For well over two decades the entire world relied almost exclusively on China for its every healthcare procurement need, given the Asian giant’s sheer manufacturing capabilities, cost advantage and dependability, all of which resulting in a nicely humming global supply chain scenario.
With pioneering European and US technology companies moving their entire production facilities to China in the name of cost efficiency, China had a good thing going - for long. Realising how lucrative it was to be the world’s leading manufacturing base, China also greatly enhanced its manufacturing capabilities, quality and more, making it irresistible to the $105 billion global healthcare procurement sector.
Best laid plans...
When the COVID-19 pandemic first broke out in Wuhan early this year, all hell broke loose within the global healthcare procurement system as the Chinese authorities shuttered all production facilities across the country to mitigate the spread of the deadly disease.
Then, with spiralling COVID-19 cases in dozens of countries requiring urgent delivery of vitally needed healthcare supplies - including medical consumables and disposables, bulk drugs and the like - attention swung solely to China to deliver the goods, with governments battling each other and even poaching scare medical supplies from the few Chinese companies that still had stocks to sell.
In the blink of an eye, the pandemic exposed to medical policymakers just how overly dependent the global healthcare procurement system was on China, even as media headlines around the world proclaimed glaring shortages of face masks, PPE (Personal Protective Equipment) for frontline workers, penicillin, antibiotics, painkillers and other bulk drugs.
And the alarm bells kept on ringing for months, as the manufacturing base was kept in lockdown, with no new production of much-needed healthcare supplies smoothly entering the global supply chain as it used to for years.
As supply-demand problems for medical supplies persisted, and as China remained largely locked down, policymakers of forward-thinking countries, including the UAE, initiated and ramped up their own healthcare supplies’ manufacturing capabilities from not knowing for how long China would be unable to meet their mass requirements.
It soon dawned on countries that they had to be self-sufficient with their healthcare procurement systems and could no longer rely only on China to meet their requirements during the pandemic or a future catastrophe.
Even though concerns such as economies of scale creep up, a small number of countries, such as Indonesia and Malaysia, are quickly emerging as key alterative healthcare production suppliers to meet global demand.
In the past, Indonesia and Malaysia operated limited healthcare supplies’ production facilities, but, with the onset of COVID-19, they have enhanced production, especially with medical consumables and disposals.
At one point, there was a global shortage of medical ventilators, the bulk of which were being produced in China. But then, countries such as Germany, ramped up their own production of ventilators when supplies dried up at the height of the pandemic.
Similar to what it has achieved with enhancing its food security, it must be noted that the UAE has also expressed interest and is already making strides in its own healthcare supplies’ manufacturing capabilities, with Abu Dhabi now producing high-quality face masks. The country also has huge potential in attracting big pharma, as well as medical consumables and disposables production.
In this context, Ras Al Khaimah is also looking at making the emirate a major production hub for big pharma, medical equipment and consumables.
If the COVID-19 pandemic has taught us anything, it is not to rely on any one country in any one part of the world for medical supplies. Look for and establish alternative production facilities scattered across the globe and also the need to be self-sufficient, as much as possible.
In this regard, global names such as Siemens, which have dedicated healthcare manufacturing facilities in China need to rethink their strategies, to avoid unprecedented supply-chain stoppages.
At the end of the day, one cannot eliminate China from the big picture because it will always remain the number one producer through sheer economies of scale it offers.
But yes, the pandemic has put the global healthcare supplies procurement system under the microscope, with several important takeaways that need immediate acting upon and before a new and unprecedented global supply chain meltdown scenario suddenly unfolds.
- Dr. Raza Siddiqui is Executive Director, RAK Hospital.