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COVID-19: Q&A on the supply chain for PPE and critical medical supplies and equipment

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March 22, 2020

HRI spoke with PwC partners and directors Dave Powell, James O’Keefe, Kevin Lewis, Kareem Elwakil, Sam Venugopal and Vitaly Glozman about the supply chain for personal protective equipment (PPE) and other critical medical supplies and equipment, as well as the opportunities and challenges manufacturers face in scaling up in response to the unprecedented demand generated by COVID-19. [Note, this information was last edited on March 22, 2020.]

PwC Health Research Institute (HRI):

What are the risks and opportunities to scale up manufacturing operations for critical products during this difficult period?

Dave Powell, Senior Partner, Strategy

We have an unprecedented spike in demand combined with a drain on capacity. This confluence creates the perfect storm that leads to debilitating unmet demand. Consequently, “trying harder” is grossly inadequate. We need to embrace different and creative approaches today.

Most companies’ first inclination is to chase rational and irrational demand, which could generate compelling returns yet at the same time drive them into insolvency. Finding the balance between responding to immediate needs arising from the COVID-19 crisis while being mindful of the need to ensure sustainable success is a necessity.  

Consumers and our healthcare system are directly competing as the demands on the supply chains that serve each of them eventually come together upstream. This demand profile will eventually return to steady state.

When and how fast it returns (or finds a new equilibrium point) is unknown—but clearly there will be a significant gap from today’s demand versus steady state.

The ways and the extent to which medical device/product manufacturers partner, invest, make trade-offs, variabilize their cost structure and work differently will be the difference between success and failure.

HRI: Why should companies support the demand surge if it may stall out quickly?

Dave Powell: A manufacturer’s response is a matter of fulfilling their societal commitment and of the critical public health need. At the end of the day, businesses care about people and they want to do their part to address this crisis and, at the same time, generate financial benefits.

Both societal interest and financial interest can and should coexist. The financial interest may come from improved competitive positioning, recapitalizing production assets and/or discovering new ways of partnering and operating more productively.

HRI: With these medically necessary products, how has COVID-19 affected the supply chain in the US for the finished products and raw materials?

James O’Keefe, Director

There are several potential ways that COVID-19 is going to impact availability of materials. As states increasingly mandate residents to stay at home, during the subsequent period, production throughout the medical device value chain will be impacted.

As mentioned above, a subset of value chain players will face financial challenges. President Trump has invoked the Defense Production Act, which in part makes funds available for essential products.

Manufacturers and suppliers are trying to understand how they can tap into that for short-term loans to invest for continuity in supply. Then there’s a fundamental risk when we think about the uncertainty of direct material input availability.

As has been widely documented in the media, the production of N95 masks is being hampered by the availability of melt-blown, nonwoven fabric. It is important to note that the medical products community competes with the consumer goods industry for this melt-blown nonwoven fabric in that it is a key input into products such as diapers and sanitary napkins.

HRI: Can bottlenecks be relieved by relaxing product specification requirements?

James O’Keefe: It depends on the product and regulatory requirements. If materials from approved suppliers are not available, companies will have to search for alternate sources of these inputs and/or alternative direct materials with comparable performance.

However, any changes will require manufacturers to work in concert with the regulatory bodies to gain approval before any changes to product, process and/or suppliers are enacted.

Internally, manufacturers and the upstream suppliers need to step up R&D and engineering efforts coupled with rapid testing to learn what they could substitute and tap into those comparable products. Ultimately, close collaboration with FDA and other regulatory bodies is imperative to starting up, expediting and expanding critical material flow.

Dave Powell: Also, depending on the product, you could be dealing with more than the FDA. For a client working to scale up, an EPA approval might be initially sufficient as they’re trying to navigate the regulatory environment to determine where there may be opportunities or needs for procedural relaxation.

HRI: Are raw materials for essential products being prioritized?

James O’Keefe: Yes, but the shift is just beginning now. At a macro level, the medical device community is competing with other industries for raw materials. Both companies within the traditional medical device industry and companies with idled production are responding to the call to action on products like masks and ventilators. However, shortages will likely occur for other products as the COVID-19 crisis continues.

Vitaly Glozman, Partner, Pharmaceutical and Life Sciences Operations

For most critical products such as masks and ventilators, you need to have a real understanding of “farm to table” in terms of what those components are. It’s critical to understand all the actors in that supply chain, what role they play, what materials they provided, and what type of challenges they face now and in the near future.

Ultimately, one weak point of supply in an otherwise well-managed and integrated supply chain can bring the whole product output to a standstill, impacting both your business and the health of patients depending on your products.

Once there’s that understanding, manufacturers must closely collaborate with their suppliers and protect the supply like precious jewels.

HRI: Another important element in the supply chain is the employees and facilities. How do we think about keeping these workers and facilities safe amid  an infectious disease pandemic?

Kevin Lewis, Principal, Medical Device Operations Advisory

We are geared in manufacturing to be highly interactive, working on assembly lines and in meetings together. So this mindset of protecting people from illness and isolating people as much as possible is contrary to the way we normally run a manufacturing facility.

For many medical devices, we operate in clean rooms that are a safe environment but can’t operate without violating social distancing guidelines. In these rooms, operators also wear masks, gloves, and smocks or gowns.

But we have to figure out what is acceptable protection gear for this virus, how we test people for possible symptoms, how to isolate all or some of our staff, and how to keep shifts isolated so we don’t cross-contaminate operators across shifts if an infection occurs.

HRI: If employees get sick, is there workforce redundancy in these facilities?

Kevin Lewis: If our products are really critical to the crisis supplies, like ventilators, then manufacturers need to start thinking about having a contingent workforce who are at least body temperature monitored or quarantined for a 14-day period in advance where the contingent workforce can also be trained as a backup in the event you lose one of your shifts to the infection.

Manufacturers must also update their cleaning procedures to ensure a fast turnaround to bring the uncontaminated equipment back online.

Kareem Elwakil, Director, Medical Device Quality, Advisory

Ramp-up is usually more challenging for quality and testing positions, because these folks tend to need more expertise and product knowledge. So given the talent shortage, companies may need to move people up the chain to create openings they can more easily backfill.

Sam Venugopal, Partner, Pharmaceutical and Life Sciences Quality, Advisory

Also, some of the skills are highly specialized. They might need weeks of detailed training, especially when you’re dealing with complex manufacturing facilities. You may need that two weeks to make sure these employees are virus free, and then two weeks to make sure they are able to do the work.

Kevin Lewis: And that’s just to maintain the status quo. We have excess demand and we need to think how to grow output and what’s the right way to grow. Ventilators are manually assembled (although there are emerging methods to semi-automate production).

So it’s not just about a contingent workforce but a new set of workers to help grow output. How do we get enough space and equipment to meet output needs? Do we need to get creative and get suppliers to help us with subassemblies or with additional final assembly space? These are just some of many ideas that companies must be considering.

HRI: What are the implications for product quality?

Kareem Elwakil: The batch is one thing; you can always reproduce a failed batch with time and money, but you also have to think about what to do if the equipment or work environment gets contaminated.

Sam Venugopal: This equipment and production area contamination gets even more complicated, because you must clean the equipment, clean the shop floor. The decontamination is a validated process with qualified cleaning products.

But now you must ask: Are those available cleaning products to decontaminate from COVID-19 safe, and are those individuals going in to do the cleaning qualified and trained?

Vitaly Glozman: If someone has COVID-19, the infection impacts the whole shift, but that also impacts the product batches and materials that this infected person worked on or was exposed to.

If they’re drug product or test assays or even PPE products, what happens to the affected batches and do you have to trace back to the material component that this infected person has touched? That’s an important consideration that requires access to track and trace data to quickly isolate the impacted materials still in manufacturing and potentially already in the field.

HRI: What about the raw materials supply chain in terms of bringing in alternative suppliers and making sure they’re qualified?

Kevin Lewis: Setting up alternative suppliers is much harder with some of these custom-engineered components that go into a ventilator (but arguably easier for masks and other PPE products).

FDA has to be more flexible to expedite qualification processes if we want to bring on alternative suppliers to help with critical supply production. Ordinarily, validating new suppliers takes longer to complete than the likelihood that this crisis extends.

Kareem Elwakil: The approach that you’d expect to see in a medical device quality system is built on ISO 13485:2016, which is a risk-based harmonized quality system standard. Because the quality system is risk-based, with a risk-benefit element, in a case like this with a significant benefit potentially outweighing the risk, you could justify abridging supplier qualification and documenting that in your quality records.

HRI: From a regulatory, qualification perspective, are we seeing any leeway on that front given actions like the Emergency Use Authorizations (EUAs) from the FDA and the Defense Production Act?

Kareem Elwakil: In a case like this, it really helps to think about compliance and product quality as two distinct things which even the FDA has acknowledged don’t always reflect each other.

Compliance is about meeting the letter of the law and dealing with FDA inspections and oversight, but in a life-or-death situation like this, the focus shifts almost entirely to product quality. You can’t skimp on product quality. You can’t send something out that doesn’t work and hasn’t been tested, and you can’t have people who aren’t trained making your products.

But from a compliance standpoint, you may have to deviate from certain procedures, reduce approvals, or take other measures to streamline your operations provided you take a risk-benefit lens and justify that the benefit outweighs the risk.

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Vitaly Glozman

Partner, PwC US

Kevin Lewis

Principal, Supply Chain Advisory, PwC US

Sam Venugopal

Principal, Health industries Advisory Services, PwC US

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