The emergence of Covid-19 vaccines over the past year demonstrates how supply chains are evolving in the 21st century. Many of the economic processes are not new. However, the creation and production of the vaccines illustrating how intellectual property and physical production can be brought together.
Pfizer and AstraZeneca, for example, are quite distinct from one another both in terms of supply chain strategies and technically.
US-based company Pfizer is a large diversified pharmaceutical company with a large production base. The company’s structure has been built on a string of acquisitions over the past 20 years. Whilst it has a strong R&D-led portfolio it also has owned (rather than sub-contracted) production capabilities. Pfizer is also exposed to advanced immunotherapies that have something in common with mRNA vaccines. Its in-house facilities have been adapted to large-scale production; but only adapted, for the existing vaccine production at Pfizer is traditional live/dead vaccine products.
To develop the Covid-19 vaccine, Pfizer partnered with BioNTech. BioNTech, started by two biotechnologists, had some modest success in genomic therapies, giving them a platform to develop gene-based vaccine technology.
Pfizer/BioNTech’s production strategy is based on Pfizer’s large-scale centralised facilities in Europe and North America. This strategy is not unique, but Pfizer is one of few capable of producing such a sophisticated product at such a scale. One area of notable importance is purchasing of in-bound semi-finished product; what might be called ‘feed-stock’ such as the enzymes required to run the bio-reactors. It is very likely that Pfizer has an existing supply-base and purchasing leverage in this area to support large-scale production.
Meanwhile, AstraZeneca is the product of the merger between British chemicals company ICI and Astra, a middle-sized Swedish pharmaceutical company. AstraZeneca has focused on cutting-edge immunotherapy technology with a priority on R&D rather than the production of older molecule-based pharmaceuticals. Consequently, when AstraZeneca agreed a contract with Oxford University Jenner Institute’s commercial arm, Vaccitech, to produce what was an existing vaccine it lacked the manufacturing capacity to produce the product in volume. This meant that it needed to develop an out-sourced production capability at a global scale within a short timescale.
The manufacturing strategy for the AstraZeneca/Oxford was articulated by senior management at Vaccitech. The reason for using a partnership for the vaccine’s production was access to production resources. However, in the case of AstraZeneca the company did not possess many of the physical resources required. In effect, AstraZeneca was given the contract for contractual reasons and then had to implement an agreed policy of constructing a production network of sub-contractors including,
The use of sub-contractors granted the vaccine a more global reach than Pfizer/ BioNTech but resulted in a more complex supply chain.
Supply chain management has evolved considerably over the 20th century. New pharma supply chains resemble the ‘virtual’ networks of the high-tech sector, which have become commonplace over the past three decades. AstraZeneca is ahead of this evolutionary curve, using its agility to develop out-sourced production capacity for its vaccine. Meanwhile, Pfizer stills owns and operates most of its production capacity in-house. Though it has immediate access to resources, building scale has proven problematic.
Source: Transport Intelligence, February 25, 2021
Author: Transport Intelligence
This brief has been taken from a larger paper, ‘Vaccines: Supply Chain Management in the 21st Century’ written by Ti Insight’s Chief Analyst, Thomas Cullen. The paper is available to GSCi subscribers. Each week, Ti’s team of senior analysts and industry experts deliver analysis covering the latest logistics and supply chain trends exclusively to users of GSCi.