When Supply Is of Public Interest: Roche & Tamiflu
The case focuses on the challenges of Roche maintaining a supply network for a global influenza pandemic response initiative based on its antiviral drug Tamiflu. The Roche group is a 40 billion CHF company consisting of a pharmaceutical division and a diagnostic division. The company’s antiviral drug Tamiflu dominates the market for prevention and treatment of seasonal influenza (flu). Tamiflu, however, could also play an important role in responding to the first wave of a pandemic caused by a particularly harmful strain of the influenza virus A. Tamiflu was designed to be effective against any strain of Type A or B influenza. Thus, there was the potential to establish a preparedness plan based on creating a stockpile of the drug in conjunction with an appropriate plan for distribution to the affected population. The use of Tamiflu in such a crisis would allow the world to respond immediately, rather than having to wait for development of a vaccine which had limitations in its effectiveness and the drug had been endorsed by the WHO as a first line of defense. The case focuses on the challenges of Roche maintaining a supply network for a global pandemic response initiative. Managing supply is particularly challenging for three reasons. First, demand for stockpile quantities is spiky and uncertain, and governments placing orders expect lead times to be short. Second, lead times for increasing capacity are long, as are lead times for drug production and encapsulation. Last, media coverage and press releases made by governments and other stakeholders increase the stakes, as negative media coverage may damage Roche’s reputation with consumers, leading to lower sales levels for its products.