COVID-19 AND CRITICAL MEDICAL EQUIPMENT SUPPLY CHAINS: WHAT FLOWS WHERE?
In January this year, Coriolis Technologies conducted a survey of the UK population about national security. Over 68% of respondents said that a better resourced and improved NHS would make them feel more secure on a personal basis. Two months on, and global security is critically dependent on healthcare systems around the world. But while responses have largely been national, for obvious reasons, the challenge of getting supplies of life-saving ventilators, face masks, personal protective equipment, and medical supplies to the clinicians in the front line is one that hits at the heart of the global supply chain system.
Coriolis Technologies estimates that the global market in what could be termed the “Covid 19 Supply Chain” was worth around $130bn in 2019. It has grown annualy at nearly 7% for the last three years, with particularly strong growth annually of nearly 8% for therapeutic ventilators. The UK exported around $400m and as such was the 8th largest exporter in the world, behind the US, Australia, China, Germany and Singapore who took the top five places. The UK has a trade surplus, i.e. it exports more than it imports, in air pumps for medical devices and the ventilators themselves but is significantly reliant on imports of facemasks, gowns, and non-woven polypropelene – the fabric that goes into facemasks. As a result, across the whole “Covid 19 supply chain” the UK is dependent on other countries as much as they are dependent on the UK.
There are two serious points to be made here and the first is this. While the natural sentiment at the moment is to protect national interests, which may itself lead to trade protectionism, medical equipment and supplies are sourced internationally through global supply chains. Across the whole supply chain, Germany and the Netherlands have been growing the fastest as import partners over the past ten years, while the US, although globally the biggest supplier, has become less important than Germany in particular. Medical R&D is internationally collaborative as well, and the outcome of this crisis should be to understand these inter-dependencies more rather than less. Never has there been a more critical moment to drop ideology and realise that the long term reaction to the pandemic must be a global rather than a national one in the interest of humanity.
The second point is a more pragmatic one. These global supply chains are dependent on very small, often very specialist suppliers around the world. For example, in the ASEAN region, the companies on which supplies to hospitals rely are to a large extent subsidiaries of large corporations. Given America’s dominance in the sector overall, these are often headquartered in the US. So the challenge for governments, as much as for banks, is to make sure that these smaller entities have the financial resources to continue production and the distribution networks to take their products to market effectively across the world. Central banks and governments have provided the framework for the financial services and trade finance sector to do this. There is an urgent need for them to use that framework so that, rather than being the villains of the piece as in the last financial crisis, they can demonstrate just how important they are to the UK’s and the world’s security.
This is no time to be precious about national interests, even if the acute nature of the Covid 19 crisis has fully understandably made us all focus on the issue as it affects us and our loved ones personally. Global supply chains rely, and always will rely on an ecosystem of small and large businesses, specialist research, distribution networks, manufacturers of everything from springs and coils, through plastics and machinery to finely tuned medical equipment, people, finance, and governments. All of a sudden the interdependencies of the global system are laid bare for us all to see at the sharp end of care that is now very close to home. Let’s h