Supply Chain Matters has had multiple posts since February regarding the incident of contaminated supplies of the drug Heparin being shipped to the U.S. from China.  In insuring due diligence, we highlight in this post the latest update from the U.S. Food and Drug Administration (FDA) as reported today in an AP story.

“We have put in place processes that we believe can ensure the safety of the heparin supply within the United States” declared U.S. Health and Human Services secretary Mike Leavitt in an interview on Monday in Shanghai.  ‘What you will see from the United States is a substantial change in our strategy” noting plans to station FDA inspectors in China and other countries. Mr. Leavitt however further cautioned “we believe the system that we have for ensuring safety is a good one but completely inadequate for the future”.

As commented in our Drug Imports from China- Controls Are Mandatory, as well as Drug Imports From China- a Wider Problem posts, this again reiterates that regulatory agencies are ill equipped to keep-up with the pace of current outsourcing of the pharmaceutical and drug supply chain, and risk mitigation must stem from internal and external controls built within such supply chains.  Sourcing materials solely for pure cost savings, is penny wise and pound foolish in the drug manufacturing value chain.  The sourcing or procurement group, nor the U.S. FDA do not hold the sole bag for product quality, the complete value-chain, and all groups involved, collectively need to own that responsibility.

Bob Ferrari

 News of Monday’s massive earthquake that struck central China continues to filter in through various media and Internet-related news sources.  The 7.8 magnitude earthquake is considered a catastrophic event, and already initial reports indicate in excess of 9000 dead, and thousands injured. Surely more tragic numbers will follow.

The quake was located about 60 miles northwest of the city of Chengdu, in Sichuan province and an AP story indicates that 80 percent of the buildings had collapsed in Beichuan county. The city of Chengdu alone has a population of 10 million, larger that that of New York City. In 1976, China’s most deadliest earthquake in modern history killed 240,000 people.

In addition to the tragic loss of life and human injury, the overall disruption and impacts to industry supply chains will most likely present itself over the coming days and weeks.  There are already reports of a chemical plant collapse in Shifang city, sending more than 80 tons of toxic liquid ammonia leaking from that site. Power, water, telecommunications and other utilities within the quake area have all been temporarily disrupted.

Sichuan province and the area of Chengdu provide an important industrial base for China. While the area accounts for only 3.9 percent of the country’s overall GDP, it is a growing area, with aerospace, aluminum, chemicals, cutting tools, fertilizer, machinery and metallurgy presence. This area also provides a growing high technology manufacturing and semiconductor packaging area, offering high tech manufacturers a lower-cost alternative to the Shanghai coastal region. Intel has constructed a large semiconductor packaging facility, and Motorola is in this area as well.

In transportation, Chengdu serves a major rail hub with links to 12 major cities including Beijing and Shanghai. According to a report by the Xinhua news agency, China’s Ministry of Railways reported that 31 passenger trains and 149 cargo trains had been stopped because railway bridges or rail beds had been damaged or destroyed.

Stories of natural disaster for the Southeast Asia region continue at an unprecedented rate.  There were major snowstorms in China in January and February, the tragic cyclone that struck the country of Myanmar with 32,000 deaths reported thus far, and now this earthquake in China.  The overall impact to China’s and certain industry supply chains from this latest tragedy bears close scrutiny as to any effects on today’s just-in-time and lean focused supply chains.

Bob Ferrari