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Originally Posted by nomadking
So what? That is for manufacturing, not supply of medicines. Even so, you could easily factor in a longer delivery time.
Still not getting why anything would be completely delayed by 3 months.
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Oooh, ooh, I can answer this as I work in the industry!
Over 60% of the cost of goods sold (COGS) of a drug is fixed costs of simply having a manufacturing facility. Those costs are there regardless of whether a company is making product or not.
Because of this, there is a massive drive towards 100% utilisation of any manufacturing facility as only making drugs makes you money. If you are running at over 90% capacity, you don't have much scope to scale up production without investment in larger facilities and this kind of thing runs on a multi-year cycle. Even just doubling up and buying a second lot of the same equipment would take 9-12 months to buy, install and qualify.
This of course just takes in to account the drug manufacturer themselves. The suppliers of raw materials and equipment will work on the same principle. They try and work and build facilities to match the scale of the demand from their customers, the pharma industry. Again, scaling up production isn't trivial. The company I work for has been investing in a second production facility for some raw materials. We are investing $700m in this and have taken 2 years to far and anticipate another 18 months for customers to accept that the product made on the new lines is the same as the old product.
Then of course, we have our suppliers and they have their suppliers and on it goes...
A well oiled industry works both using just in time manufacturing but also working towards 100% utilisation of their facility. Knowing what 100% is depends on good market knowledge but also a stable market. Sudden stockpiling in a market as large as the UK is hugely destabilising.
The last time I saw anything like this was during the risk of pandemic flu. During that time, we did a great deal of horse trading with our customers to get a much closer idea of their needs and what might need to be dropped if new flu therapies were needed in a hurry.
I have papers galore on this but they would kind of tell you who I work for...