A look back at the top disruptions to life sciences and healthcare supply chains in Q1 2024, including other key industry news from the quarter.
Top disruptions to Healthcare supply chains in Q1 2024
Q1 2024 saw 3850 supply chain disruption alerts in healthcare supply chains—a 40% increase year-over-year compared to Q1 of last year. Of the alerts, 2205 triggered a WarRoom, meaning these disruptions had a higher potential to impact businesses. WarRooms for life sciences saw an 18% increase Q1 year-over-year.
This data comes from Resilinc’s AI Monitoring system, EventWatchAI, which scans 104 million sources and sites worldwide to uncover potential supply chain disruptions. Once a disruption is found, EventWatchAI classifies the disruption into one of 50 different event types and alerts customers with the next steps they can take to mitigate risks.
Here’s a look at the top five disruption types in life sciences in Q1 2024:
- Factory Fire
- Labor Disruption
- Mergers and Acquisitions
- Factory Disruptions
- Leadership transitions.
Factory fires and factory disruptions
Factory fires are consistently a top supply chain disruption across multiple industries. Although these events are often small, they are frequent and can lead to trickle-down delays throughout the supply chain. The biggest drivers of factory fires are gaps in regulatory and process execution, as well as shortages of skilled labor in warehouses. Learn more in this report, Factory Fires: The Top Supply Chain Disruption.
Labor disruption: Life Sciences layoffs in 2024
Across all industries, labor disruptions saw a staggering 91% year-over-year increase in 2023. From weeks-long UAW strikes to major layoffs at tech giants like Google and Amazon, labor disruptions such as strikes, shortages, stoppages, and layoffs caused significant disruptions last year. Life sciences was no different, with the trend continuing into 2024.
Major companies that have already performed layoffs this year include Pfizer, Thermo Fisher Scientific, Sanofi, Catalent, and GSK. For Q1 this year, the Fierce Biotech Layoff Tracker reported 58 layoffs; for 2023 the tracker clocked 187 total layoffs—claiming at least 10,000 jobs.
M&As and leadership transitions
The increase in operational changes such as mergers and acquisitions and leadership transitions may be largely responsible for most life sciences layoffs. From January to February, operational restructuring fueled 45 layoff announcements, according to Drug Discovery and Development. Other causes of layoffs also included funding challenges and project restructuring.
Craig Fix, Resilinc’s Director of Customer Success, shared in a Q&A, “For Life Sciences, 80% of the pain point areas we see come from business transitions (mergers and acquisitions, business sales, and senior leadership changes)…” Here’s a look at some of the biggest M&As for healthcare supply chains so far this year:
- January 2024 – Swiss multinational company, Roche, acquired Carmot Therapeutics for $2.7 billion. Bristol Myers Squibb closed a $4.8 billion acquisition of Mirati Therapeutics.
- February 2024 – Novo Nordisk, a Danish multinational pharmaceutical company, announced a $16.5 billion purchase agreement for Catalent.
- March 2024 – Novo Nordisk to acquire Cardior Pharmaceuticals, valued at around $1.1 billion. Bristol Myers Squibb closed a $14 billion takeover of Karuna Therapeutics.
Drug shortages in Healthcare supply chains
Drug shortages continue to plague the life sciences industry, with drug shortages reaching an all-time high in the US. During the first three months of 2024, there were 323 active medication shortages, according to the American Society of Health-System Pharmacists (ASHP) and Utah Drug Information Service. The previous record was 320 shortages in 2014.
In March, the Biden administration created a new billion-dollar plan to tackle drug shortages for critical drugs for cancer and other diseases. The new plan calls for hospitals to pay more to ensure reliable supplies of high-quality medicines. It also outlines standards that hospitals should follow when purchasing medicine and generic drugs.
The plan, totaling $5.11 billion over the next 10 years, aims to address the lack of accountability in the supply chain and quell persistent drug shortages. In April, US health officials met with congressional leaders to discuss their vision. The 18-page plan suggests a federal program that rewards hospitals that purchase from reliable, diverse suppliers—and penalize those that don’t. If the plan comes to fruition, it may mean that life sciences companies will bear more responsibility for performing due diligence across their supply chains. Learn how industry experts are handling drug shortages in our podcast: Insights around drug shortages, production capacity and speed to market
New regulations for Ethylene Oxide Sterilization
In other big news, On April 9, the US Environmental Protection Agency (EPA) announced a final set of rules to reduce emissions of toxic air pollution from chemical plants, including Ethylene Oxide (EtO). Ethylene Oxide is a crucial chemical in the life sciences industry. It is used to sterilize over 50% of all sterile medical devices in the US, including approximately 95% of surgical kits.
If companies are unable to follow the new standards, this could result in facility shutdowns and widespread industry delays. Even before the final rules were released, in 2023, there were over $700M in jury awards and settlements for EtO litigation, mostly involving commercial sterilizers. Learn how to navigate these new regulations and avoid potential risks: Impact of Sterilization Regulations on the Life Sciences Industry
Want a deeper dive into life sciences and healthcare supply chains? Resilinc’s Life Sciences Spotlight report covers exclusive life sciences disruption data and industry analysis, with an in-depth look at risk trends and market drivers.
