Cli­mate change: more than a gen­eric risk for pharma?

India became the phar­macy of the world by sup­ply­ing afford­able medi­cines to more than 200 coun­tries, dom­in­at­ing the global mar­ket for gen­eric drugs and pro­du­cing a large share of the world’s vac­cines. This suc­cess rests on an assump­tion so basic that it is rarely dis­cussed. Indian firms have shown that drug for­mu­la­tions can be made, stored and trans­por­ted under tightly con­trolled con­di­tions without fail. But as cli­mate change turns heat­waves, floods and extreme rain­fall more fre­quent, this assump­tion is becom­ing harder to sus­tain.
The risks extend far bey­ond dam­aged build­ings or delayed deliv­er­ies. They strike at the reli­ab­il­ity on which India’s phar­ma­ceut­ical industry has built its repu­ta­tion. It also comes at an uncom­fort­able time. Indian drug­makers are under greater scru­tiny from over­seas reg­u­lat­ors over qual­ity and com­pli­ance, while US tar­iffs pose another threat.
Cli­mate change adds another layer of oper­a­tional risk. While it may not cause an imme­di­ate crisis for the sec­tor, it threatens to make an already com­plex man­u­fac­tur­ing busi­ness more vul­ner­able to dis­rup­tions that will get more fre­quent and less pre­dict­able.
Mod­ern drug man­u­fac­tur­ing depends on far more than skilled work­ers and soph­ist­ic­ated equip­ment. Factor­ies require unin­ter­rup­ted elec­tri­city, large volumes of pur­i­fied water, stable tem­per­at­ures, reli­able trans­port and care­fully con­trolled stor­age con­di­tions. The stand­ards that gov­ern pharma pro­duc­tion leave little room for error because even minor devi­ations can affect product qual­ity and safety. Recog­niz­ing these needs, the gov­ern­ment’s Bulk Drug Parks scheme includes com­mon infra­struc­ture such as ded­ic­ated power sys­tems, water sup­ply, cool­ing net­works, ware­houses, storm­wa­ter drain­age and advanced test­ing facil­it­ies aimed at man­u­fac­tur­ing resi­li­ence.
Cli­mate change threatens each of these found­a­tions. India is see­ing longer and more intense heat­waves, heav­ier down­pours and more fre­quent flood­ing, trends that are expec­ted to worsen as tem­per­at­ures rise.
Heat­waves increase cool­ing require­ments for factor­ies and ware­houses, while pla­cing greater strain on elec­tri­city sup­ply. Water scarcity can dis­rupt pro­duc­tion in an industry where it is essen­tial throughout the man­u­fac­tur­ing pro­cess. Floods can cut off indus­trial clusters, delay ship­ments of act­ive pharma ingredi­ents and fin­ished medi­cines, and inter­rupt exports. Even short dis­rup­tions can ripple through highly reg­u­lated sup­ply chains where pro­duc­tion sched­ules, test­ing and deliv­ery timelines are tightly linked. A delayed ship­ment of raw mater­i­als or a pro­longed power out­age could put cus­tom­ers and health­care sys­tems in trouble.
The industry’s geo­graphy increases its expos­ure. Major pharma clusters are con­cen­trated in Gujarat, Andhra Pra­desh, Maha­rashtra, Tel­an­gana, Tamil Nadu and Himachal Pra­desh. These states are already see­ing rising heat stress, erratic rain­fall, floods or water short­ages. The indus­trial eco­sys­tems that helped India become a phar­ma­ceut­ical leader now face grow­ing cli­mate pres­sures.
The chal­lenge will become greater as the industry shifts towards higher-value products. Vac­cines, bio­lo­gics and many spe­cialty medi­cines require strict tem­per­at­ure con­trol from fact­ory to patient.
Main­tain­ing an unbroken cold chain is not simply a mat­ter of effi­ciency. It is essen­tial for product qual­ity and safety. As tem­per­at­ures rise, refri­ger­a­tion sys­tems con­sume more energy and become more vul­ner­able to power fail­ures and equip­ment stress. The World Bank has warned that strength­en­ing cli­mate-resi­li­ent cool­ing and refri­ger­a­tion is crit­ical for sev­eral sec­tors, includ­ing phar­ma­ceut­ical trans­port.
However, cli­mate resi­li­ence receives far less atten­tion than pro­duc­tion incent­ives, export tar­gets or research spend­ing. Indus­trial policy is rightly focused on expand­ing local man­u­fac­tur­ing through ini­ti­at­ives such as pro­duc­tion-linked incent­ives and bulk drug parks. But the next phase of com­pet­it­ive­ness may depend less on how many factor­ies India builds than on how well they with­stand less pre­dict­able cli­matic con­di­tions.
Investors, mul­tina­tional buy­ers and reg­u­lat­ors are pay­ing increas­ing atten­tion to sup­ply-chain resi­li­ence. Com­pan­ies that can­not
India must focus on pro­duc­tion reli­ab­il­ity in the face of cli­mate risks to a sec­tor that can’t afford dis­rup­tions
demon­strate oper­a­tional con­tinu­ity dur­ing cli­mate shocks could find them­selves at a dis­ad­vant­age in an increas­ingly risk-con­scious global mar­ket.
This calls for a dif­fer­ent way of think­ing about cli­mate adapt­a­tion. It is not another envir­on­mental com­pli­ance exer­cise or a cor­por­ate sus­tain­ab­il­ity pro­gramme. It is risk man­age­ment. It calls for pro­tect­ing medi­cine man­u­fac­tur­ing facil­it­ies from flood­ing, secur­ing depend­able water and power sup­plies, strength­en­ing cold chains, design­ing logist­ics that can cope with extreme weather and incor­por­at­ing cli­mate risk into decisions about where future pharma invest­ments are made. Cli­mate resi­li­ence should become part of the industry’s defin­i­tion of man­u­fac­tur­ing excel­lence rather than an after­thought once new factor­ies are built.
For years, India’s pharma industry has com­peted on cost, scale and reli­ab­il­ity. Costs can be reduced. Capa­city can be expan­ded. But reli­ab­il­ity is harder to rebuild once con­fid­ence is shaken. Cli­mate change is mak­ing that reli­ab­il­ity increas­ingly dif­fi­cult to guar­an­tee. The greatest threat may not be a single cata­strophic event, but the steady accu­mu­la­tion of dis­rup­tions that slowly weak­ens the trust on which the phar­macy of the world ulti­mately depends.
Source: Pressreader