UK needs ‘parallel supply chains’ for Covid second wave

29 July 2020

MPs have called on the government to investigate the benefits of ‘parallel supply chains’ for medicines and essential goods ahead of a possible second wave of coronavirus. 

In a report, the International Trade Committee said the pharmaceutical sector had been affected by “significant and distinctive shocks to both supply and demand” as a result of Covid-19. 

“On the supply side, there has been disruption to the manufacture of drugs, much of which takes place in India; and of their active pharmaceutical ingredients (APIs), which is substantially concentrated in China,” the report said. 

During an inquiry, looking into the impact on international trade and supply chain resilience throughout the pandemic, the committee found India was responsible for “virtually all” of the UK’s supply of paracetamol. 

MPs urged caution over ‘onshoring’ as a solution to Covid-19 supply chain vulnerabilities, warning that it may not be easy to achieve and could replace one vulnerability with another.

“It may have unintended consequences in respect of factors such as the price of goods and tit-for-tat actions by other countries,” the report said. 

It added supply chain vulnerabilities could be addressed instead by “a healthy stockpile of equipment and supplies” and a “diverse set of suppliers”.

The report called on the government to investigate the possible benefits of ‘parallel supply chains’ for medicines and other essential goods, including building “surge capacity” into UK-based production.

Having a portfolio of suppliers in geographical locations and “not having all our eggs in one or two baskets” was preferable, as was ensuring the manufacturing capacity to make critical drugs in the UK is there when necessary, the report said. 

“Companies within the UK that are maybe manufacturing 20% or 30% [of required supplies] and, when a crisis hits, those companies have the ability to flex their capacity and bring it up to 80% or 90% to meet the needs of the UK public,” the report suggested.

During the inquiry, international trade secretary Liz Truss became the first, and only, cabinet member to go on the record about the government’s investigation of supply-chain vulnerabilities, known as ‘Project Defend’. 

The committee added the government “must be as open as possible about how it is identifying issues of supply chain resilience arising from the pandemic and what measures it is considering as possible solutions”.

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