Drug API Sourcing: Managing Supply Chain Shipping Times

Port congestion is a major contributor to our current supply chain slowdown, and it is being exacerbated by staffing shortages. Coupled with a driver shortage in the U.S., bio/pharma supply chain professionals have been left unable to accurately forecast arrival times for raw materials.

Bio/Pharma Supply Chain Prediction #2,378: Accurately predicting the end of drug industry supply chain issues will continue to vex everyone!    

Despite the reduction in direct pandemic-related impacts, pharmaceutical supply chain issues continue – and will persist for another year or two.

Why?

The decline in interest in transport-crucial jobs, such as truck drivers, has not reversed—even with enticing salary increases. Based on the 2021 annual report from the International Road Transport Union (IRU), a review of 1,500 haulage companies spanning 25 countries identified 2.6 million unfilled job posts for truck drivers. In China, a 9% increase in open jobs was expected in 2022. In the U.S., there were 84,000 vacant trucking posts.

The efficient flow of shipments that the industry experienced prior to 2020 has not returned – and may remain elusive indefinitely. According to the World Economic Forum, materials shipped from China to the U.S. that used to arrive in around 40 days now require 70 or more days.

Most active pharmaceutical ingredients (APIs) are not sourced in the U.S. India and China continue to be the main API producers, collectively accounting for 31% of FDA-registered API-manufacturing facilities. In Europe, dependence on foreign sources is even higher: the Environmental Financial Consulting Group (EFCG) has estimated that China and India produce at least 80% of the substances used to make pharmaceutical products available there.

Many challenges have resulted from this supply chain interdependence. India remains dependent on China for about 70% of its generic drug ingredients. An issue in one supply chain location will likely cause problems in others. Shipment delays and disruptions now occur frequently, making it crucial for bio/pharma companies to strategically plan ahead in order to avoid ingredient shortages.

Industry leaders are aware that shipments take longer than they did pre-2020. According to the Business Continuity Institute, 4.8% of companies experienced supply chain disruptions in 2019. However, the number rose to 27.8% in 2020.

As we head deeper into 2023, transport times have improved by a few days – but they are certainly not comparable to pre-Covid expectations. And more than likely, the delays will persist for another year or two.

To ensure that all necessary ingredients are on hand when they are needed, companies need a suitable plan B. A single delay could disrupt the entire supply chain and yield significant unexpected costs.

The decline in interest in transport-crucial jobs, such as truck drivers, has not reversed—even with enticing salary increases. Based on the 2021 annual report from the International Road Transport Union (IRU), a review of 1,500 haulage companies spanning 25 countries identified 2.6 million unfilled job posts for truck drivers. In China, a 9% increase in open jobs was expected in 2022. In the U.S., there were 84,000 vacant trucking posts.Key Time Considerations for Sea Shipments

Port congestion is a major contributor to our current supply chain slowdown, and it is being exacerbated by staffing shortages. Coupled with a driver shortage in the U.S., bio/pharma supply chain professionals have been left unable to accurately forecast arrival times for raw materials.

Because shipping and transportation have become the primary bottlenecks facing most drugmakers, taking time allocations of shipments into consideration is paramount. Here are a few timeframes that we keep in mind for effective planning:

  • Average time from port arrival until departure.
    Once a shipment arrives in the port, it is typically there for 15.5 days.
  • Average time from port arrival until receipt at the warehouse.
    After material arrives at the port, it should reach the warehouse in approximately 19.5 days.
  • Average shipment time from China to the United States.
    When a shipment is sent to the United States via sea from China, we can expect the transport to take about 66 days.
  • Average shipment time from India to the United States.
    Shipments from India to the U.S. currently require about 50 days.

Avoiding Shipment-related Disruptions

Approximately 25% of organizations that experience disruptions fail to analyze their supply chain to determine the disruptions’ cause. This lack of analysis increases as company size decreases. Smaller organizations are less likely to perform appropriate supply chain analysis, largely due to lack of available resources.

Just in Time manufacturing doesn’t work the way it used to. There are multiple strategies that companies can employ to reduce their risk of a supply chain delay. You can:

  • Expand your supplier network. Reliance on one or several suppliers in a particular location can introduce vulnerabilities. Smart organizations are choosing not to put all their eggs in one basket. They are expanding their sourcing network by qualifying backups before problems arise.
  • Keep extra inventory on hand. Maintaining a stockpile that exceeds current orders can help ensure that shipment delays and supplier issues don’t affect timeliness goals.
  • Improve supply chain transparency. The global nature of supply chains can cause opacities that increase risk. Visibility is key to evaluating and circumventing potential issues. The quality of information shared freely among partnering companies benefits all organizations involved.
  • Plan ahead. Planning ahead is crucial to avoid last-minute orders. Orders placed a month or two in advance are more likely to fill and reach the desired destination on time (or early) – even if an unexpected event occurs.

Approximately 25% of organizations that experience disruptions fail to analyze their supply chain to determine the disruptions’ cause. This lack of analysis increases as company size decreases. Smaller organizations are less likely to perform appropriate supply chain analysis, largely due to lack of available resources.We realize that unforeseen issues don’t necessarily originate with the supplier. They may come from the ordering client. If a company changes its request from 50 kg of an API to 500 kg, the unexpected increase may require additional time for preparation.

The increase in an order’s volume may not be problematic in itself, but if the company has unmitigated concerns that delay order placement (for instance, potential vulnerability from an API that is still under patent) the order delay may result in a supply chain delay.

This played out with one client who failed to perform appropriate planning, but drastically changed the volume of an order. Insufficient time had been allocated to a legal review of an API’s patent submission. Combined with a massive increase in volume, the order was delayed – impacting their time to market…and their period of exclusivity. Better planning (and earlier IP review, in this case) would have avoided such delays.

LGM maintains favorable relationships with manufacturers across the globe, enabling supply chain transparency that offers a realistic snapshot of lead times. We use the information to plan ahead and ensure materials are distributed to our clients as efficiently as possible.

Even when taking known delays into consideration, there are steps that can be taken to expedite shipments. At LGM, we don’t just sit and wait for shipment arrivals. We remain thoroughly involved, communicating with all relevant parties to ensure the accuracy and timeliness of all shipment-related paperwork. We file all the required documents while the shipment is still en route, facilitating regulatory clearance from customs, the Food and Drug Administration (FDA), the United States Department of Agriculture (USDA), and other relevant governing agencies.

Regardless of the new shipping time developments on the horizon, LGM is remaining vigilant, proactively adapting with strategic planning to help our partners avoid delays and on track

Have questions about supply chain timelines for your next project? Let’s discuss them! Contact us here.

 

Learn more about supply chain management at LGM Pharma.

LGM Pharma > Strategic Sourcing
Reduce supply chain cost and risk with API sourcing from LGM.

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