While Australian supply chains proved broadly resilient, the COVID-19 pandemic highlighted supply chain vulnerabilities and tested Australia’s ability to access critical necessities.
Working with industry experts, initial analysis identified potential vulnerabilities for critical products necessary for Australian’s health, safety and well-being in a crisis.
Three product categories were initially identified for in-depth deep analysis:
- Biopharmaceuticals (medicines)
- Agricultural production chemicals
- Personal protective equipment (PPE).
To determine critical products in each category, the following key factors were considered:
- the impact of supply disruptions on Australian industry that provide items that are essential for the health and well-being of Australians in crisis
- their high import dependency and high import partner concentration.
Extensive, real-time, industry advice was used to validate these critical products and gain a deeper understanding of supply issues.
Medicines were identified for investigation given Australia’s import dependence on the final product, the market concentration for the active pharmaceutical ingredients (APIs) within them, and the manufacturing process which underpins them.
This process is complex and capital intensive, with stringent, highly regulated practices. Domestic manufacturing is limited to a small number of finished products and there is no onshore API production capacity. Demand for most of the products analysed is projected to increase. Shortages occur across most products due to highly specialised manufacturing processes and freight issues.
A prioritisation process was used to identify the 10 critical medicines based on criticality, risk, and stakeholder consultation. This consultation cross-checked against the Therapeutic Goods Administration’s ‘Medicines Watch List’ (for medicines with reported shortages) and the World Health Organisation’s ‘List of Essential Medicines’.
The 10 critical medicines fall into the following categories:
- life-threatening infections e.g. antimicrobial agents
- emergency and critical care
- safe reproductive health and obstetric practices.
Critical product list
- Gentamicin (injection): Used to treat pneumonia, severe acute malnutrition and sepsis in newborns and children.
- Sulfamethoxazole/Trimethoprim: Used for bronchitis, middle-ear and urinary tract infections.
- Vancomycin: Used to treat a range of life-threatening infections.
Emergency and critical care
- Epinephrine: Used for cardiac arrest, acute heart failure, and anaphylaxis.
- Dexamethasone: Used to treat allergies and inflammations.
- Morphine: Used for short-term severe pain relief.
- Enoxaparin: Used for the treatment of blood clots.
- Phenytoin: Critical to treat epilepsy, including simple and complex focal seizures.
- Nifedipine: Used to treat hypertension.
Obstetrics and reproductive health
- Ergometrine: Used to treat haemorrhage during labour.
Agricultural production chemicals
Agricultural production chemicals were identified for investigation through the SCRI given their high import dependence and high concentration risk across all finished products and Active Ingredients.
These products have a vital role in supporting the $60 billion Australian agricultural industry, and contributing to the Ag2030 target of an agricultural sector worth $100 billion by 2030. Supply is vulnerable and there is limited onshore manufacturing capability. Stockpiling is not suitable for most products given their volatility and corrosiveness.
Critical agrichemicals include fertilisers (to help crops grow) and crop protection products (CPPs, to avoid pests and diseases). These are often weather and time dependent. The local agri business sector is highly dependent on imports for over 50% of its fertilisers and pesticides. This sector experienced shortages during periods of global lockdown and disrupted international supply chains.
11 critical chemicals have been identified using trade flow data and consultation with the agricultural industry to be considered through SCRI.
These products cover:
- crop protection products
Critical product list
Crop protection products
- 2, 4-D: Used to kill broadleaf and grass weeds without affecting the crop itself across commercial, industrial and aquatic areas.
- Glyphosate: Used in agriculture, home gardens and commercial industries to stop the growth of weeds and other invasive plants.
- Trifluralin: Applied to the soil before planting crops to control broadleaf and grass weeds in agricultural and horticultural crops.
- Fungicides: Protect plants from disease-causing fungi after large rain events. Typically used in the high-value fruit, vegetable and nut industry. Strawberries and onions are fully dependent on fungicides to remain viable.
- Urea Ammonium Nitrate (UAN): A source of plant nutrition, particularly during colder seasons or periods of high rainfall on winter cereals such as barley and wheat.
- Ammonium Nitrate (AN): Key input into urea ammonium nitrate (UAN) and critical to the mining industry.
- Diammonium Phosphate (DAP): Essential for the growth of seedlings and young plants. Primarily used in crops and on grass pastures.
- Monoammonium Phosphate (MAP): Essential for the growth of seedlings and young plants. Preferred as a fertiliser mainly for grain and cotton crops.
- Potassium Chloride (MOP): Vital to plant growth used on sugarcane and for the cultivation of broadacre crops such as wheat, oats and barley.
- Potassium Sulphate (SOP): Used predominantly in high value crops such as fruits, vegetables, berries, potatoes and tree nuts.
- Urea: Used predominantly by broadacre farmers most often in fruits and vegetables, grains, cotton and sugarcane.
Personal protective equipment (PPE)
PPE is a critical product and is used by a number of medical and non-medical industries in Australia. The COVID-19 pandemic has clearly shown the importance of PPE in medical-grade settings like hospitals, with around 600,000 health practitioners relying on PPE to stay safe. The pandemic also showed they can be critical in areas like food processing.
PPE products were identified for further investigation due to areas of vulnerability in supply chains, driven by high levels of concentration for both raw materials and final product. Access to polypropylene is also a common vulnerability, given high import reliance and its useability across several critical PPE products. However, Australia is likely to continue to have access to polypropylene given there are multiple sources globally.
Using trade flow data and extensive consultation with PPE industry and users the following 4 products were deemed most critical:
- Gloves (surgical and non-surgical): Single-use, disposable gloves protect against contamination. These are made from latex rubber, nitrile rubber or vinyl plastic. This category also includes sterilised rubber gloves for use in operating theatres.
- Masks (N95, Level 2/Level 3 surgical): Surgical face masks are used to resist particulates and fluids with polypropylene layers to provide bacterial filtration. Surgical masks are loose-fitting and the difference between L2 and L3 is the greater fluid protection offered. N95 masks are tight fitting and are, for example, the minimum advised for healthcare professionals during any coronavirus interaction. N95 masks are also used in other industries including, manufacturing, repair services, construction and cleaning.
- Gowns (surgical and non-surgical): Gowns are used to protect against contamination or infection by limiting contact with potentially infectious liquid or solid material. Surgical gowns are worn by healthcare professionals during procedures. Non-surgical gowns are used in minimal to low-risk patient situations.
- Hair caps: These are used to keep the wearer’s hair sealed under material to avoid human contamination. They can be polypropylene bouffant caps or cotton-based skullcaps.
Industry consultation highlighted that actions the government has already taken to ensure PPE availability have yielded positive results. This has included funding to establish and expand local manufacturing, establishing accredited product testing capability at the CSIRO and the National Measurement Institute (NMI), free access to product standards and streamlining regulatory reviews and approvals.
As an example of government action Med Con were able to scale up production capacity from 2 million to over 90 million surgical masks in 2020. The Department of Industry, Science, Energy and Resources also administered the $2 million Australian Manufacturing Fund for PPE, which established and expanded local production of medical equipment and PPE products. Additionally the Department of Health manages the National Medical Stockpile which includes a considerable reserve of PPE.