Vaccine Supply Chains Bend But Don't Break
Vaccine Supply Chains Bend But Don't Break
It’s been one terrible year, but it’s worth taking a moment to appreciate how corporate America has risen to the challenges of the moment — especially when it comes to manufacturing and transporting essentials like vaccines. Supply chains have been tested in ways they never have been before and, yes, there have been pileups, shortages and other snafus. By and large, though, companies have figured it out and kept moving, at times under impossible circumstances.
Shares of Pfizer Inc. fell on Thursday after the Wall Street Journal reported the company would deliver only 50 million doses of its vaccine this year, half as many as initially targeted, because of supply-chain logjams. It took longer than expected to source the necessary raw materials in large quantities, Pfizer said, while also noting that its clinical trial of the vaccine concluded later than first planned. The company has been indicating for weeks that the initial rollout would be scaled back, based on November news releases, but given current anxiety levels and the consequences of each passing day of the pandemic, this headline understandably put people on edge. I actually found it encouraging in a way.
Obviously, we would all like to see a vaccine distributed in as many doses as possible, as quickly as possible. But considering pharmaceutical companies typically wait to set up supply chains and factory lines until after a vaccine is approved, the fact that Pfizer was able to cobble together the infrastructure to deliver any vaccines at all this year is an incredible feat. Not to mention, neither Pfizer nor any other drugmaker has ever developed a vaccine on this scale using messenger RNA technology that instructs the body’s cells to create virus proteins. On Friday, BioNTech SE, Pfizer’s partner on the vaccine, said the companies had already made most of the 50 million doses, a testament to the manufacturing prowess of its supply chain. The companies expect to make up this year’s shortfall — relative to initial targets — as production of the vaccine ramps up, and are on track to distribute at least 1.3 billion doses in 2021.
The government is aiming for Pfizer to begin shipping the vaccine within 24 hours of receiving US Food and Drug Administration approval, Vice President Mike Pence and Health Secretary Alex Azar said at a press conference this week. Pfizer will do so directly with FedEx Corp. as part of the Operation Warp Speed program to accelerate distribution of vaccines. FedEx rival United Parcel Service Inc., which historically has operated a bigger pharmaceutical shipping business, will also play a key role in the rollout. The news this week that UPS is limiting pickups at certain retailers to ease congestion should be viewed in that context.
Logistics data-analytics company ShipMatrix estimates a surplus of 7 million packages per day this peak season relative to the actual capacity of the parcel-delivery industry. That’s before factoring in vaccine shipments, which will inevitably displace some e-commerce orders. UPS’s efforts to meter the flow of boxes into its network therefore isn't a flaw in the system; it’s a feature and a reflection of the company’s billions of dollars of investments in automation and software to help it more profitably handle the deluge of e-commerce shipments. Even with all of the demands on their networks right now from the pandemic-fueled surge in e-commerce orders, UPS and FedEx are handling this peak season amazingly well so far. For the third week of November, FedEx delivered 96.6% of its packages on time, while UPS delivered 96.9%, according to Satish Jindel, president and founder of ShipMatrix. That should instill some confidence in their ability to get vaccines from point A to point B.
UPS and FedEx are only one part of the logistics equation, though. Much of the final legwork will fall to pharmacies, whose trained medical professionals will be responsible for poking millions of arms with the vaccine, including the first wave of recipients at long-term care facilities. Thankfully, this is something they have experience with. So far this year, CVS Health Corp. has held flu-shot clinics at more than 8,000 long-term care facilities across the country, Chris Cox, a senior vice president at the company and its liaison to Warp Speed, said in an interview. There are unique features to the coronavirus vaccines under development, but CVS is drawing on this know-how.
The company will ultimately administer shots at more than 30,000 elder-care facilities as part of a program coordinated by the US government. CVS has selected about 1,000 of its existing pharmacies (which were chosen based on their geographical proximity to long-term care facilities) to serve as hubs for vaccine warehousing, Cox said. CVS’s past experience with administering vaccinations means it already has certain cold-storage infrastructure in place, a must for the leading coronavirus candidates. CVS will transport the shots from the hubs using specially-made cooling containers manufactured by AeroSafe Global.
Once the vaccine is more widely available, CVS will link its vaccine inventory management system with its software that tracks patient appointments to ensure that each individual gets two doses of the same vaccine, he said. You wouldn’t want to get one dose of the Pfizer vaccine and a second of Moderna Inc.’s, for example. CVS will use the same messaging system it deploys for prescription pick-up reminders to prompt customers to come back for their second shot. These are the kinds of things the average person isn’t thinking about right now, but these little logistical details matter a great deal.
This is not to say the back-end preparation for a vaccine rollout has been an easy process. Raw-material suppliers, logistics companies and pharmacies have had to come up with comprehensive plans despite a myriad of uncertainties, including but not limited to: knowing which, if any, of the vaccines under consideration might ultimately be approved; adjusting to shifting perspectives on who should receive inoculations first; managing through a patchwork of different plans, budgets and launch dates by the 50 individual states; and ensuring their own workers are protected during this process. There may yet be hiccups and snags, but I for one am comforted by the degree to which the private sector is on top of this process. These companies have a plan and in many ways are playing to their strengths and existing infrastructure.