As one of the world’s biggest contributors to climate change, pharma is morally compelled to adapt its processes and operations – and this will open up new opportunities for growth.
The pharmaceutical industry’s reliance on global supply chains and its need for large quantities of water make it particularly vulnerable to climate change. But preparing to adapt to the phenomenon presents both an opportunity and a challenge.
Rising global temperatures will, for example, increase the spread of mosquito-borne diseases like malaria and Zika, increasing the need for effective vaccines. Waterborne diseases are also likely to become more common as increased rainfall and storm surges contribute to flooding and contaminated runoff.
Just as in the wake of COVID-19, the world will look to the pharmaceutical industry to meet its public health needs. Yet the industry’s vulnerability to climate change means it may not be able to answer that call.
Responsibility
In 2019, the pharmaceutical industry produced 48.55 tonnes of carbon dioxide equivalent (CO2e) for every million dollars generated – which puts it even above the automotive industry, which emitted 31.4 tonnes per million dollars generated in the same year, in terms of contribution to greenhouse gases ( GHGs) worldwide.
“As a critical industry, any disruption in the production or distribution of pharmaceuticals can have significant financial implications for the industry and health ramifications for the global population”
“With its heavy reliance on natural resources for product development and production, and complex, carbon-intensive supply chains, the pharmaceutical industry has been highlighted as one of the biggest contributors to global emissions” , said the authors of a white paper by climate intelligence specialists. , Cervest.
The sector, which currently accounts for almost a quarter (23%) of global water consumption, was well represented at the United Nations Climate Change Conference (COP26) in Glasgow last year and is already taking measures to reduce its impact on the environment.
About 80% of biopharmaceutical companies have set goals of net zero or carbon neutrality, for example. Additionally, 10 of the biggest names have signed on to a renewable energy initiative that aims to decarbonize the supply chain and increase access to renewable energy. However, the responsibility does not end with reducing greenhouse gas emissions and large-scale water consumption.
“In addition to taking action to reduce emissions, industry must be prepared for how climate change is affecting – and will continue to affect – operations.
“Any disruption in the production or distribution of pharmaceuticals can have significant financial implications for the industry and health ramifications for the global population,” the white paper states.
Vulnerability
Pharmaceutical companies are “highly vulnerable” to the effects of climate change, due to their reliance on global networks.
“The pharmaceutical industry is globalized: generic drugs manufactured at sites in India will be produced from imported materials and shipped to distributors around the world, who will coordinate their distribution to retail outlets or pharmacies,” the white paper states. . “Volatile weather conditions can interfere with this product flow and create supply bottlenecks.”
Climate change can impact most points in a supply chain, from raw material sourcing to final product distribution, and pose a range of short- and long-term risks. Adverse weather events can lead to raw material supply delays, unplanned production shutdowns, transport delays and cold chain storage disruptions, for example.
And these are not remote possibilities for the future. In 2017, the global drug supply was disrupted when Hurricane Maria hit Puerto Rico, which is home to more than 500 medical product facilities and produces 10% of all medicine consumed in America. The following year, Pfizer, Merck and Novartis had to shut down production at their southeastern US operations as Hurricane Florence approached.
“Previously unexpected weather events such as these are increasing in frequency and severity, and pharmaceutical companies are particularly sensitive,” the white paper says.
“Many pharmaceutical companies operate with only one site available for the production of each product, due to the cost of building new facilities. […] if this site is subject to extreme weather conditions, it has a devastating impact on the supply chain.
Adaptability
As climate change impacts the spread and virility of disease globally, pharmaceutical companies can expect to face demand to increase production and expand into new treatments and drugs.
“Abbvie, for example, believes extreme weather events could boost its immunology product portfolio, and Roche has considered developing treatments for malaria as the disease spreads to new climates,” the paper said. “To meet growing demand and market opportunities, a pharmaceutical company must ensure it has the resources, capacity and supply chain to grow.”
To operate sustainably – and be able to seize these public health opportunities – companies need to develop a “deep understanding of climate risk”.
“This can only come from a comprehensive analysis with scientific methodology and informed projections for future scenarios over different time frames.”
It should be granular enough to capture asset-level insights, whether those assets are managed directly or by a vendor, and broad enough to inform business-level operational decisions. Advances in climate intelligence make this possible.
“Climate intelligence is asset-level intelligence on climate-related risks and opportunities. It provides a unified and previously impossible view of climate risk for every asset a business owns, manages, or depends on,” explain the authors.
“This level of understanding includes both the probabilistic probability of sudden climate-related events (shocks), such as heat waves, as well as the probability of long-term problems (stresses) such as rising average temperatures.”
With this level of information, pharmaceutical companies can quantify and understand the risks to their assets and supply networks over different time horizons, risk categories and climate scenarios – and adapt accordingly.
“Making plans is not enough. Solid investment must be made to uncover risk and build asset resilience over the next few years,” the document said.
Resilience
With rising temperatures and an increase in the number of recorded extreme weather events, we are already feeling the effects of climate change.
All global industries have the responsibility and business imperative to adapt their processes and keep their supply lines open.
For the pharmaceutical industry, where delays could prevent people from receiving the drugs they depend on to live their lives, failing to prepare could be a matter of life and death.
