X-raying COVID-19 vaccine supply chains

By Camille Egloff, Senior Partner, BCG Athens

 

Delivering vaccines to a large percentage of the global population is a Herculean task. The more vaccines that receive regulatory approval, the more complex the logistics. Yet our research indicates that the essential stakeholders in the global supply chain are ready and have already taken on their tasks.

Efforts to defeat the COVID-19 virus have taken a giant leap forward as some pharmaceutical companies have made vaccines which are now available across the world.

No doubt, there are still concerns about successful vaccine production and delivery, so Boston Consulting Group researched some of the most complex issues around the vaccine supply chain, from air freight capacity and the dry ice supply to cold chain resources and the cost of vaccine distribution. And our findings were surprisingly reassuring. 

The overall costs of the vaccine are relatively low vis-à-vis the toll of the virus on the global economy—and the supply chain costs represent just a fraction of the total.

Already, some vaccines are being administered to people around the world; namely, Pfizer-BioNTECH, Moderna, Johnson & Johnson Janssen and AstraZeneca-Oxford which have already reported high levels of efficacy.

Manufacturing enough vaccines to reach a large percentage of the global population by the end of 2021 will be a Herculean task. Complete success will depend on a few “must believes:” no delays in starting vaccine production, no major quality problems, and very limited vaccine waste.

Nonetheless, various pharma companies and conglomerates already had dedicated significant manufacturing capacity to supplying their vaccine candidates once approved. In fact, the producers of the seven US government-supported vaccine candidates have each announced the capacity to manufacture 1 billion to 3 billion doses by the end of 2021, totaling approximately 11 billion doses, of which 50% have already been contracted by various nations.

Along the length of the potential vaccine supply chain, cold chain requirements present the most dominant challenge, as mRNA vaccines—including two of the leading vaccine candidates— are highly temperature sensitive. ­­­­Moderna’s vaccine, for example, must be stored at -20°, and Pfizer’s vaccine at -80°. While Moderna’s temperature requirements can be handled at regular freezer temperatures for up to six months—of which up to 30 days can be normal refrigerator temperatures—Pfizer’s vaccine will require dry ice and a special chain of custody and may only be stored in a refrigerator for up to five days, setting it apart from other vaccine types.

 There has been some concern about potential bottlenecks in the supply chain due to an insufficient supply of dry ice at the production site or along the vaccine delivery route, as well as the risk of inadequate cold chain infrastructure. However, there are many such plants in the region around Pfizer’s sites. In addition, the sourcing of bulk dry ice in insulated boxes from manufacturers across Europe is realizable.

The calculation is that demand for vaccine shipping will represent only around 5% of the global daily production of dry ice, with half needed for initial packing at only two manufacturing sites and the other half used for replenishment along the route when sensors indicate a need, or after ten days when the vaccines are stored. Dry ice suppliers are also ramping up their production capacity and preparing to ship higher volumes.

As to cold chain infrastructure, most developed countries have substantial refrigerated warehouse storage, and some major logistics players are already investing in additional capabilities to ensure a smooth vaccine distribution. Logistics companies are also investing in premium facilities and specially designed containers, such as those produced by va-Q-tec, to ensure an uninterrupted cold chain at the necessary levels, including -80°C, -20°C, and 2° to 8°C. Some are talking about expanding their warehouse solutions and “freezer farms” to support distribution activities as well.

As an example, global transport and logistics provider Kuehne+Nagel has developed a regional hub strategy that will offer COVID-19 vaccine storage at all three temperature ranges. Many of these warehouses are strategically located near today’s vaccine manufacturers, with access to air and road logistics that comply with industry standards and practices and can reach every country in the world, including low-to-middle-income markets. Kuehne+Nagel has also developed a COVID-19 Temperature Pod solution that will allow countries to set up storage locations supporting distribution at these temperature ranges in their markets.

As with the production of the vaccine, several logistical challenges naturally present themselves as pharma companies and governments attempt to deliver it across the globe and into every urban, suburban, and rural community—although spread out over the course of a year or more. Not surprisingly, there is no single response to these challenges. Each vaccine manufacturer’s method of getting its supply out to the public will be determined in part by its handling requirements; in addition, it will be influenced by factors such as geography, existing logistics infrastructure, available resources, and even political agendas.

Logistics providers across the globe, in turn, are rapidly preparing to manage the transportation of the vaccine from manufacturer to clinic. Kuehne+Nagel, for example, offers door-to-door services focused on 32 vaccine-capable airports around the world, each of which has the required carrier capabilities and capacity, infrastructure, staff expertise, service levels, and quality support and is located near known manufacturing locations and vaccine destinations. These services will include dry ice, container, and packaging availability and airside service (tarmac visibility) and will be overseen by a team focused solely on COVID-19 customers.

The discussion of costs is as complex as that of delivery. In preparation for the vaccinations, the global community has taken both individual and collaborative approaches to secure and support the supply of vaccines; the chosen approach will affect both the way the vaccines are delivered and the cost structures.

Adding to this complexity, the COVAX Facility—an alliance supporting the research, development, and manufacturing of vaccine candidates—and the Coalition for Epidemic Preparedness Innovations (CEPI), as well as private foundations such as the Gates Foundation, play an essential role in distributing a supply of vaccines to relatively small and less wealthy countries.

Whether a country can establish a decentralized vaccination campaign that reaches even the most isolated individuals or must use a centralized campaign will be determined by the supply chain requirements of the vaccine, paired with the local infrastructure. Pfizer’s vaccine, for example, may be limited to centralized distribution in urban centers due to its cold-chain requirements, while Moderna’s vaccine may be more suitable to broader and decentralized distribution. Other vaccine candidates from companies such as Johnson & Johnson, AstraZeneca, and Novavax, in turn, have less-sensitive cooling requirements and may be suitable for broader and more rural deployment.

The availability of the vaccine, syringes, and even personal protective equipment (PPE) must also be synchronized. Material procurement will be critical to a successful vaccination campaign. Yet experiences in previous pandemics, including Ebola, SARS, and MERS, show that logistics companies have the capabilities and the knowledge in place to address these challenges, despite the seemingly unprecedented scale of the current pandemic. 

According to Tolu Oyekan, Partner, BCG, the COVID-19 vaccine is one of the products that many people now have high demand for. “Already, some African countries, such as Nigeria and Ghana, have begun giving second doses of the COVID-19 vaccine. The World Health Organisation (WHO) has said that Africa needs at least 20 million doses of the Oxford-AstraZeneca vaccine in the next six weeks to enable those that have been vaccinated to get second doses. The current high demand for vaccine is as a result of the shift in citizens’ attitude from the initial apathy. This in turn will increase confidence and drive the gradual return to normalcy.  

As manufacturing, transportation, and delivery complexity grow due to the multitude of requirements and constraints for so many vaccines, stakeholders along the value chain should consider taking the following important steps.

Developers and government authorities should mitigate the long-term safety concerns generated by rapid vaccine approval by pushing for the highest levels of data transparency and working to increase the lessons learned along the way.

Manufacturers that do not have a vaccine approved yet should consider supporting those candidates that do have a successful early rollout in launching their vaccine even more quickly.

Logistics companies should collaborate to establish a chain of custody and end-to-end supply chain transparency in order to guarantee uninterrupted cold chains and minimize losses.

Authorities, manufacturers, and logistic companies should determine how best to ensure that their vaccination campaigns are not bottlenecked by a lack of medical material supply, such as syringes and personal protective equipment.

Throughout the research, BCG experienced strong confidence and support from many stakeholders in the vaccine supply chain.  There are no doubts that many challenges lay ahead, and our world depends on how they respond to this need. Yet many companies have been distributing vaccines for years; the key difference now is that the world is watching.