particular facility that, problems and remediation efforts persist and continue to have an impact on medicine supplies.

Not all these vulnerabilities can be avoided, but those across the supply chain should do their best to ensure they’re at least known and recognised. And they should make sure they have the systems and technology in place to give them early warning of problems as they arise.

Intersys’ own tool Regulatory Incident Monitor is specifically geared towards identifying and alerting businesses about pharmaceutical non-compliance trends in their supply chains.

If businesses want to be ready for the challenges Brexit or other exceptional events may bring, they first have to ensure they can deal with risks to supply chains that would seem to be frighteningly common.

Catherine Geyman, Director, Intersys Risk Ltd

Head shot of Catherine Geyman, Director, Intersys Risk Ltd

 

Regulatory Due Diligence Remains Key in Pharma M&A

The Importance of Due Dilligence in Pharma M&A

Catherine Geyman offers a word of caution when it comes to the M&A spree in pharma this year.

It looks like a record year for mergers and acquisitions in pharmaceuticals. Time will tell if that’s a good thing.

Beginning, as it did, with Bristol-Myers Squibb’s $74 billion purchase of Celgene, 2019 has looked a promising year for pharma M&A from the off. With AbbVie’s $63 billion takeover of Allergan ending the first half as well, it’s unlikely to disappoint those looking for big numbers.

In fact, with transactions worth $172 billion, the pharma, medical and biotech (PMB) industry led the way for M&A in the months to July and put the last couple of years activity in the shade: the value of the top ten deals announced in 2019 is up by almost half (47%) on the same period last year.

Moreover, we can probably expect activity to continue in the remaining months. New leaders at giants such as Gilead Sciences and Pfizer show continued appetite for deals, and the list of candidates to drive activity remains strong.

Let’s hope, though, that Pfizer has learnt lessons from its takeover of Hospira back in 2015 with respect to the cost of underestimating the regulatory risks presented by a company with a poor compliance history.

Pharma M&A drivers

Senior Female Scientist Works with High Tech Equipment in a Modern Laboratory. Her Colleagues are Working Beside Her.

 

There are, in fact, a number of reasons to be a little cautious about the scale of activity we see.

First, some of the mega mergers mentioned do tend to skew the figures. The bulk of the value is found in just  one or two of the biggest deals (of which the BMS merger was the largest), and overall activity is a little less impressive: by transaction volume, the PMB industry ranks only fourth in the M&A tables, and in the first quarter the number of pharma deals was actually 10% lower than in the same period in 2018.

There also remain significant barriers to deals in some cases, as illustrated by Roche’s continuing attempted takeover of US gene therapy specialist Spark Therapeutics – delayed again in June due to regulators’ competition concerns. Potential regulatory action in other areas, such as over pricing (already being seen in countries such as Canada), could also dampen activity in the future.

Third, it should be noted that the deals are as much of a sign of weakness as they are of strength. Some of the drivers for M&A are benign, including pent-up demand after lower activity in 2017 and 2018, as well as US tax reform in 2018 that left big pharma companies with more cash. Higher activity also reflects significant opportunities in oncology; with M&A being used as a way for big players in pharma to expand into new therapeutic areas – as was the case with the BMS deal and Eli Lilly’s $8bn purchase of Loxo Oncology, among others.

As ratings agency Standard and Poor’s makes clear however, the activity also points to pressures over pricing, continuing patent expiration and fewer alternative avenues for growth. While M&A may stave off some of these issues, it’s hardly a silver bullet. Furthermore, S&P warns that groups’ consequent willingness to “compromise financial policy strength” and buy rivals at higher values could put pressure on some of their credit ratings.

Regulatory due diligence

Pfizer pharmaceuticals building in Tokyo

 

The most important reason we should not get too excited about the rash of deals we’ve seen, however, is that successful mergers and takeovers are notoriously difficult to pull off.

Completion of the purchase is a big milestone in any M&A, but it is really when the real work begins if the deal is to bring anything more than a short-term boost to the businesses involved. And if it’s not handled right, it can end up being a long-term burden.

The industry is awash with less than successful M&A that should force us to take a sober attitude to current activity. Pfizer’s $11bn aquisition of Array is among the headline deals that show M&A strength continuing in the second half of the year, for instance (as well as another example of the continuing attractions in oncology for the big players). But will it prove more successful long-term than the giant’s ill-fated takeover of Hospira?

In 2015 when that deal was announced, Hospira seemed to offer Pfizer an opportunity to dominate the generic sterile injectables drugs market, which was forecast to see rapid growth, as well as the biosimilar market – generic versions of expensive “biologics” medicines. It therefore promised to provide the business with avenues for rapid growth as well as mitigation for expiring patents.

Instead, the deal has helped drag down Pfizer’s sales figures and make a significant contribution to drug shortages affecting the US, with Hospira’s McPherson plant singled out by the American Society of Anesthesiologists in its contribution to the FDA’s public discussion on the root causes of shortages.

“[W]e observed the impact of how business decisions, such as mergers, impact drug shortages. The purchase of Hospira by Pfizer, for example, brings to light what can happen during manufacturer and production consolidation. The quality issues that are facing Pfizer in the McPherson plant have greatly impacted access to sterile injectables,” wrote the society’s President Linda Mason.

It certainly serves as a powerful lesson in the importance of due diligence when it comes to mergers and acquisitions for pharma companies.

A common problem

White lightbox with word fda recall on wood background

 

Hospira had a history of problems with  Rocky Mount, the North Carolina plant when Pfizer bought the business. In the three years before the deal, there were 239 recalls relating to the plant, according to the FDA. Despite assurances the problems had been largely addressed by 2015, these persisted afterwards, with a further 45 or more in the three years following. It’s been a continuing headache for Pfizer.

As recently as March, the company announced a recall of three lots of 8.4% sodium bicarbonate injection due to contamination by glass particles in some vials. In January, it also announced the closure of two manufacturing facilities in India, which have long been troubled, too.

Such problems are hardly unique to Pfizer and there is a range of other examples we could examine:

In other cases, businesses have had lucky escapes– such as Fresenius in 2018, when it realised the scale of the data integrity non compliance issues just in time to back out of its acquisition of Akorn.

For all of the above examples, major non compliance notices had been published by regulators such as the FDA or EMA prior to these acquisitions, suggesting that regulatory due diligence was either lacking or the potential impacts of ongoing issues seriously underestimated.

Nevertheless, these cases don’t necessarily reflect badly on the businesses involved so much as reflect the scale of the challenge. There are of course, risks for any industry when it comes to M&A. Often in pharma, as elsewhere, it’s the “soft factors”, such as culture, brand and people – and whether those of the two businesses fit well together – that determine the success or otherwise of the venture. That’s a handy reminder to those of us too tempted to be impressed by the big values being bandied about: It’s not all about the numbers.

But pharma also faces some unique issues relating to the tight regulation of the industry. Indeed, as this piece by Jenny Yu at insurer Munich Re makes clear, the regulatory risk facing the industry has been exacerbated in recent years by two factors: first, the move to outsourcing much of the pharma supply chain and second, ever expanding regulatory requirements.

As Pfizer’s woes with Hospira (and Bayer’s issues with its Leverkuesen plant) illustrate, there is a significant challenge in  addressing problems such as contamination and other regulatory issues when they do occur – not to mention potentially massive expense; major manufacturing issues have cost the biopharma industry over $12bn in lost revenues and remediation in the last two decades.

The key is to make sure you thoroughly do your due diligence on the business and its entire supply chain and then do it again. To do so, businesses should use all the tools at their disposal, including developments such as SCAIR’s Regulatory Incident Monitor tool. It collects a wide range of regulatory non compliance data from major North American and European regulators into a single historical report for each company – giving you an at-a-glance warning of any red flags.

It not only provides businesses with an early warning system for potential acquisition targets, but also a way to continually monitor and keep ahead of supplier issues. It can help businesses make sure they make the right decisions at the outset – so they don’t end up paying for others’ mistakes later.

Catherine Geyman, Director, Intersys Risk Ltd

Head shot of Catherine Geyman, Director, Intersys Risk Ltd

Regulatory Risks for Pharma in Brexit Uncertainty

The Regulatory Impact of No-Deal Brexit on the Pharmaceutical Sector

In the first of a new series of industry insight articles, Intersys Risk Ltd Director Catherine Geyman, examines the various legal risks to the pharma sector posed by a no-deal Brexit.

Importers, distributors, pharmacists and others face a fast-changing legal environment in the event of no-deal

 With Boris Johnson taking the keys to number 10, the prospect of a no-deal Brexit looms large. It is “do or die” when it comes to departing in October, he says, and the risk is probably at its highest since March, before Theresa May first confirmed she would ask for an extension to our departure date.

With that realisation, many of the now well-worn discussions about the risks of disruption to the pharma supply chain are resurfacing. But, as the chances of leaving the EU without a deal grow, new risks are also coming into focus – not least the legal framework in which drug companies operate.

Looming liability for pharma distribution

medical warehouse worker man loading boxes with medcine drugs by hand forklift

Of course, it’s long been recognised that the regulatory framework for the UK industry is heavily reliant on more than four decade’s worth of acquis communautaire. As we’ve looked at before, that change will manifest itself physically, with the European Medicines Agency in London relocating to Amsterdam, as the UK ceases to be a member.

More recently, however, we’ve also had some indications of what that may mean in practice – and the changes are far from being simply symbolic.

As this piece by a product liability expert makes clear, for example, it threatens serious consequences for those importing drugs. Distributors importing products (including pharmaceuticals) from the EU and selling them to retailers currently benefit from a level of protection against liability for personal injury due to a product defect: Provided they have conducted due diligence on the supplier and its product, they won’t be held at fault. Rather, it’s likely to be the manufacturer that bears the cost; and within the EU consumers can seek compensation from the manufacturer even where they’re in another country.

That changes if we leave the EU without a deal, however, as the expert explains: “As an importer into the UK, the distributor will be liable to the injured person as if he were the manufacturer.”

Moreover, for injured parties, making a claim against the EU-based manufacturer is likely to become much more complex, and much less likely to succeed after Brexit. This will make the UK importer the more viable and likely target for any consumer seeking compensation.

That’s a significant change, and one for which there’s been little discussion or debate, and for which there is likely to be widespread ignorance in the sector. The advice for importers is relatively simple: “[They] should review their product liability insurance,” writes the expert.

It is, though, just another overhead already hard-pressed businesses will not relish having to take on board.

Serious Shortage Protocols

Female pharmacist sat at desk writing notes with medicine boxes in background.

It’s far from the only change the pharma supply chain faces, either.

 This month, for instance, Amendments to the National Health Service (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013 made in June came into effect. These introduce Serious Shortage Protocols (SSPs) into the terms of service for NHS community pharmacies. As the Pharmaceutical Services Negotiating Committee explains, if an SSP is put in place for a product, a retail pharmacy business or a dispensing appliance contractor must consider supplying in accordance with the SSP rather than fulfilling an NHS prescription for that product.

In practice, this means that, to protect supplies of a drug where shortages are an issue, the pharmacy can use the relevant SSP when fulfilling a prescription to dispense less of the drug, give a different strength, or provide an alternative product. Use or otherwise of SSPs could therefore have significant impacts for the supply chain of not only the product for which the SSP applies but also, depending on the terms of the protocol, likely alternatives that the pharmacists may choose.

On the one hand, this provides additional flexibility in the supply chain and should help minimise disruption. On the other, though, the impact is going to be difficult to predict – not least because pharmacists still have discretion as to whether to use the SSP. They only have an obligation to consider it, and if they consider supplying a different product or quantity is unreasonable or inappropriate, they can choose to fulfil the prescription as written.

Preparing for anything

 pharmaceutical logistician using internet of things solution based on blockchain technology to secure data integrity of drug supply chain. Networking concept for distributed ledgers.

In fact, every part of the supply chain is likely to be affected by the legal changes Brexit will bring. In June the government published guidance on the “written confirmation” that will be required for each shipment of Active Substances manufactured in the UK exported to the European Economic Area in the event of a no-deal exit; and that followed guidance on how to apply for a certificate of pharmaceutical product.

Regulatory resources

All this preparation is encouraging – even if it means there’s a lot to take in and there are resources that can help pharma businesses keep abreast. TOPRA’s site for professionals in healthcare is one useful site, while, in April, the House of Commons library published an overview of the current state of regulations relating to medicines, and how that might change. But one line from the introduction to the that briefing jumps out:

“It is still not known how medicines will be regulated when the UK leaves the EU.”

Unfortunately, three years on from the vote to leave the EU and – possibly just three months before we actually do – that remains true. All pharma businesses across the supply chain can do is, first, keep a watchful eye out for regulatory developments as they become clear; and, second, keep their supply chain risks under constant review as the legal landscape continues to change around them.

Head shot of Catherine Geyman, Director, Intersys Risk Ltd

Catherine Geyman, Director, Intersys Risk Ltd

Intersys at Price Forbes Life Science Conference

Life Sciences Landscape – Insights from Pharma

Intersys Director Catherine Geyman speaking at Price Forbes Life Science Conference 2019

 

Intersys recently had the pleasure of presenting at the price Forbes Life Science Conference 2019. It was a fantastic opportunity to understand the latest regulatory, legal and insurance trends in the life Science industry. Intersys Director Catherine Geyman was guest speaker on the final day where she presented the latest innovative work that Intersys have been doing in the field of supply chain risk management. Delegates got a sneak preview of the latest addition to the SCAIR suite - Regulatory Incident Monitor.

Catherine Geyman said "The Price Forbes Life Science Conference is a great platform that brings together subject matter experts with diverse specialisms in the life science industry. It’s a fantastic opportunity to start conversations and showcase the exciting projects we have been working on. Pharma supply chains are rich in public event data – we are simply trying to make those events more relevant to individual companies through Monitor."

A big thank you to Price Forbes Executive Director, Head of Life Science, James Bird and the entire team for putting together such a well thought out and insightful event and looking forward to attending the next one!

 

 

 

 

 

Can Pharmaceuticals Sit Out the US China Trade War?

US China Trade War: end in sight but pharma must remain vigilant

Pharma businesses can take some encouragement from the progress of US trade talks with China, but that doesn’t lessen the need for a hard look at their exposures.

Hope at last. This week brings news of a possible end to the yearlong trade war between US and China.  Over recent days, there has been talk of a delay to planned increases for trade tariffs on Chinese goods, with US President Donald Trump announcing there has been “substantial progress” in trade talks between the two countries. He has added that, if more progress could be made, a summit with Chinese President Xi Jinping in Florida could cement a deal that would end the battle between the two countries.

This is a sign that those in the pharmaceuticals sector over the last year urging caution in responses to the trade wars with China may be proved right. As our own Catherine Geyman told the Pink Sheet “pharma intelligence” publication last year, waiting to see how the trade war evolved and if it would blow over might not be comfortable, but it seemed the most practical option. The expense and complexity of setting up US-based manufacturing facilities or even re-routing supply chains to avoid tariffs on Chinese imports made other options impractical in the short term.

But keeping a watchful eye on developments and waiting for clarity before acting is not the same as sticking your head in the sand. Pharma businesses still need to follow this debate closely, and have properly evaluated their options.

Pharma focus for US policymakers

Close up of Pharmacist's hands holding medicine box and capsule pack in pharmacy.

 

Pharma is not the only industry involved in the trade dispute, of course, but it is a key one. The Trump administration’s ire is focussed on a wide range of non-tariff barriers to Chinese markets that includes industrial subsidies, regulations and product standards, among other practices that it argues prevent US goods from accessing China or competing there on a level playing field with domestic firms.

Given how highly regulated the pharma industry is in all countries, it’s perhaps not surprising there should be particular challenges here. But, as this piece explains, Chinese pharma is also one of the recipients of “Made in China 2025” subsidies the country offers to 10 strategic high-technology sectors it has identified as key industries. (Others include semiconductors, robotics, aerospace and electric vehicles.)

The US government has come out strongly against these subsidies.

All of which is to say that the pharma industry remains central to this dispute, and if anything changes, it could well be affected.

Furthermore, things do have a habit of changing. As the Pink Sheet’s timeline of the tariff battle outlines, drug products, active ingredients and excipients have appeared and disappeared on proposed lists of imports to be subject to tariffs (of either 10% or 25%) a number of times in the last year.

So, while it’s encouraging that progress in the talks seems to be yielding fruit, we’re a long way from being able to celebrate or relax.

Not just tariffs: inward investment challenges for pharma

Three modern office buildings with Huawei logos in Vilnius

 

It is also worth noting that the challenges for pharma and businesses in related sectors do not simply relate to the potential for tariffs. As reports last year pointed out, China has become a key source of finance for Western biotechs and medical-technology start ups. Research from Bain & Co. shows that Chinese venture capital and private equity firms poured a record $3.5 billion into foreign healthcare businesses in 2017. Other reports suggest that, of the $10 billion US biotech and drug developers raised from venture capital investors in that year, the same amount ($3.5 billion) was from Chinese investors.

That source of funding is also hostage to the on-going changes in US-China relations. Last October, the US Treasury Department Office of Investment Security increased scrutiny of foreign investments. The Office tracks and reviews foreign direct investments into the US and is tasked with enabling the investment the US needs, while protecting national security, particularly regarding its critical infrastructure. The reviews are undertaken by The Committee on Foreign Investment in the United States (CFIUS).

Much of the most high profile discussions on this sort of issue in both the US and UK have revolved around Chinese firm Huawei, and its role in national telecoms infrastructure. In October, however, a total of 27 strategic areas were identified as requiring increased scrutiny. While pharmaceuticals overall escaped, the list does include biotechnology, and the increased scrutiny is unlikely to encourage investment in this and other areas. While previously, CFIUS reviews focused only on mergers and acquisitions, the new rules include proposed minority investments as well as joint ventures. The body has the power to block such business deals if it has national security concerns or sees threats to US “technological superiority”.

Again there’s considerable uncertainty.

Significant value at risk

Chinese female scientist in lab with pipette and containers

 

With so much uncertainty, however, it is worth firms concentrating on what they do know.

At a macro level, China remains the world's largest supplier of raw materials for chemical compounds, and active pharmaceutical ingredients in particular. The US Food and Drugs Administration estimates that 80% of APIs used in the US originate from China or India. Tariffs on these and related products would significantly affect not only the Chinese producers, but also US firms relying on these ingredients for a wide range of drugs from insulin and antibiotics, to antidepressants and vaccines.

 Whilst some stakeholders may believe that removing Chinese suppliers from their drug supply chain would be positive for quality reasons, (In a 2018 FDA online survey, consumers and patients were asked about their perception of pharma quality. 75% of respondents ‘either did not believe or were not sure that drugs manufactured outside the US and sold in the US adhere to strict manufacturing standards and regulations.’), the FDA are positively broadcasting the message that the quality requirements are the same whether a drug is made in the US or abroad. So the FDA patently do not forsee a future that excludes Chinese APIs.

In fact, as one commentator almost suggests, the depth and complexity of Chinese APIs’ influence in US supply chains is perhaps one thing that might be protecting the industry from tariffs: “US authorities would have to map out the entire supply chain of ingredients for generics and non-generics if they wanted to understand the full impact of imported Chinese pharmaceuticals and related products on the US market.”

 But that is no guarantee of protection, and even if it were very unlikely, the potential impact of such tariffs means the possibility cannot be ignored. As a headline puts it starkly: “US-China trade war could wipe out US-based generics manufacturing.”

Time for supply chain transparency

Pharma Logistician Using IoT Based On Blockchain

 

So what’s the appropriate response for pharma businesses? Well, probably, still, to wait and see, particularly since we have some renewed caused for optimism. But to hope for the best does not mean we don’t prepare for the worst.

The task of tracking the impact of Chinese supplies on the entire US pharma market may well be beyond the US government. The task of evaluating its influence on particular companies is, however, a responsibility they all need to address. It is not an easy one, but it is necessary to ensure quality of supply. The Heparin scandal in 2008 revealed the lack of visibility and qualification of critical sources of raw materials in China, and despite many regulatory changes since then, the global pharmaceutical industries finds itself in a very similar predicament today. The current Valsartan & ARB contamination contagion that has been spreading across industry was uncovered in July 2018, but regulatory action against a key Chinese source only materialised in Dec 2018 with the FDA Warning Letter to Zhejiang Huahai Pharmaceutical Co. Ltd.

For products with tight margins, there may simply be no good answer: It might be that businesses have to concentrate on other products.

But, either way, businesses cannot make these evaluations and strategic decisions without clear visibility of their supply chains. However the China dispute resolves, effort put into gaining that insight is never going to be wasted. If it’s not called on for a solution this time, we can be sure there’ll always be another crisis down the road, sooner or later.

If you want clearer visibility of pharmaceutical non-compliance in your supply chain, why not try our new supply chain incident monitoring tool Regulatory Incident Monitor.

 

Is Brexit Bad for your Health?

3 Health Conditions That Could be Affected by Brexit

White pharmaceutical pills spilling from prescription bottle over British flag. Brexit concept. SCAIR.

With the Bank of England warning of an eight per cent contraction in the economy (a “scenario”, not a prediction, it emphasised), it’s all too easy to dismiss dire warnings about Brexit as part of “project fear”.

But the uncertainty around the UK’s exit from the EU is real, and so, too, are the vulnerabilities of many pharmaceutical and medical supply chains. As the Parliamentary select committee report on the impact of Brexit on the pharmaceutical sector noted, the industry is ‘heavily integrated with European Economic Area (EEA) states for supply chains and the regulation of production and distribution’.

Some – and perhaps much of the potential impact – should be mitigated if firms follow the UK government advice issued in August to stockpile an extra six weeks’ supplies to prepare for any disruption. Yet, as we looked at before, in a ‘no-deal’ scenario, some worry it won’t be enough, particularly since many pharmaceutical firms don’t have massive resources: The majority are SMEs, with 90 per cent of manufacturers having fewer than 250 employees.

So where could problems arise? Here’s a quick look at the top three conditions where Brexit could mean breaks in the supply chain and problems for patients…

1. Diabetes: could Brexit cause widespread disruption?Close up of woman hands using lancet on finger to check blood sugar level by Glucose meter. Diabetes concept

The impact of Brexit on diabetes or, more accurately, insulin supply has probably received the most comment. In part that’s because it makes a good story when the prime minister herself has a direct interest since she has type one diabetes. More significantly, it is because of the numbers who could be affected, and potentially ‘seriously disadvantaged’ if supplies of insulin are affected by a no-deal Brexit, as Sir Michael Rawlins, the chair of the UK’s Medicines and Healthcare Products Regulatory Authority (MHRA), put it.

As charity Diabetes UK notes, insulin in the UK comes from three main pharmaceutical manufacturers, which produce in Denmark, US, Puerto Rico, France, Italy, Brazil, Russia, Algeria, Japan, and a range of other countries – but not Britain. In fact, all analogue and synthetic human insulin in the UK, the most common forms of insulin used here, is imported. As Rawlins put it:We make no insulin in the UK. We import every drop of it.” He also pointed out that it needs to be temperature controlled, making disruption and delays to transport a more pressing issue.

However, while the impact of insulin shortages would be high, the probability of these occurring is, hopefully, low. The early attention and high profile given to the risks has seen the main manufacturers make significant contingency plans to avoid disruption. Consequently, the big producers supplying the UK have said they don’t expect supply problems, even in the event of a no-deal Brexit.

2. Asthma: Are recent shortages a taste of things to come?

Asthma patient girl using inhaler in park. Asthma concept.

Asthma’s another condition affecting large numbers of people – with 5.4 million sufferers in the UK. Again, they rely on a continuous supply from the pharma industry to manage the condition, this time of inhalers. The last month has shown that it doesn’t need the threat from Brexit to cause problems in the supply chain: Asthma UK warned in November that stocks of AstraZeneca’s Bricanyl Turbohalers, used by about half a million people in the UK, were running very low.

Again, the consequences of a supply disruption would be widely felt and could be serious: the UK already has among the worst asthma death rates in Europe, partly because the condition is not taken seriously enough.

Fortunately, though, it is a risk that is being taken seriously by manufacturers, with those like Vectura making plans to mitigate any disruption, as it revealed earlier this year. ‘The group remains of the view that Brexit could result in an increased cost of operations for the group and potential disruption to partner supply chains. Accordingly, the group is continuing to review stock levels with its partners for both finished product and key components and planning appropriately,’ read a section in its half-year results.

That should mean that plans are in place to deal with most likely outcomes next March when we leave.

3. Cancer – Delays for life saving drugs?

Scientist pipetting research samples by the microscope. Cancer research concept.

As the most common cause of death in Britain, accounting for around a quarter of all mortality, cancer treatment remains a hugely evocative issue. The disease affects one in three of us at some point in our lives, and drug development and availability is often the key to determining whether a cancer is treatable or terminal.

It’s not surprising, then, that the potential for Brexit to disrupt supplies of cancer drugs is seen as ‘uniquely damaging’ by Jeremy Hunt, the Health Secretary. Any disruption as a result of Brexit would not just be a problem for the UK, as he said: ‘It’s not just that we want to continue to get cancer drugs that are manufactured in Europe. It’s Europeans who will not want any interruption to their supply chain for drugs that are manufactured in this country,’ he said earlier this year.

In a fast moving medical field, drug supply is not the only issue around cancer treatment that might be affected by Brexit. There have been significant concerns about the impact on research from potential skills gaps, for example. A review by Queen's University in Belfast noted that overseas staff contributed to nearly 80 per cent of papers on the topic published in the UK.

There could also be consequences for new drug development. In last month’s blog, we looked at how uncertainty over the regulatory framework is already putting back clinical trials here and could mean delays in new drugs coming to the UK market. That would affect not just new cancer drugs, but a wide range of drugs approved abroad. Much depends on whether the European Medicines Agency (EMA) ends up considering the UK as a ‘third country’ under its regulatory regime. If so, a House of Commons Select Committee has warned it could mean approval times lengthening from a few months to a year.

The outcome here remains significantly unclear.

Looking up – opportunities in Brexit for pharma

Various pills and capsules in container. Pharmaceuticals concept. SCAIR

Finally, it is worth noting that not everyone is so downbeat about the prospects of Brexit. This week, a report by The Institute of Cancer Research (ICR), noted that the EMA itself does not have a spotless record when it comes to approvals. It could do more to speed the path of new cancer drugs to market, in part by learning from other regulators such as the US Food and Drugs Administration, the ICR argued.

With this in mind, Brexit could potentially offer opportunities to actually speed up approvals, according to ICR’s chief executive Prof Paul Workman. “If we don’t align with the EMA after Brexit then the MHRA could be an alternative mechanism for approvals,” he said.

How likely that is remains to be seen, but it is a useful reminder: In the short term, for pharmaceuticals Brexit is necessarily about minimizing disruption to supplies and making sure people have access to the drugs on which they depend. In the long-term, though, it should be about looking for new opportunities, too.

Brexit Scares Continue for the Pharma Supply Chain

What impact will Brexit have on the pharmaceutical supply chain?

 

Flags of the United Kingdom and the European Union.Brexit concept SCAIR blog

 

Is it really time for patients to be stockpiling drugs, or was this just a Brexit scare story in the Halloween season?

The debate around the UK’s exit from the EU hasn’t always been marked by moderation, but it is still not easy to simply dismiss the warnings flying around about the potential impact of Brexit on the pharmaceutical industry.

The most emotive and worrying, perhaps, are warnings around drug shortages. As we’ve looked at before the risk of Brexit pharma shortages is very real. In August, the chair of the UK’s Medicines and Healthcare Products Regulatory Agency (MHRA),warned that 3.7 million diabetes sufferers in the country were entirely dependent on insulin imports. The risk to supply chains for key cancer drugs received significant coverage earlier in the year.

Now patients are being told they may need to stockpile drugs themselves. Giving evidence to Parliament’s Health and Social Care Committee, the head of the Association of the British Pharmaceutical Industry, warned that there were no facilities at ports to store drugs at low temperatures in the event of delays.

“Almost all the latest medicines that we are producing are biologics and require cold‑chain storage. That means that they have to be kept at between 2° and 8° from when they are produced to when they get to a patient. There are no cold-chain facilities at the border ports. That is why we rely on real frictionless trade to be able to move medicines quickly. Those are the things that clearly will give us challenges in the event of challenges at the border,” Mike Thompson told the committee.

Asked by Labour MP (and GP) Dr Paul Williams whether patients should be stockpiling their own drugs, Thompson urged caution against alarming patients. But he did not deny it.

Another witness to the committee, Martin Sawer, executive director of the Healthcare Distribution Association, said: “We are not suggesting that anybody needs to stockpile outside of the supply chain yet, but, come January, that might be a different picture.”

Some of the headlines might be “sexing up” the evidence, but it’s far from fake news.

Delays for new pharma products

Closeup pharmacist hand holding medicine box in pharmacy SCAIR blog

 

And, of course, it’s not just supplies of current drugs that are the issue. There are real fears for patients’ access to new drugs in future for treatment of conditions such as HIV or cancer – and even development of treatments; US medical research firm Recardio said in October that it had suspended trials in Britain of a potential heart drug due to “completely unresolved” questions about regulation after Britain leaves the EU next year. That is part of a wider trend, too: the number of new clinical trials started in Britain last year dropped by a quarter as a result of worries that data collected in the country won’t be accepted by European regulators post Brexit.

Of course, some of the warnings of the potential repercussions of Brexit on emotive issues such as healthcare are being used by those with agendas to push. But that does not mean they can simply be dismissed. They are based on genuine concerns.

Regardless of the outcome of negotiations, the European Medicines Agency (EMA), long based in London, is relocating to Amsterdam and the UK will cease to be a member once it is outside. If the UK ends up considered a “third country” by the European regulator, it could mean significant delays in new drugs coming to the British market.

As a Commons Select Committee has noted, the Medical Research Council reports that even countries such as Switzerland, Canada and Australia wait much longer than the UK for drugs to come to market – up to 12 months in some cases. It also noted that alignment with other large markets such as the US and its Food and Drug Administration (FDA) as an alternative would have uncertainties and complications of their own.

The fact is that the split between the EMA and MHRA creates significant uncertainty. As Niall Dickson, co-chair of the Brexit Health Alliance, which brings together bodies such as the Academy of Medical Royal Colleges, the NHS Confederation and the Association of the British Pharmaceutical Industry among its members, put it earlier this year: “Our shared approach to regulation has given patients throughout Europe faster access to treatment. The UK has been a significant player in shaping the current system and now we are leaving the EU we accept that is bound to change.”

It is not for nothing that the British regulator is consulting on how its legislation and regulatory processes may need to be modified for the future.

Reasons to be cheerful

Confident smiling female doctor posing in the office, healthcare concept SCAIR blog

 

If it would be foolish to disregard these warnings, though, it is also too early to despair. A few factors should give pharma businesses encouragement.

First, many of the worst impacts are predicated on a no-deal, hard Brexit. The MHRA still views this as unlikely, and after recent announcements a deal would now appear to be on the table.

Second, there are strong incentives on all sides to see that arrangements are made to prevent problems. As we’ve mentioned previously, it’s not just those in the UK that are worried. In August, while the head of the Irish Pharmacies Unions was calling for drugs to be stockpiled, the head of AstraZeneca, which has its research headquarters in Cambridge in the UK, also warned about of the risks of patients missing out on drugs if the company did not prepare – patients in the EU.

And that, in fact, is the final reason for some optimism: There has already been significant work to prepare for Brexit already, not just by AstraZeneca, but also more widely. Cologne’s IW economic institute recently reported that German chemicals and pharmaceutical firms have spent up to £88m each to prepare for a potential hard Brexit.

Be prepared

pharmaceutical industry, medicine pills are filling in the plastic bottle on production line machine conveyor at the medical factory SCAIR blog

 

That’s true in the UK, too, where many have already started trying to mitigate the risks. Most strikingly, of course, the UK government in August called on pharmaceutical manufacturers to build up a six-week stockpile of drugs to cope with supply disruption in the case of a no-deal exit.

The recent testimony to the parliamentary committee was a wake up call that this is unlikely to prove enough if no deal with the EU is reached. But the government advice was a useful encouragement to get firms to think about the issue seriously, and a reminder that they needn’t be passive hostages to circumstance. At this stage, it is impossible to know how Brexit will turn out, but that doesn’t mean it’s impossible to prepare. Indeed, Thompson said that a lot of businesses had already started stockpiling ahead of the government’s request.

Going forward those that have not already will have to ask whether the six week stockpile suggested by the government is right for them; it’s unlikely that this will be the suitable length for everyone. They should also look at alternatives and do more work to consider the potential impacts. Here they might be able to draw lessons on both the extent of potential disruption – and mitigation possible – from US businesses, which have been facing their own challenges as a result of the trade war with China, which has included active pharmaceutical ingredients. A 25% tariff is imposed on raw drug ingredients, insulin, epinephrine and vaccines is widely expected to hit US makers of generic drugs.

If nothing else it’s a reminder that the UK pharmaceuticals businesses are not alone in facing sudden and significant challenges to their supply chains.

And while the potential problems with Brexit could be more complex, the solutions have the same starting point: Careful mapping and establishing clear visibility of the supply chain. For many businesses that’s going to be a massive undertaking; Thompson gave the committee an example of one British manufacturer trying to revalidate more than 15,000 supply lines.

It is a big job, but without a clear view of their supply chains and an ability to see the vulnerabilities, there’s little prospect of businesses being able to prepare – regardless of the type of Brexit we end up seeing. That is a hard reality, but it is also a potential opportunity. As one business leader puts it, “[I]t has become vital that businesses review the complexity of their regulatory filing process and their supply chains, which ultimately could help to improve operations in the long run. Providing companies take a well-thought-through strategic approach to Brexit they should be able to minimise any potential impact on supply.”

Whether Brexit problems end up being a scare story or not, then, if companies prepare well, there’s still every chance of a happy ending.

The New Challenges Around Drugs Shortages

Drug shortages are back – or at least the risk is

That might seem alarmist. After all, the high point for shortages – at least in the US – was earlier in the decade, after shortages tripled in the years from 2005 to reach 251 new drug shortages in 2011. That led to concerted efforts by the US Food and Drug Administration (FDA) and others, resulting in a steep decline in the following years.

Last year, according to the FDA’s annual report, there were just 39 new shortages.

Three factors, though, should cause concern. First, the risk has never really gone away; it’s just that efforts to manage it improved markedly following the President issuing an Executive Order in 2011 directing FDA to take steps to prevent and reduce disruptions in the supply of life­saving medicines. That encouraged it to require drug manufacturers to provide advanced notice of potential shortages and expedite its regulatory reviews, for example.

It was further helped by passing of the FDA Safety and Innovation Act in 2012, giving the regulator new powers.

The risk, though, remains: in 2017, the FDA helped to prevent 145 shortages (up from 126 in 2016), and was notified of 520 potential drug and biological product shortage situations from 86 different manufacturers.

Second, as the FDA report notes, there are on-going shortages. While there has also been considerable success in tackling these, there remained 41 at the end of 2017.

Finally, while the number of new shortages is still modest compared to the peak a few years ago, the 39 in 2017 does represent a significant increase on more recent years. In fact, the 2017 figure is 50% up on levels in 2015 and 2016 when there were only 26 for each year.

Reasons for pharmaceutical shortages

Concept showing empty blister with only one tablet left

Of course, part of the surge in 2017 was the result of hurricanes Harvey, Irma and Maria. The latter two, particularly, hit Puerto Rico, home to numerous pharma manufacturing facilities, hard, creating both new shortages as well as worsening existing shortages, despite the FDA’s extensive efforts.

Screenshot of SCAIR mapping the path of hurricane Maria

 

But these won’t be the last storms to impact the region, and there are structural problems, too. It’s not just the number of drug shortages that’s a problem, of course: it also depends which drugs are in short supply – and the combinations. As this article explains, for example, in some hospitals it’s not just that the go-to drugs for pain relief such as morphine, hydromorphone and fentanyl are in short supply – so are many of the alternatives.

“We’ve seen a variety of shortages over time,” the doctor explains. “What’s been challenging is that second-line drugs are out, too.” Research shows half of drug shortages are for medications used in critical care.

All of this helps explain why the FDA announced last month that it was setting up a new drug shortages task force. As FDA Commissioner Scott Gottlieb put it: “While we’ve made progress to mitigate individual shortages, we haven’t firmly impacted the underlying structural concerns that give rise to these recurring challenges. When shortages occur, practitioners are forced to ration supplies or substitute alternate drugs that in some cases compromise patient care. We need to pursue more enduring solutions.”

The new task force will explore why some shortages remain a persistent challenge, and look for “holistic solutions” to addressing the underlying causes for these shortages: including both what additional powers for the FDA could help ensure continued access to medicines, and policy steps that could address the root causes giving rise to shortages. Crucially, the statement notes that lasting solutions can’t be the responsibility of the FDA alone.

“Historically, many drugs in short supply have been low-profit margin generic medicines. Many are sterile, parenteral drugs, which can be challenging to manufacture. The low-profit margins, and the significant cost of manufacturing these complex drugs, has resulted in consolidation in the industry. The only way to produce these low-margin products profitably is to manufacture them at tremendous scale. This has resulted in fewer and fewer manufacturers for certain key products. The result is very little margin for error in this space.”

That suggests there’s not going to be any panacea, and that any solutions are likely to take time. The question then remains, what will happen in the years to come if President Trump is successful in his proposed 30% budget cut at the FDA; less resource to mitigate shortages if they happen or fewer enforcement actions resulting in fewer shortages in the first place?

Problems for UK pharma

Two chemist working in pharmacy drugstore. Male and female pharmacists checking inventory at pharmacy.

 

And it’s not just a US issue, of course. UK pharmacists have also been complaining of significant shortages for months, if not a year, particularly for certain classes, such as diabetes drugs.

That has a number of effects. Most obviously, of course, it’s bad for patients. It causes unnecessary additional distress and forces doctors to use less effective alternatives or those with greater risk of bad side effects.

“It's a patient safety issue,” says the chairman of the national clinical governance board for US Acute Care Solutions physician group.

Second, it adds to cost. The Times report on shortages at the end of last year noted that they cost the NHS £180 million in six months alone, threatening to swallow the entire winter funding bailout for the UK’s health service. At the very least, shortages jeopardise the negotiating power of providers, and the drive to control costs. As one local pharmacists group explained, there were particular issues around the supply of generic medicines stretching back to late spring last year – partly due to the closure of two generics manufacturing plants, but also due to the success of the NHS in driving down prices in the past.

As it wrote: “Generics prices in England are incredibly low compared to most parts of the world, because DH’s [the Department of Health’s] policy to incentivise community pharmacies to reduce medicines prices for the NHS has worked incredibly well. There is a global market for generics, so international manufacturers can choose to sell where they will make the best financial return.”

Finally, and not unrelated to the issue of rising costs, shortages create extra work. Hospitals and pharmacists have to seek out alternatives; patients waste time trying to get drugs that aren’t available; and GPs have to spend time rewriting prescriptions for alternatives.

Brexit and trade wars: time to stockpile essential drugs?

Brexit strategy concept showing two chess pawns with UK and European flags

 

Just as in the US, the problems in the UK aren’t going away any time soon. In fact, there are significant fears the shortages will get worse if there’s a no Brexit deal. In July Sir Michael Rawlins, chairman of the Medicines and Healthcare Products Regulatory Agency warned that Britain could face significant shortages of drugs such as insulin in the event of no deal.

The UK imports “every drop” of insulin it uses, he warned, creating a risk for 3.5 million with diabetes who rely on it, including Theresa May, the Prime Minister. The new Health Secretary Matt Hancock, meanwhile, has said there are plans in motion to stockpile drugs, as well as medical devices and blood products in case of a no deal exit.

Brexit could affect not just Britain, however. Its neighbours could be hit, too. In August the head of the Irish Pharmacies Union called for drugs to be stockpiled to minimise disruption in the supply chain from Britain. Six out of ten of the drugs in Irish pharmacies are manufactured in the UK or labelled there, she said.

“The UK is obviously the largest English-speaking country in the EU and 37 million patented packs of drugs go into the UK every month and 45 million come out. That is 1 billion per year.”

Whilst on the subject of barriers to trade, the US’ tariff war with China could also threaten continuity of supply owing to the dependence on the US market for Chinese contract active pharmaceutical manufacturers.

Forward thinking - managing drug shortages

All these issues are putting increasing pressure on everyone in the pharma supply chain. Whether it’s simply to prevent shortages for patients, control costs, or meet growing regulatory expectations, the issues are growing more complex, and the risks greater.

In this scenario clarity on the evolving risks is going to be increasingly important, and technological solutions such as our Incident Monitor module can help: collecting supply chain interruption information from previous recall warning letters, product shortages, import alerts and GMP non-compliance reports from leading medicines regulators such as the FDA and EMA.

With a history of the supply base’s quality performance, businesses can identify repeat offenders by company name, and use analysis to identify root causes – whether that’s for drugs, biologics, veterinary or medical devices. It can also analyse different product characteristics (therapeutic area, dosage form and route of administration) to determine which product types are most likely to trigger non-compliances.

The benefit of this approach is not just that it enables businesses to better manage the risks; but also that it allows them to track how the risks are evolving. That’s going to be increasingly valuable – partly just because shortages are becoming increasingly problematic; but also because the one thing that’s already clear from developments within the FDA and around Brexit is that things are capable of changing pretty fast.

Impact of US China Tariff War- Intersys Provide Expert Opinion for Leading Pharma Publication

Snapshot of Pink Sheet Interview featuring Catherine Geyman from IntersysCatherine Geyman, Director, Risk Management, Intersys Ltd and creator of SCAIR® has offered valuable insights in Pink Sheet - a leading pharmaceutical regulatory insights publication. Catherine was interviewed about her views on the current US-China Trade Tariffs and their impact on pharmaceuticals manufacturers.

President Trump's decision to slap  10% US tariffs on goods including some drug products and their ingredients from China has caused major concern for global pharmaceutical manufactures. The fear of the Chinese passing on the increased costs to their network of customers is a very real worry.

However Catherine predicts that the proposed tariffs are unlikely to be the main cause of US Drug License Holders switching away from their Chinese Supply base, because of the costs involved in switching suppliers.

"The strict validation requirements (that often vary by country/regulator) constrain every material that could influence the quality of the final product, meaning that critical suppliers cannot be simply or quickly substituted. It is these regulatory requirements which create fragility within pharma supply chains and mean that any change in sourcing of material results in prolonged revalidation times and significant costs. Consequently pharma manufacturers may feel like they are stuck between a rock and hard place amidst US and China trade retaliations"

However, when combined with other worries, such as Chinese suppliers failing to achieve appropriate quality standards, a longer term shift away from China could be on the cards.

The full story in Pink Sheet is available here.

Artificial Intelligence in Healthcare: Real Opportunities

Healthcare and AI

Doctors have always been a little cautious about the “worried-well” diagnosing themselves with fantastic ailments using the web. Increasingly, though, it seems there’s a solution: Cut out the middle-man.

Artificial intelligence in healthcare is growing rapidly. Across diagnosis, research, prevention and treatment, AI solutions are promising a revolution. The next big name in healthcare may, in fact, be Google: The company’s DeepMind AI business is in partnership with a number of NHS trusts, helping see if its technology can spot early signs of eye conditions that doctors would miss, for instance. Wearables maker Fitbit, meanwhile, is connecting with Google’s dedicated healthcare cloud so doctors can easily access data from its wearables.

In fact, there’s countless ways AI could transform healthcare, across every part of healthcare, and there are ever more businesses serving the sector. It’s not just governments and healthcare businesses that could benefit. AI could also help businesses to build healthier workforces and improve employees’ well being, getting them diagnosed and treated more quickly, and healthy and back to work faster. It could even help encourage them to live healthier lifestyles to prevent them getting ill: A worthwhile investment for many businesses.

Data security

Digital Security and data protection. Conceptual illustration with advanced technology digital display.

The technology doesn’t just promise new treatments and innovations. It also gives us the opportunity to do the same things more cheaply; it’s been suggested it could cut the soaring costs of drug development for pharmaceuticals businesses, for instance. Researchers could generate accurate hypotheses faster, “making the drug discovery process less expensive and more effective”, according to one data and analytics company director.

All technology brings challenges, though, and AI is no exception. We’re already seen the UK’s Information Commissioner’s Office, for instance, rule that DeepMind’s partnership with one NHS Trust breached the Data Protection Act. There are outside threats, too, as last year’s Wannacry ransomware attacks showed, affecting not just PCs but connected medical equipment such as MRI scanners and blood testing devices, too. As connected technology becomes ever more ubiquitous in healthcare, the potential disruption grows.

Not surprisingly, it’s not just data regulators businesses who are interested in AI; the FDA in the US is already taking a keen interest in the regulation of AI applications in healthcare.

AI and the supply chain

3d rendering android robot control forklift truck

None of this diminishes the potential of AI in healthcare, but it’s a reminder that the sensitivity of data and dangers involved warrant special protection for the field. It should also serve as a reminder for businesses to look to the low hanging fruit as well.

There will definitely be powerful applications of AI developed that overcome the challenges of privacy and security. But there are also applications that often don’t involve such sensitive data but could still have a significant impact on the business. The supply chain, for instance, is likely to be another key area where AI can make a real difference, and it’s already being used to cut shipping times and costs; yet there’s not widespread adoption.

As AI develops, it should make supply chains faster, more efficient, more robust and transparent. Businesses that want to make the best use of the technology will need to look to every part of their business, and grab the opportunities where they find them.