Securing Europe’s medical supply chains against future shocks by Sam Lowe
European policy-makers should not give in to the temptation to use the COVID-19 pandemic to justify the forced onshoring of medical supply chains. Better options are available. The COVID-19 pandemic severely disrupted medical supply chains, leading some politicians to question Europe’s reliance on imports, particularly from China. To them, the solution is obvious: companies should be forced to make vital medical products in the EU rather than abroad. However, this is easier said than done, and pulling production into the EU does not necessarily leave the Union any less vulnerable to supply shocks. Being overly reliant on one location for vital products is a risk, whether the source is China or Europe. If the EU is to build up resilience against future crises, its efforts now should be focused on gathering more data on supply chain risks and embedding deeper regulatory co-operation with key countries. Only in specific instances should it consider providing financial incentives for companies to diversify production and sourcing. COVID-19 demonstrated that member-states, and the systems they rely on, were unable to respond to a global pandemic. There have been notable problems obtaining ventilators from China and paracetamol from India. Countries have even had to contend with being outbid for personal protective equipment (PPE) by
the US. Since the beginning of the pandemic, Global Trade Alert, a group that monitors global protectionism, estimates that across 86 jurisdictions, 157 export controls on medical supplies and medicines have been implemented. But how big is the problem for Europe? The EU is already one of the biggest global producers of medical products, and the biggest exporter. When it comes to imported medical products, particularly pharmaceuticals, it sources the vast majority not from Asia, but from the US ($47 billion) and Switzerland ($35 billion). However, it does import the majority of its PPE from China. Yet a focus on the value of imports can be misleading. While the US and Switzerland tend to produce expensive and innovative drugs, cheaper generic medicines and active ingredients imported from elsewhere are also important. When accounting for the quantity of pharmaceuticals imported by the EU, rather than their value, India shifts from being the EU’s sixth biggest provider to second. The trade-off the EU is facing is that if it does onshore the production of generics, active ingredients and PPE, in order to reduce its