Today (June 2nd) marks the first day that Singapore is exiting the Circuit Breaker and move to Phase 1 of the reopening. I was quite delighted to learn last week from a Channel News Asia broadcast that if the infection remains low, we might move into Phase 2 by later part of June. I can’t wait for that to happen!
Of course, there is no reason to quickly go out to have a big party (quoting National Development Minister Lawrence Wong). Although 75% of the economy will resume operations in phase one, most shops will stay closed during the first phase. Dining-in at restaurants, cafes and food outlets remain closed.
In my eighth interview, I have the privilege to speak to Ti Hwei How, President of Singapore Association of Pharmaceutical Industries (SAPI). SAPI was founded in 1966 as Pharmaceutical Trade Association before its name was changed to SAPI in 1975 to encompass a wider spectrum of pharmaceutical-related businesses into the association. The association aims to make innovative medicines accessible to patients in Singapore and promotes ethical practices, seeks collaborative dialogues as well as promote the understanding of the value of innovative medicines.
Professionally, Ti Hwei is the VP, International Oncology with AstraZeneca and he was previously the Country President for Singapore. For this interview, he speaks in his capacity as the President of SAPI and he has a unique insight in the dialogues that he is having with multiple stakeholders during this Covid-19 pandemic to ensure the supply chains of pharmaceutical drugs are flowing in and out of Singapore smoothly.
The interview is conducted via Microsoft Teams on May 27th. Here are the excerpts from our interview:
Ricky “R”: Hi Ti Hwei, thanks for joining me for this interview. We have spoken recently about how the pharmaceutical industry in Singapore is reacting in this pandemic.
Can you share with us your overall perspective on the Covid-19 pandemic situation?
Ti Hwei “TH”: As many leaders have mentioned, this is an unprecedented challenge for humanity since World War II. What it needs is the leadership to address the situation and we have seen leaders around the world respond in different ways.
My perspective is that we need to have strong political leadership to provide a good policy with clarity and stability. The entire population and enterprise (in a country) get one consistent message, and the entire society can work together to overcome the crisis.
As a pharma industry, we are part of the overall healthcare ecosystem. This is as much an economic crisis and also a healthcare crisis.
To get over the pandemic, two things need to happen:
If we can reduce the seriousness of the disease, there is an opportunity to open the economy.
Currently, some of the economies are opening up slowly and there is a fear that the infection rate is going up.
From a pharma perspective, as part of the healthcare systems, there are multiple efforts focused on the development of effective vaccines, while other companies are pursuing therapeutics to treat the disease.
In Singapore, what we need to do is to ensure that the supply chains remain open, that the critical medicines continue to be supplied to our healthcare industry. We have been working with the Ministry of Health (MOH) in coordinating and discussing with them to ensure that there sufficient inventory level of medicine in Singapore.
R: From the news that I read every day, I’m hearing “lots of noise” on some of the recommendations and experiments on what we can do. How do we manage the noise?
TH: The right people to listen to are the regulators. Even though we are accelerating the programmes of developing vaccines – acceleration does not mean that we don’t have to conduct proper clinical trials.
We still have to conduct properly designed clinical trials and the results still have to be reviewed by the regulators, in order for new drug approval. We have accelerated the process of identifying potential drugs.
My advice is to listen to regulators – they would have screened all these noises. They have determined which studies are conducted in a clinically robust manner and have been proven through proper design.
R: Thank you, I feel more assured that the regulators are always doing their best and not cutting corners. Let’s talk about the pharma industry, what is the impact on the business?
TH: This crisis has brought to the fore that the pharma industry is an integral part of the healthcare ecosystem. This is the biggest call to action and the industry is about to bring resources to develop vaccines and therapeutics very quickly. We have never seen such a strong collaboration between companies, academics, and governments. The private sector is working closely with the public sector, with the same goal of bringing solutions to the world as fast as possible.
Caption: Pharmaceutical drugs (source)
In terms of manufacturing activity for the biomedical sector in Singapore, there is an increase of 91.4% in March, with the pharma segment in particular growing by 126.6% in the same month. In April, the pharma sector grew by 141.3%! This is largely driven by the production of Active Pharmaceutical Ingredients (API) and biological products. These are very strong performance for the industry.
Due to the Covid-19 pandemic, there is a lot of reduction in global transportation and this has caused disruption of supply chains. As a result, we see the pharma industry trying to bring the finished products closer to the customers. The public sector is buying more inventory to ensure that there will be no disruption of medicine supply for the patients.
The business impact is different from countries. Due to safe distancing, many citizens might feel that it is safer to stay home, resulting in a potential delay in seeking treatments for chronic diseases, which means a possible reduction in medicine consumption in those areas, while we also see an increase in demand for intensive care and emergency-use drugs, including anti-infectives and anaesthesia products.
We believe there is an inventory build-up now. We are waiting to see what the actual demand is from the second quarter onwards.
R: How is it disrupting your supply chains?
TH: If you look at global supply chains, it is through the sea and air freight, plus some trucking. Shipping is largely unaffected but the air freight is greatly impacted.
Caption: Sea Freight vs. Air Freight (source)
Shipping is used when there is more lead time: China to Singapore takes one week, while Europe to Singapore takes a few weeks. If it is urgent, air freight is crucial. As long as we have political stability that provides consistent policy, this will allow us to plan in advance. Even if air traffic is down, you can rely on shipping.
Singapore is a major hub in pharma manufacturing. In 2019, the pharma manufacturing output is SGD 20 billion (20% of total manufacturing) and there are more than 50 manufacturing plants (incl. 8 out of the Top 10 pharma companies). This is a very sizable sector.
What the Singapore government has done is to enable manufacturing plants, particularly those that manufacture essential products, to stay open. We have also seen how our government, in particular the Ministry of Trade and Industry and the Ministry of Manpower, worked quickly to ensure that there was sufficient manpower in Singapore when borders between Malaysia and Singapore were closed. Therefore, our production continues without much interruption. This is a good example of good political leadership.
As the APIs manufactured in Singapore are shipped to different parts of the world to become finished products, the Singapore government has helped the continuity of pharma production around the world.
R: How are your customers reacting during this crisis?
TH: One of our major customers is in the public healthcare system. The major objective of the system is to ensure a continuity of medicine supply to patients in Singapore. As mentioned, the pharma industry has worked closely with MOH to ensure the supply of medicine is met.
In the private sector, the business impact may vary depending upon the medical specialities and the types of patients they see, e.g. an oncology practice will continue to treat cancer patients through this crisis period vs. a General Practice (GP) attending to patients with chronic diseases. Patients not requiring urgent treatments may seek to delay their consultations.
In terms of patient behaviours, we are not able to track easily as our business model is largely business-to-business (B2B). We are hearing anecdotal points from the research houses that patients are delaying non-urgent treatments.
At this point, we are not seeing the full impact yet due to the building up of inventory by our customers.
R: Where do you see the opportunities in the current situation?
TH: If you look at what is happening, it highlights the importance of Singapore as a key global trading hub. There is a much better appreciation of having an open global supply chain that is working together to ensure the free flow of drugs. In addition to working with individual countries to ensure a continued free flow of essential goods, Singapore has led a cross-regional statement to the United Nations, sponsored by 175 Member Nations to ensure open markets, free flow of essential goods and supply chain connectivity
Our Minister of Trade and Industry, Chan Chun Sing, has mentioned that as the dust settles, supply chains will potentially shift. Many governments will attempt to bring goods closer to the end consumers. Singapore has the opportunity to respond – to continue to be an open and competitive trading hub. Singapore has the vision and ambition to do so.
I see two specific opportunities for the pharma industry:
R: How are you managing your team and workforce?
TH: At a general level, there are three things that we do:
R: What final advice do you have for business leaders?
TH: This is a very challenging situation for all business leaders and the crisis affects some industry more than others. I empathize with my colleagues in the airline, travel, retail and F&B. It is a very hard hit for them.
At the same time, just like any other crisis, this too shall pass. We have seen SARS and H1N1. The Covid-19 pandemic will pass as well.
I learn from the book “Crucibles of Leadership” that it is through a tough situation that we define our leadership. When we are leading through these difficult times, it is a good time to reflect our leadership and define who we are.
This interview was highly engaging and insightful for me as Ti Hwei shared about the importance of the pharma industry and also the role that Singapore plays in the global biopharmaceutical supply chain. Thanks to Ti Hwei, I'm adding a new leadership book "Crucibles of Leadership" by Robert Thomas, to my reading list. You can read his material from this HBR article.