In business, you can’t always avoid the trouble of one sort or another, but you can learn to bounce back quickly. It’s what we mean by “resilience”, the ability of an organization to recover from difficulty, adapt to change and persevere in the face of unexpected disruption.
Our particular focus here is on how Life Sciences companies can avoid or mitigate product availability disruption due to natural disasters such as hurricanes and earthquakes; and human-caused emergencies such as compliance violations and product safety and quality issues. Accenture Strategy research shows that these kinds of disruptors can have a significant impact on product flow and stock price if a company is under-prepared.
Natural disasters often disrupt global drug supply chains, and such accidents are becoming increasingly common, often with devastating human and business impact. Pharmaceutical supply chains are particularly vulnerable. In the United States, for example, 80 percent of active pharmaceutical ingredients are made outside the country.3 Market data suggests that supply chain disruptions caused by natural disasters can result in a 1 to 3 percent drop in share price.
Predictable and preventable disasters, compliance violations, skills shortages, etc, have wreaked similar havoc on product availability and can severely diminish consumer trust, which can have damaging impacts on future revenue. Accenture Strategy research of the effects of stakeholder trust shows that a life sciences company with $2B in revenue experiencing a trust-damaging incident has the potential to lose $170 million in future revenue growth.5 From a compliance perspective, share prices of pharmaceutical and medical device companies fall 15 percent on average after a significant compliance violation.