Munich Re again expands the boundaries of insurability and provide business interruption coverage for Life Science companies who suffer
• product suspension events due to manufacturing problems at their own or
• a named third party supplier or
• contract manufacturing facilities.
The coverage replaces
• lost revenues, including ongoing loss of market share, for up to twenty-four months even if production has restarted
• additional costs such as remediation expense, and any necessary product destruction costs
Half of drug shortages in the USA are the result of quality or manufacturing issues
Drug shortages can have a major impact on a Life Science company’s reputation, market share and stock price. According to the FDA over half of drug shortages in the USA are the result of quality or manufacturing issues. The first indication of a problem that might lead to shortage is often the initiation of a recall of finished product from market.
Life Science companies are well-drilled in undertaking recall events and the recall costs themselves are not generally a major financial issue. However if a significant manufacturing problem is the underlying cause of the recall this may well lead to a product shortage. Unravelling the root cause and fixing the problem can be a lengthy process. Where a company’s profitability relies on a single key product, or it has limited free cash flow to fund a revenue gap, a major product shortage can be life threatening to the business.
Munich Re offers enhanced business interruption coverage
Until recently, it was not possible to insure against a production outage due to a GMP manufacturing deficiency. However, Munich Re has developed a solution that provides business interruption coverage for Life Science companies who suffer product suspension events due to manufacturing problems at their own or a named third party supplier or contract manufacturing facilities. The coverage replaces lost revenues, including ongoing loss of market share, for up to twenty-four months even if production has restarted. It also covers additional costs such as remediation expense, and any necessary product destruction costs.
Such a solution is proving to be of great interest, particularly now many Life Science companies outsource many key manufacturing stages to third party suppliers and contract manufacturers.
Click here to learn more about our NDBI Life Science insurance product: http://bit.ly/pharmaiq
Munich Re is one of the world’s leading risk carriers and stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. The Group operates in all lines of insurance, with around 45,000 employees throughout the world.More about Munich Re on our website:
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