THE PROMPT

The Covid-19 epidemic has shown the lack of ‘corporate immunity’ of the pharmaceutical industry to systemic risk. Most companies globalized their business models to access new markets and reduce production costs, but doing so inevitably increased the fragmentation of their value chains across geographies – thereby amplifying firms’ exposure to global shocks and their supply-chain dependence on Asian countries. This situation has significantly raised the risk of drug shortages in western markets during the Covid-19 outbreak. This intriguing strategic dilemma has been exacerbated by the fact that European governments have recently urged pharmaceutical companies to repatriate production to help reestablish national sovereignty.

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Select a pharmaceutical company and propose whether it should change its supply chain strategy over the next 5 years given the business challenges highlighted, and politics changed, by the Covid-19 crisis. If not, why? If so, why and what changes would you recommend?