India’s Short-Lived Ban on Exports of Coronavirus Drug

April 29, 2020
India’s Short-Lived Ban on Exports of Coronavirus Drug

As demand for potential coronavirus drugs surges during this pandemic, several countries have banned the export of these drugs.  As many drugs and/or their key ingredients are made in a handful of countries, export bans create tremendous problem and potential shortages.

India announced a partial ban on the export of hydroxychloroquine in late March. Following a threatened retaliation from President Trump, the ban was at least partially lifted.

Several researchers are studying the affect of this drug in combination with the antibiotic azithromycin.  One small-sample study in France showed promising, but not definitive results.  In addition to potential for treating coronavirus, hydroxychloroquine has been used in the prevention and treatment of malaria for many years.

Video Spotlight: Increase in demand for drugs to treat coronavirus leads to shortages (Mar 23, 2020, CBS Evening News)

This post is based on the Bloomberg article, Global Rush for Trump-Backed Virus Drug Sparks India Export Ban, by Bloomberg News, March 24, 2020; the Japan Times article, After Trump threat, India lifts export ban on COVID-19 treatment drug, by Bloomberg, April 7, 2020; and the YouTube video in the Spotlight. Image source: aberration/123RF

Discussion Questions:

1. Why did this shortage occur?

Guidance: Several factors have led to this situation.  Obviously, the pandemic has tremendously increased the demand for the drug.  Individual countries, such as India, obviously want to protect their country.  As a result, it makes sense that they would prevent or limit exports of key drugs.  Additionally, operations management practices that encourage reducing the number of vendors and lean supply chains exacerbate the problem.

2. What can be done to prevent future export bans?

Guidance:  It is extremely difficult to prevent a country from stopping exports when the safety of their country is at stake.  But the use of single-sourcing and lean supply chains add to this problem.  For companies that sell heavily in the U.S., it is important that they maintain manufacturing or at least manufacturing capability in the U.S.  The U.S. Government, either through incentives or regulations, may want to encourage or require production of key drugs and other medical devices in the United States.  Organizations may also want to keep multiple vendors located in a variety of countries to reduce their supply chain risk.  Pharmaceutical companies need to more carefully weigh the risk/reward balance in their supply chains.


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