USAntiobiotics, Walmart & McKesson Partnership
In step change progress to depending on China (who has been unreliable in supplying critical minerals), a strategic partnership has been developed to replace this dependence for antibiotics. The only U.S. manufacturer of antibiotics, USAntiobiotics (descriptive name!) is partnering with Walmart and McKesson to onshore the production of amoxicillin to the U.S. Reshoring, onshoring, regional manufacturing and the expansion of domestic manufacturing at scale is gaining momentum. Read more about this manufacturing renaissance in our recent article.
Even more exciting than this announcement is that USAntiobiotics expects its Tennessee facility to produce enough to meet 100% of the U.S. demand. According to the press release, Walmart pharmacies will offer the U.S.-made amoxicillin, while McKesson will provide the antibiotic through its massive national distribution services. In essence, this is a great illustration of a vertical integration partnership to ensure end-to-end supply chain success.
Strategic Partnerships to Scale Production
Since China entered the World Trade Organization, U.S. manufacturing capability has steadily decreased, highlighting national security concerns (pharmaceuticals, defense, computer chips, infrastructure and related end-to-end supply chains (steel, critical minerals, etc.). Refer to this graphic from the United Nations.
Since skills and capabilities have eroded with the decline in U.S. manufacturing, continuous improvement will not suffice. Instead, step change improvement is needed. Strategic partnerships is an option that can provide the resources and investments required to scale the end-to-end supply chain. In this example, USAntiobiotics has the manufacturing capability but not the scale to ramp up as needed. They needed a strategic partnership to complete the supply chain.
Walmart operates more than 4500 pharmacies across the U.S. and Sam’s Club locations, and so they can commit shelf space. In addition, Walmart is investing heavily in pharmacy automation and central fill centers including a new investment in Maryland that can process 100,000 prescriptions/day. These facilities integrate robotics and artificial intelligence to handle repetitive dispensing tasks, while pharmacists in stores focus on patient care.
Walmart has relied on McKesson for years as its primary wholesale distributor of branded and generic drugs. McKesson is the largest pharmaceutical distributor in North America and delivers pharmaceuticals daily to Walmart pharmacies, serving as an outsourced supply chain arm. In the Walmart–USAntibiotics partnership, McKesson will handle nationwide distribution of amoxicillin produced at USAntibiotics’ Tennessee plant.
During a strategy session with a cross section of CEOs from multiple industries, every forward-looking CEO recounted a time when they partnered with a competitor. Strategic partners can be found in odd places – or in your daily business. Put on your creative thinking hat, take a fresh look at your end-to-end supply chain partners, and evaluate your supply chain network options using artificial intelligence, advanced technologies and processes like SIOP (Sales Inventory Operations Planning). Think outside the box and take the leap with strategic partnerships. Prudent risks will reap rewards.