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March 31, 2022

Impact of COVID-19 on the drug supply chain: Adapting to the new normal

The COVID-19 pandemic is an unprecedented challenge in the modern era, with over 40 million reported cases and a million deaths across the world, the pandemic is here to stay. It is not only global health that is a concern, COVID-19 could potentially impact the survival and sustainability of companies. Globally, we are currently experiencing another wave of COVID-19. This means that we face the growing prospect of dealing with another challenge in businesses and organisations.

Demand for essential drugs has been on rise, with companies aiming to maximise their production capacity, and increasing their business avenues in many parts of the world. This is especially true in South Asia where the use of traditional medicine has been a huge success in limiting the spread of the disease in the community. Sri Lanka is no exception; the country boasts one of the largest collections of herbal plantations used to improve the immune system response against virulent disease.

Our organisation has been one of the chief suppliers of traditional medicine for combatting diseases; over 37% of the company’s profit was generated from the drug manufacturing unit (DMU) for the year of 2019 and the first quarter of 2020. With the increasing demands, we expected to surpass the 50% profit margin from drugs for the year. However, with the prevailing conditions this target appears beyond the reach of the organisation. Based on our initial findings, the biggest challenge for the drug manufacturing and production units will be meeting suppliers’ demand.

Where we are now

Workplaces and organisations have been forced into adopting alternative working patterns, a paradigm shift that was triggered by the COVID-19 pandemic. A number of businesses have been pushed into a world of uncertainty, where the survival of the company has to be the primary focus and all other plans must take a back seat. During these times, leaders are the vital component that holds everyone together, from the  investors to the employees. A level head, a clear plan, and a sense of optimism need to radiate from the organisation’s leader to help put the company on the right track towards being successful.

The impact of the pandemic on businesses cannot be underestimated; most employees in an organisation have been extremely limited in their work roles, with hardly sufficient income being generated over the past six months. However, the organisation has been able to break-even due to the drug manufacturing supply chain unit. Demand for traditional medicines rose by nearly 200% between May and September, as partners and stakeholders have invested large amounts into receiving these alternative medicines. With a possibility of a second wave of COVID in the country, the CEO of the organisation needs to make decisions that will ensure we can meet our suppliers’ demand, and make a profit.

Impact of COVID-19 on drug supply chain

The drug supply chain unit has been one of the most profitable departments in the organisation in recent years, with nearly a third of the company profits being generated by the drug manufacturing unit (DMU). As a result of the pandemic, the number of orders for drugs this year alone has increased by 41.1% in comparison to 2019. Increasing supply-demand results in a need for more resources across all areas, from staffing to obtaining goods to be able to meet demand. One potential major problem is the shortage of the raw materials – the herbs and other plants – required to manufacture the drugs; competition in the market has significantly increased with several other reputable organisations also producing herbal medicines.

This has led to panic buying among organisations. When taken in conjunction with the travel restrictions being imposed around the country, limited availability of goods drives the price of the plants even higher. The machinery and tools are a fundamental aspect of designing drugs, and these require calibration. External quality assurance officers come for monthly inspections, although with the pandemic, this process has been transferred to be a internal quality assurance audit as a total quality management (TQM) process. However, for this process external staffing is still required to carry out the testing and reporting work, as currently there is a shortage of staff in the unit. A large majority of the available employees are working overtime to meet current deadlines.

Leadership during a time of uncertainty

A purpose driven approach has been adopted by most companies to survive this uncertain period. The World Trade Organization (WTO) report for 2020 suggests a significant drop in GDP of 4-5% was due to the pandemic, and has the potential to significantly affect the low-middle income countries such as Sri Lanka. Over time, evidence suggests that leadership theories and approaches have evolved to adapt to the needs of globalisation and market requirements, with contingency and behaviour theory being widely used in the recent past. The main challenge as the leader of the organisation is to manage available resources and guide all stakeholders in the organisation towards a single goal. To achieve this, a top-down leadership approach is required to make bold decisions within the organisation.

As an organisation, we can adapt to this approach by implementing a transformational leadership style that promotes employee creativity. This way we can become accustomed to the situational changes that occur as a result of the pandemic. Transformational leadership also follows the social identity theory approach of creating networks among employees, building the trust and confidence which motivates employees to follow the leader’s path. In terms of strategic planning, the leader also needs to build a sustainable contingency plan that provides an environment for the organisation to relaunch their activities to increase profits. A short term business continuity plan should aim for an initial U-shaped recovery, as the main goal is to survive and sustain, and try to build on a V-shaped recovery over time. However, in order for all stakeholders to trust in the process and leadership skills demonstrated, the leader needs to make decisive decisions that prioritise the health and well-being of employees over profitability.

Solutions to handle the challenges

The organisation has been following a corporate governance structure over the past decade, and has been successful in setting out policies for all stakeholders to comply with, understanding the corporate social performance management and ethics. To adapt to the ‘new normal’ of business, sustainable strategies such as the sustainable business model innovation (SBMI) should be implemented within the organisation. SBMI focuses on tackling issues and providing solutions for a long-term sustainability and business continuity plans (BCP), which are one of our key challenges in the organisation.

Human resource management (HRM) is the next challenge that needs to be addressed immediately, with the main concern being the staff allocation for the DMU. Resource allocation needs to be managed to ensure that we meet demand, and so the main priority for the organisation should be to identify staff that meet the required criteria for DMU. Recruiting new staff may well be challenging during the pandemic. As such, the organisation needs to manage their current employees, and provide them with adequate training to adapt to the new safety measures.

The availability of products and machinery for drug manufacturing is another main concern, with the price inflation and restrictions imposed along with travel bans, having an outsourcing company outside the city will help product manufacture at a competitive price point. Drug supply is an essential service; by obtaining permission from the respective authorities we can transport the drugs, which should mitigate potential limitations in drug supply. The health and wellbeing of the employees is an essential component in the new normal, with work from home now being a common phenomenon. The organisation will need to be flexible and provide options for the staff to decide on their preferred working environment, and understand the consequences of handling both work and household activities in mind.

Conclusion

The current pandemic has disrupted the workflow of several organisations across the world, and leaders of these organisation face one of their biggest challenges in leading and managing available organisational resources. To deal with the situation, as a CEO, the ways of steering the organisation towards being sustainable in the long run need to be evaluated. This report focuses on identifying ways a leader can approach the new normal and manage their available resources.

Recommendations

As an organisation, the main task will be to adapt to the new normal and build contingency plans for the short term, while keeping in mind the longevity of the pandemic. Ensuring proper training is provided to all employees in the organisation to adapt to the health and safety requirements and online working possibilities is also important. It is a good time to invest in training current employees, with a focus on improving the use of digital technology and online tools which can be used for the organisation, eg, artificial intelligence, drug designing tools, drug bank database. Leaders also need to create a work culture at home for employees by providing them with necessary equipment to set up their own working space, thus preventing disruptions caused by work from home. The final point is to build a green leadership strategy in the organisation to increase the social responsibility of the employees in protecting the environment and its surrounding.

References

Dawson, A, Isaacs, D, Jansen, M, et al (2020) An ethics framework for making resource allocation decisions within clinical care: Responding to COVID-19, Journal of bioethical inquiry, Springer, pp. 1–7.

Khattak, M N, Zolin, R, and Muhammad, N, (2020) Linking transformational leadership and continuous improvement. Management Research Review, Emerald Publishing Limited.

Shakeel, J, Mardani, A, Chofreh, A G, et al, (2020) Anatomy of sustainable business model innovation, Journal of Cleaner Production, Elsevier, p. 121201.

Wignaraja, K, (2020) Six leadership lessons from COVID-19, UNDP Blog, [online] Available from: www.undp.org/content/undp/en/home/blog/2020/six-leadership-lessons-from-covid-19.html (Accessed 25 October 2020).

Written By

Fahim Aslam

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