 Good morning and welcome to this webinar on vulnerabilities in the US chemical supply chain My name is Ellen Mantis and I'm the director of the chemical sciences roundtable at the National Academy's of Sciences Engineering and Medicine For those of you who are not familiar the roundtable provides a neutral forum to advance the understanding of issues of importance to the chemical Sciences and engineering and promotes the exchange of information among government industry and academic sectors This year, we are excited to launch a series of webinars on emerging topics. This is a third in our series presentations and recordings from our first webinar on inorganic bio hybrids and our second webinar on detection of novel synthetic opioids are available on the CSR website Today we will be focusing on two vulnerabilities in the supply chain the inelasticity of the chemical supply chain and the risk posed by overseas manufacturing of specialty and pharmaceutical chemicals the format will consist of one overview Presentation followed by two more in-depth presentations There will be time for one or two clarifying questions after each presentation But all other questions will be addressed in our discussion time after the presentations are completed Dr. Michael Fuller will be our moderator for this webinar He is co-chair of the chemical sciences roundtable and completions advisor at Chevron He will be asking the questions on behalf of the audience and will be moderating the remainder of the session Questions can be submitted via the Q&A button on zoom located in the bottom control panel The chat feature has been disabled for audience members for those tuning in via live stream on the CSR website Please submit questions by email to csr at nas.edu And with that, I would like to introduce our first speaker David BEM. Dr. BEM is vice president of science and technology and chief technology officer at Pittsburgh Paint Glass PPG Industries. David, the floor, so to speak is yours. Thank you very much. Very happy today to have an opportunity to speak about what I think is a very important topic for us all to consider, which is around the chemical supply chain risk. Make sure I have control here. You know, one of the important things that has happened in the last many decades in the chemical industry has been a drive towards increased efficiency. In fact, for most chemical processes, those processes are so efficient in their conversion that there's a drive to increasing the scale of them, as well as to really the cost that drive them are driven by where what the feedstock cost are or what the inputs or raw materials are are more than anything such as logistical or capital cost. As a result, there's been a massive globalization in the industry and we've seen larger and larger plants being built where those feedstocks are available. Now of course as we go downstream in the chemical processing, we see a little slightly different trend happening where those again that feedstock access or those raw material accesses are equally as important. But we do see those starting to go more into into markets where products are consumed in the factory, which increasingly have been in Asia Southeast Asia. The overall efficiency of the process of processing and chemicals is really quite impressive. In very little waste, most byproducts are consumed and used and there are several critical molecules that are a result of byproducts, byproduct production, which can limit their access from a global standpoint. Now in recent history, there have been several disruptions that have really highlighted some of the vulnerabilities that there are within the supply chain. This is just in recent history if we go back to 2011 during the tsunami and earthquakes in Japan and the Fukushima disaster that happened. What made the headlines of course was the Fukushima nuclear facility that was basically flooded and had a significant industrial accident. What was less well recognized was the impact on the chemical industry and specifically an important ion exchange resin called amber list, which is at the time was made by the Dow chemical company sits very close to that Fukushima reactor and was also flooded flooded and consumed out and basically shut down during that accident. Sorry, my slides progressed. There we go. That that exchange resin was actually important for the cleanup and production of the of the nuclear reactor. And that supply chain disruption could have been disastrous. Now, fortunately, that facility was able to come back online very quickly, and was able to supply that exchange resin into that facility, but it really highlighted a potential risk and a lot of kudos to the Dow chemical company at the time for its ability to respond. There have been several others, including the hurricanes we've seen in the Gulf Coast specifically Harvey and house disrupt the supply chain, and I'll show you some more recent ones from an industrial park explosion in China as well as what's happened in COVID-19. So with COVID-19 of course there is a race for cleaning products and specifically hand sanitizers. And one of the key ingredients and hand sanitizers is isopropyl alcohol or isopropanol. So fundamentally, great, good molecule in terms of what it can do from a disinfecting standpoint. But it's really produced by by three main routes either from propylene or from the hydrogenation of acetone. The assumption of this really spiked up as a result of COVID-19 and what we can see on the right of my slide shows you the history of the cost per metric ton of isopropanol. And what you see is right when COVID goes we have really a four full, almost a four full increase in that pricing so way out of the normal way out of the norms now that pricing is important, because for most chemicals the pricing is really determined by supply to man balances. And what you see there is a direct result of the inlasticity or the ability for the production of isopropanol to keep up with the demand. In fact, what we saw happen, which is something that's that is common practice as you're getting the more downstream applications is a substitution. And we saw many products start or many hand sanitizers start using ethanol. It fundamentally works, but for all the chemists on the phone, we know that ethanol has a much higher flashpoint. And you start to see accidents happening with hand sanitizer where people are getting burns from basically flashing their hand sanitizer and burning themselves with it. So it's really not as good as a substitution from that perspective isopropanol would be a much better one. So this is a real live example that we're experiencing today. Another example that wasn't very long ago had to do with a biocide known as VIT and 80% of this biocide was being was permanently disrupted in 2019 when there was a chemical site explosion in China and the Jiangsu province. Well, it wasn't the actual biocide itself that exploded, it was actually a precursor, and these sorts of supply chain risks are actually quite difficult to to to see, because there's concentration of specific chemical intermediates that get made in plants that present the vulnerability as opposed to the end product, which is what actually has a shortage overall. In this case this explosion happened in the bi T precursor, which was made next door, which is made from nitrachlorobenzene was subsequently shut down concurrently. And as a result, 80% of the BIT basically has disappeared from the market and has not yet reappeared there's a single producer today that makes this molecule so why do you care. So this is an important biocide used in products near and dear to my heart such as architectural coatings or paints. It's also used in other home of personal care products, and is a very effective and low risk biocide to use inside of those products. So here's an example again of how, how these disruptions can have lasting effects that roll through the supply chain. Again, what was the industry's response, a substitution response, where they put other biocytes and again there's always trade problems, they can be cost and in this case, both cost and from a risk profile. So hopefully I've teed up for you some of the types of examples that we've seen recently, and that will be the end of my section of the presentation. Thank you for that Dr. Ben. Great kickoff to to some of our discussion. Again, everyone is urged to please use the Q&A function within zoom to ask your questions, or to follow the instructions previously provided regarding emailing your questions to the CSR. So let's go ahead and start with one quick question as we have time for about one or two questions before we get into things. So, ultimately, what key risks Dr. Ben, do you foresee in a future from what we've learned from some of these recent disruptions? Yeah, so I think some of the key risks do lie in the chemical intermediates. That example that I used in the Jiangsu province, it removed both some biocytes and some other specialty molecules and other one that really hit our company high was around pigments and the pigments specifically to make blue colors and automotive paint coatings. Now these aren't like critical examples, but we're going to hear from some speakers here later today. There are these intermediates are important for things such as that are important for the health and safety of people, as well as in areas like pharmaceuticals and I think those risks are really the critical ones that we need to keep our eyes on. Additionally, I should point out some some critical molecules are important for the defense industry. Over on how we defend ourselves and our countries and those molecules are are are something that when the intermediates upstream of them go short, could present a security risk for the country. Very good. So I'm going to ask another quick question here since we have a few moments and again everyone is encouraged to again please use the Q&A function of zoom. So this question is really related to the fact that you have shown a lot of catastrophes in a very short period of time. How would you say that we've learned from catastrophes natural disasters that may have happened 10 or more years ago to get us to a point where we're actually a lot more resilient as an industry today. Yeah, I think if you were to roll back the clock from some of the catastrophes that have happened, you know, the robustness and the construction of chemical plants and the safety protocols that they use really give them the ability to ride through a lot of really some very challenging situations. You know, it's very rare that you see full shutdowns happening as hurricanes come through today. And again, these chemical explosions are the explosion like we put there those are really the exception not the role in the industry. Specifically, they tend to be concentrating in developing economies where those safety standards and some of the national companies, maybe not have caught up to the learnings that the broader industry has had overall on how to safely operate and really prevent those disruptions. Very good. So we have time for one more question. This question has come in through the Q&A chat. So, All right, so, you know, the audience here this being sponsored through the chemical sciences roundtable there's a good balance of people with a chemical interest as well as an interest kind of looking at the broad view of the industry. So the question is, what are some of the best media sources for learning about some of the shortages where that information is more geared to a chemist perspective, rather than a public perspective. Do you have any recommendations. Yeah, there are there are sources like IHS, which actually publish really you can watch the pricing of different molecules and those again the pricing movements are a direct reflection of supply to man balances. It's really where we in industry get a lot of it from a public standpoint. That would be the primary one that I would focus on. Okay. Very good. So with that, we thank you Dr. Ben. Give you just a second here. So, I'd like to then switch to our next speaker, which is Dr. Kevin Swift. Dr. Swift will speak broadly to the industry perspective amid the COVID-19 disruption. Dr. Swift is also the chief economist at the American Chemical Camp. I'm sorry American Chemistry Council at ACC Dr. Swift performs economic analysis dealing with markets energy trade and tax and monitors business conditions to assess the economic contributions of chemistry. In addition, Dr. Swift teaches courses at the University of Murray Washington, which include environmental and resource economics and industrial economics. You'll now hand it to you, Dr. Swift. Okay, thank you. Appreciate the opportunity. I'm going to be speaking from more of a broader perspective. One, and I'm going to limit my remarks to essentially basic chemicals, which include in organics. I'm not going to talk about basic chemicals downstream organic derivatives and then the synthetic materials, resins, rubber and fibers, but also to specialty chemicals. I'm not going to talk about fine chemicals or pharmaceuticals. So, how is chemistry used well, 5% of basic and specialty chemicals going to other manufacturing industries or industrial activities. We do not sell to the consumer. Okay. And the largest end use market or primary end use market is plastic and rubber products which are then those products are then used in a multitude of other applications and industries. But when you boil it down, the leading macroeconomic drivers are essentially, you know, a half dozen or so key segments. One's retail for, you know, packaging and materials for products, housing and other building and construction, light vehicles. And then, you know, more important for lately is, you know, the use of composites and aircraft and aerospace but home appliances, furniture and home furnishings, machinery, industrial and exports. In our next ports, if you look at much of the chemistry that we do export the chemicals, as much as 25% is exported of some of the final chemistry, particularly with resins. And this is just another view of what I just said on the left hand side is essentially who we sell to but I did mention them. And, you know, includes pretty much most of our economy in society. But you know, our primary sector is rubber and plastic products. Those products go to, they go into building and construction motor vehicles, a lot's exported, so on and so forth. So, now, when the Coronavirus first emerged in this country, we did a very quick survey. Typically, in the spring, right after earnings seasons, we reach out to our member companies with an economic survey where we collect data from them on the EHS spending, R&D spending, security spending, things like that that just aren't available. Well, that got pushed back because of this pandemic and emergency. So, we did a quick survey of our member companies to see what challenges they were facing. But we're pleasing to find that and we did that in March and April, but roughly three quarters of the manufacturers, our companies produce a product or a feedstock or an intermediate chemical that's ultimately used in products necessary to fight against the Coronavirus. And this includes, you know, products that go into a medical equipment, you know, the resins, you know, for IV bags, test kits, things such as that to protect the PPE, the protective, personal protective equipment. And all of those resins, they go into those products, packaging. We do produce products that go with the active pharmaceutical ingredients that do go into pharmaceuticals. And then, you know, the biosize bleach and things such as that. So, we do have a fairly big role in that. And this is just sort of a visual of some of those products. And we're all familiar with theirs. I'm down for the duration down in North Carolina, my house here and I'm pleased to report that we're finally getting hand sanitizer and toilet paper back in the supermarkets. So, we support the medical sector. And, you know, we're the number one importer and number two exporter of medical products. But I'm gonna, but, you know, China does account for a quarter of the world exports of face masks and a lot of other products as well. I believe some of the active pharmaceutical ingredients. So, roughly, close to half of our companies had the capability to pivot and many of them did. They have already pivoted to produce goods or products. Materials sensitive to fight the coronavirus companies that were not manufacturing, for example, has a propane alcohol and others were moving downstream to produce hand sanitizer and this such I'm proud of the response that we have. But there have been some, we've learned from this some factors that occur during the coronavirus, at least initially in March and April. Faced a lot of obstacles, federal regulatory, sometimes you had situations where different agencies were at odds with each other, you know, just different rules and procedures and ways to do things. We had to work through those companies had to work through retooling their equipment if they wanted to go down further downstream and to say hand sanitizers it was work force availability public transportation most places in the country was severely curtailed state and local regulatory situations, personnel experiences they may have had issues with school age children at home, love ones that may have been sick so on and so forth. So, those are just some of the challenges they were facing some of the obstacles. But I mentioned that we typically did a economic survey, which got pushed back and it got pushed back until late, well actually essentially may is when the period when we did it. So we took that opportunity to ask how the pandemic was affecting our members. And so this is the response that they actually isn't public yet another final report on this may change slightly if we get one or two other companies reporting. But you know, all in all, it was negative, you know, as you would suspect. Okay, you know, four fifths said that very few said that they weren't impacted. But roughly about 10% face higher input costs they about half face supply chain disruptions or lost export sales. About six tenths face transportation or distribution challenges, three quarters lost us sales. But any, there's increased demand for certain products believe it or not, and and there were decreased demand for certain products. And if you combine both of those at those companies of 57% experience both increased and decreased demand for certain products. Here's an example. Poly vinyl chloride or vinyl residents. Residents are used in building and construction well April was a bad month for construction activity, even though construction was deemed in the central industry there's a lot of social distancing regulations at the state and local level. And so activity fell off so the demand for building grade PVC residents felt off by more than one half in in most of those are going in directly into construction. They're going into a manufactured construction product up the plastic product and there were a lot of curtailments in the downstream plastic product manufacturing. So, the demand for PVC residents for that particular application fell by half. At the same time, vinyl residents use and say IV bags, things such as that continue to be supported. In the propylene and other example there's some grades of polypropylene that probably suffered but polypropylene grades used for non-wovens that go into the PPE the personal protection equipment held up fairly well. Some of the packaging that polypropylene is residents are used for held up well. So, it just were differences. So, you know what was some of the responses that they took. You know the actions. We've seen this across the board, they've curtailed capital spending they delayed projects so on so forth cutting capital expenditures. Roughly we believe by about 18% compared to the year before. They curtailed most companies are curtailed you know work hours they've been some furloughs and some layoffs they curtailed production. Again delayed or canceled investments, mostly delaying or extending the schedules, some partial and full shutdowns and they pivoted operations into such. Again from our economic survey. Some of the adjustments that were made in response and you know about three quarters had to make some sort of you know workforce adjustment. You know some of them reduced permanently reduced the workforce, eliminate positions, layoffs, some temporary temporarily reduced. Workforces more that was about half of the survey companies more so than the permanent reductions. Decreased hours worked about one third about 150 crease wages. 24%, however have increased wages. So next slide. As I mentioned that. End use markets and this is right we just finished our mid year situation now looking to draw from that for some of the remaining slides but here we rank the key end use industries that we sell into. Now rank them from best to the worst performing this year now they're all negative. Some more negative than others motor vehicles and parts being at the bottom because you had essentially no automobile late vehicle production in the month of April. So that clearly affects that output will be down roughly, you know, 25 to 30%, but food beverages and tobacco just down slightly this year. A key thing is that we are. Energy is a key aspect of for us it's a we use energy much like other for fuel and power much like other industries but it's our raw material. And in this particular in this country we use a thing is our prime feedstock propane as well, but I think primarily it's a natural gas liquid. It's used in the Middle East, as well as the United States and Canada. Most of the rest of the world cracks what's napple that's a liquid, a heavier liquid that's a product of petroleum refining the price for that's highly correlated with the price of, say Brent. It is prices are somewhat correlated with the price of the Henry hub is become disconnected in recent years but we use as a proxy. We divide Brent by the Henry hub and when that ratio is about seven and we're competitive as you can see in the early part of the latter part of the 1990s and the early 2000s. We were less competitive, but with the shell gas revolution, our competitiveness is improved now in early May, when the WTI turned negative. You know, we were concerned there's a lot of concern in the industry that was as permanent. This is in the ratio of going back up and we do not make forecast by the way, this is essentially from the Wall Street Journal we just you can go and get the forward strip rates. Okay. The shell gases resulted in a number of projects that have been announced by the chemical industry, we update this is called their one pager, roughly 344 projects value to $204 billion. What's of interest is that 62% of this is foreign direct investment, 80% of it is in petrochemicals plastic resins and other derivatives. It's sort of tapered off lately, but this is a result of a significant increase in the capacity in this country, roughly 40% during the 2010s. This is where the shell plays are, and this is where these projects are. There's a cluster in the Gulf Coast, mostly petrochemicals and petrochemical derivatives, a cluster that's emerging in Appalachia. There's a cluster of mostly fertilizer plants plants in the Midwest in the couple on the West Coast, as you can see. No one called that a cluster. This just shows a measure of basic chemicals and synthetic materials capacity the incremental change each year. This just shows that we're in a period right now of significant gains in this capacity and then it'll begin off in 2022 2023 and so on, but significant capacity coming on stream. Okay. This is a measure that kind of gets into the issues of supply chain resilience. Unfortunately, the data going back to 2005 but if you look at other similar time series of the relationship of inventories to sales you had the advent in the 1990s of just in time inventories and so day supply would likely have been much higher back in the 1990s and it continued to decline until roughly about 2011. The Fukushima earthquake. In effect there was a plant that made a key input for electronic chemicals that was taken out and it significantly impacted the semiconductor industry worldwide so we've had since then a general creeping up of days inventory there to help and this is just for one segment basic chemicals and synthetic materials. And it was in a good position. Our outlook significant decline this year. All across the board, what will fair the best would be consumer products because that's where I'm up it's where hand sanitizers are and things such as the so that's going to decline is going to be we expect a fairly good bounce back next year. Okay, here basic chemicals. Within basic chemicals, you know significant declines in bulk petrochemicals and organics this year. Synthetic rubber for example is going to decline because we had that loss of production most rubber goes into tires which is related to OEM purchases fibers are going to decline. Well up the best is plastic resins, and that's expected. It's going to decline this year but not as much as the others be largely because of the role that these materials play in, you know fighting the corona virus. And next year we expect, you know, some strong gains recovery. We don't like to make single point forecast so we've looked at a kind of a baseline we've laid out for the economy and then we looked at a pessimistic scenario where there really isn't a vaccine that maybe there's continued lockdowns and restrictions that continue through the end of the year and so the situation would be much worse. And with these chemicals, you know the volumes would be much worse in this pessimistic scenario. Less likely is an optimistic scenario where there's a V shape recovery. But compared to our baseline but I do compare this to what we were saying it. We're really thinking about the corona virus in late well actually was early December when we did our year end situation outlook but if things were the worst and capital spending in particular would slump even more. So, getting towards the end, our outlook or success depends on the bond access to abundant and affordable energy, a favorable regulatory or reasonable regulatory environment the state of the US and global economy access to global supply change and then access to export markets, some concluding thoughts that derive some of these from a good friend of mine Paul Hodges. He writes a regular column and ICIS chemical business and actually the question was asked before is the sources of data. ICIS chemical business IHS market and S&P global plants are the primary sources of data. Argus media as well on chemical pricing and you know market developments and the such and so she outgassed it's been a game changer. It's provided an advantage renewed our competitiveness our exports are going to gain. And they're seeing changing demand patterns. You know, continue strong growth in China and other emerging markets strong growth here downstream and plastic products and rubber products as there's reshoring going on. Ensuring of the supply chains, for example, to downstream customers to say North America, if they're labor intensive likely to Mexico but that chemistry will likely be produced here in the United States and exported to Mexico from the Gulf Coast. Some other interesting things that the dilation of manufacturing customers in the chemical industry itself. For example, if I would have asked a typical business leader, five, you know, 10, 10 years ago, you know, what's your data analytics strategy and may have gotten a puzzled look but they're all employing data scientists and analysts now to improve their communications to improve the logistics to improve their marketing, so on and so forth, the circular economy and sustainability are big issues and then there's new materials that are being developed. And so I'm going to leave it at that. As my contact information if you want to have a dialogue. Thank you Dr swift. We will now open it up for just a couple of questions. Again, please note that if we don't answer your questions now we will have an extended roughly 25 minute Q&A period for all speakers at the very end so please bear with us. And again also it was noted the chat function is disabled but if you do have a question, please use the zoom tab labeled Q&A for your questions. I'm going to go ahead with just one quick question here that I see here. I'm number one. Dr. Swift has the Corona's pandemic been a catalyst for innovation and new business models and in what ways specifically in the domestic market. Well, you know, it's certainly a lot of companies have, you know, risen to the challenge and going downstream, you know, producing some of these products at fight. The Corona virus, you know, hand sanitizers, you know, some have gone downstream even manufacturing face shields and things such as that. And whether that's permanent, I don't know I suspect that life has changed and we will probably go through life wearing more masks than we would have, I would have said, you know, six months ago is changing, you know, business models. And as I mentioned, I think this will be sort of a push to more modern manufacturing and digitalization within the industry and within our customers and the such. Very good. The next question is actually coming from our chat. So Dr. Swift what role if any will small US businesses play in some of the reshoring that you alluded to in your presentation. Well, when people think of the American chemistry console they typically think of, you know, like the major chemical companies we have a lot of small member companies and we actually have a small medium size console of companies. A lot of them are specialized and so, you know, for example, you know, it may be a company that focuses on, you know, a specific type of plastic additive well as reshoring occurs into the North America. They may find more opportunities and Okay, very good. The next question also comes from the chat. Could you comment on how the COVID situation and the need for reduced capital expenditure has impacted product innovation not necessarily related to COVID innovations but general R&D efforts. Well, we never really asked the question about what if they were cutting back in R&D so it's hard for me to comment on that our focus when we did do our economic survey was on capital spending, because it's related to R&D. To the extent that this is just general, I can't I really don't have the numbers to back that up but you know just common sense that to the extent that R&D expenditures or budgets are curtailed, you know, cut back or it would have effect on, you know, innovation you would assume that there'd be some sort of outcome, you know, from those investments. Very good. I'm going to ask one more quick question if I could. So, you know, you're with the American Chemistry Council you represent a lot of these domestic producers. So really compared to international chemical manufacturers, what would you say you're going to be some advantages of our domestic manufacturers that may allow for either a more speedy or a more robust recovery following the pandemic. Well, we're a unified nation for one thing so you can ship from Texas to New Jersey. There aren't borders. So we have that. We're a fairly I think an innovative nation. You know, we things don't work we find solutions and work around it. We have a tremendous raw material fee stock advantage that very few other countries do. I mean, the capacity that's being built on the Gulf Coast and plastic resins and bulk petrochemicals is among the most competitive in the world and so we have an advantage in that aspect. Good. So with that, Dr. Swift, we'd like to thank you for your presentation. We're now going to go ahead and shift to our final present presenter for today. Ron, this is Ron Pervin Chenzi who's going to address vulnerabilities within the specialty chemical and pharmaceutical industries. Ron Pervin Chenzi is the Chief Executive Officer of the United States Pharmacopeia or USP. In his role, Dr. Pervin Chenzi provides strategic leadership to USP's global staff of around 1400 folks around the globe. He's launched several USP initiatives on topics that include digital medicine, manufacturing technologies, and advanced biologics. With that, Dr. Pervin Chenzi, please go ahead. It's my great pleasure to speak to you all today. Three parts of my talk. First, I'm just going to answer in two slides who is USP. And then the focus of our conversation today, the insights on the supply chain vulnerabilities with respect to not just the medicines, but also the precursor elements and chemicals. And then second, what can we do about that? How do we strengthen that global medicine supply chain and what impacts consequences can that have on the broader industry, not just the pharmaceutical industry, but the chemical industry as well? So to start with, who is USP? So the National Academy of Sciences was founded, I believe, in 1863. USP was actually founded 43 years before that in 1820 by 11 physicians, three of whom were in US Congress at the time. And the idea of the formation of USP was to solve a problem of poor quality medicine in the United States. We see a wizard oil at the top here, but even worse than that, there were poor quality medicines being dumped on the US by Western European countries, mostly England. There was actually a time where the labels medicines were labeled good enough for America so that they could not be sold in England, but only exported to the US. And so this reaction of these 11 physicians was to establish the world's first pharmacopoeia. And a pharmacopoeia at that time was really a recipe book. Today, it certainly has evolved into something much, much more complex and it's a set of essays and tests that can assure both the identity, the quality, purity of medicines and we use medicines quite broadly. I can describe a little bit more of that in a moment. So, what is the medicine supply chain, and a little bit of context there on USP's role. It's another way to look at the supply chain. On the right hand side is a simplified depiction of suppliers, many, most of whom are chemical companies, manufacturers which are either final product or sometimes intermediate products as well along the lines to becoming a medicine. And then of course you have the distribution and wholesalers and unlike in in a non medical chemical supply. There's additional complexity of the fact that the buyer is not the decision maker and the payer is not necessarily the buyer or the decision maker. And we're all quite familiar with this from our own lives and the challenges of managing your, your insurances, your production, your pharmacy relationships back to the healthcare provider, the scriber, etc. So the medicine supply chain is complicated, even having nothing to do with manufacturing, but you add to it, manufacturing component and yet you have something quite complicated and also relatively opaque. In order for the US as the official standards for medicines in the US as well as recognize in over 60 countries around the world requires a lot of content. And this is a cumulative content developed and updated over 200 years. We celebrated 200th anniversary this year. On the left hand side on this slide gives you just a sense of the volume of these standards. These are highly technical documents. Of course, they're not in books anymore but had when they were in books this was nearly two feet thick of standards to cover the entire US medicine supply chain and by medicines. So we don't mean only prescription drugs but also over the counter products standards in and around food ingredients, and as well as dietary supplements. So, why do I tell you about these standards, I'm telling you about them because the data I'm going to be sharing is going to be based partly on publicly available information from around the world, but also a mixture of US case proprietary information we have through the usage of our standards. So this chart as a map of the world that's taking a USP lens on the world, but the notion here isn't to tell you about USP standards but actually to give you a sense of the world when it comes to medicine. So the first statistic here about 80% of medicine precursors the API the active ingredient, the secret sauce into medicine, 80% of manufacturers are located outside the United States. It's not probably terribly shocking. It's a big world, but that's gives you a sense now already where we're starting over 80% outside the US. A second number I'll share on this slide, which will be first, we're analyzing this was was quite sobering 22,000 hours standards physical standards that are used in laboratories by both governments as well and mostly by industry for the testing of their medicines and as well as R&D to create new medicines and precursors. Our standards were shipped to over 22,000 locations around the world, far more than half of which are outside the US that gives you a sense of the footprint of the entire supply chain. Now we don't have the we as an industry don't really have a handle on this and that's really the point of today's talk that complexity is not well understood and therefore there's very low transparency today. One last thing on this chart. Take a look at the map. It's not randomly spread around the world. This is think of it as a bit like a heat map, the dark red is where you have the highest concentrations of usage of the standards and therefore, you know, medicine management, and then going down from there and you see certainly hot spots in Europe US, India and China which are not only, you know, play huge roles in the medicine supply chain as manufacturers as well as precursor creators, but also are growing users of medicines. And see Russia as well and then Latin America in particular Brazil. So that's just to kind of get a set up a little bit. So there's, there's a lot going on in the world. There are thousands of medicines across hundreds of countries. Many countries participate in manufacturing all countries participate in purchasing and use of medicines. So now let's talk a little bit about supply chain vulnerabilities. These are series of headlines from the last few months. The pandemic has not created the first time we had critical shortages in medicine supply chain, but no time before has there ever been the degree of awareness, driven by a double combination. First, the pandemic just causes disruptions to all kinds of supply chains across all chemical industries actually more than that. And, of course, also affected the medicine supply chain. Secondly, they were unique shortages driven by spikes in usage of specific medicines, whether or not proven to be effective. Those created ripples throughout the supply chain, including on patients who were using those same medicines for other purposes having nothing to do with cobit 19. So this double combination has created a lot more awareness. Two of the previous speakers actually both mentioned hand sanitizers in the US a hand sanitizer is actually an over the counter product think like aspirin or Tylenol. And therefore the standards for the quality of a set by USP for a hand sanitizer. And we were involved in those early days of helping to address the shortage and we had a couple of questions come up about about the shortage and it's one particular case but it's an interesting one. There are several rounds involved distillers and many of you seen this in the newspapers, and certainly in USP is 200 your history I don't think we've ever had to work directly with brewers and distilleries like we had during the earliest days for the first first weeks at least of the pandemic. And I think that's a sense of that innovation we did we do see in the US. So it's a rough story in the beginning but I think a very positive outcome in the end. It's a recognition but the recognition of what. So let's talk about looking backwards first before we look forward. This chart goes back about 20 years. And at this moment ignore the 2020 number it represents just the first couple months of the year. But the rest of the years you'll see drug shortage is the number of drugs that fell into a defined shortage. Each year for the last 20 years and it's an ongoing issue. It's it's it's ever been flowed over time but it's consistently a problem. The numbers don't quite tell the whole story. There are certain types of medicines that tend to fall into shortage more often and for those, it is even more disruptive, in particular, more complex medicines, sterile products used in hospitals. These are very important. They're generally low priced, and they're often falling into shortage creating creating issues as well as creating switches to other alternative which may not be as effective. So is not a new challenge. So the question if it's not a new challenge and most obviously not driven by a pandemic in this years and what has been driving the shortages. Well, many things drive it, but what I would call the underlying chronic issue is quality. 62% of shortages over the past five years were triggered by a quality problem. They're different types, but generally a quality issue is either a manufacturer or an ingredient supplier fails to meet quality expectations and is either shut down or supply is otherwise interrupted because of because products have to be pulled from the marketplace, or there's a halting of production. 62% of the time. This is the underlying issue. Now that will come back later that actually has issues, especially when it comes to disruptions in a pandemic. And then of course there are others natural disasters hurricane that affected Puerto Rico created a very large issue through the supply chain medicine supply chain in particular for sterile products which were disproportionately manufactured in Puerto Rico. So that's a good example of course there are others and as we see climate events rising. The next item that comes on the list that could potentially come on the list is political disruptions so trade trade disputes and barriers have played a relatively small or a very small role so far but there's no reason that couldn't become an additional challenge in the future. So I'll come back to the quality in a couple of moments. So let's talk about why has gotten worse. This is true of the chemical supply chain in general and it's probably even a little more true in medicines because the manufacturing for medicines is relatively old school has not evolved as quickly as almost any other industry. It's just starting to now. And because of that, even the notion of just in time manufacturing which is certainly not a new, a new idea has come into manufacturing for medicines really in the last decade mostly. So as a result, you've tightened things up. It's good for efficiency, but it leaves one more vulnerable to all kinds of disruptions. Another item I'll call point out specifically for generic medicines is the pressure on pricing the generic medicines in at least in the US around the world but in particular in the US are really quite affordable. There are exceptions, but the vast majority are are very affordable and prices actually dropped quite a bit over the last 20 years. Some of those prices dropped so low as to no longer be profitable, which leaves manufacturers to leave to move into more profitable areas, and those drugs are the ones that most often fall into shortage. And lastly, we talked about regulatory and other logistical hurdles that slow response to in theory a perfect marketplace would respond to a shortage by quickly producing products by somebody else another country, another manufacturer, such that the patient at the end would never actually feel the shortage. But given other challenges in both the visibility and the transparency of the shortage. In other words, you don't know until it's too late. In addition to the regulatory challenges that it takes time to be able to produce a medicine prove it's a high quality get the right approvals and be able to provide them to stakeholders. So the medicine supply chain has some of the same challenges that any chemical supply would have, and then on top of that a layer of a few additional ones that create even bigger time gaps and therefore they amplify the risks. That's what we do about it. But the first thing I'm going to share is a little bit of the work that we have been doing, which is, it's new for us new for USP is to build what we're calling the pharmaceutical supply chain center. We start to uncover and to talk about that those unknowns that we always say are opaque or not transparent and to make them more transparent by creating a public data set that maps well over a dozen data sources. In fact, it'll be dozens within the next couple of months to create a real view of the upstream supply chain we essentially mean from a medicine going backwards up the chain into ingredients through the distributor networks, looking at things like biographies, as well as medicine types, and ultimately not just to understand it, but to be able to predict vulnerabilities, or at a minimum to identify the areas, most of most likely vulnerabilities. And then to provide tools because that's not enough to say this vulnerability that what can be done about it. And fortunately, there are quite a few mitigated actions that can be taken with some reasonable and better data sources available. So we're going to come back later and talk a little bit about the solutions. But let me share a little bit of the of the bad news. This is a relatively simple this is not a complex but a relatively simple example of the HIV antiviral. What the map on the right shows is a, it is a distributed manufacturing map. This is not a distribution supply chain to reach the patient but rather the manufacturing from ingredients through finished product. It shows not only the types of companies involved, but also the locations of the countries where those manufacturers are whether it's a manufacturing for an active ingredient or an API, an Excipient, which is a name for the some people called the non active ingredients things like emulsifiers, colorants, etc. And of course the finished product manufacturers as well. So one example, the number of different manufacturers and number of countries that they're in. And as I said, it's a relatively simple example. So in the United States, the US FDA has approved well over 1500 medicines with unique API is there are thousands of medicines approved on different formulations are called, but underlying those are over 1500 unique active ingredients. So you apply that chart on the right hand side by 1500. And that's the beginning of what you look when what it looks like to talk about the global supply chain. So this is one example of one of the more relatively simple analyses that we start to map to be able to then aggregate this across geographies across medicines across medicine classes to develop a true look at the medicine supply chain and its vulnerabilities. Here's an analysis that goes more towards a set of predictors, or at least it's a precursor to predictors but to create some sense of vulnerability. In this case, we've just not a randomly chosen set of medicines but these are medicines that are used in the treatment of COVID patients so we chose just for interest reasons. Some are relatively indirect like acetaminophen to treat fever and others are more direct like albuterol for breathing issues and as well as in the case for some painkillers for patients who are intubated for example. But stepping back from that for a moment to what what is this chart trying to do. Here at two, not the only two, but to what we call risk factors for a medicine supply. Every one of these drugs is is post patents or in generic. So you have multi manufacturer scenarios. And on the bottom is the one that's most intuitive, which is a geographic risk. So how concentrated or dispersed is a manufacturing of a product. All the product was manufactured in one town in New Jersey you would have a geographic a very high geographic risk score of 1.0. If a medicine is produced in every country on earth you would have a very, very low geographic risk score. So in this case, ibuprofen on the left is being produced in so many different places and countries that let's say a natural disaster would hit any one region. There would be many alternatives for the production of ibuprofen. And ibuprofen zone is much more concentrated. The vertical access access sorry, the vertical access represents the density of the actual manufacturers. So let's say, for example, you have a very dispersed set of geographies many countries involved in manufacturing. So it is very few manufacturers, for example, Albuterol what it means is that you just have probably in a few countries, one one company in each country. So very few manufacturers means if any manufacturer, for example, has a quality issue or goes into economic challenges can create a disruptive effect on the supply chain. The right hand corner speaks to both geographic as well as concentration of manufacturer, and those are ones that you want to look at the most carefully when you think about your sourcing, if you're an acquirer of medicine or if potentially you're looking to make new manufacturing for for any given product. So this is a basic, this is, I mean, in some ways the simplest analysis we've done in the earliest weeks. We're only about six weeks into this, this effort, but we're really excited about the potential it has to shed more information and more light on basically where medicines are coming from where the potential risks are, and then ultimately what we can do about it. So, as I promised earlier, this won't only be a news of what's complicated or worrisome but a few notes about what we can do. So I'm going to share a list of a five we think really significant solutions and then I have two slides on just one of them to go to just a little bit more detail. So first on the list is somewhat counter intuitive to many, which is that we would benefit by fostering more supply chain diversity, go back to the two by two chart I just showed figuratively not not literally. And you'll see that having geographic diversity will help everyone. If we brought all manufacturing for US medicines back to the US in New Jersey, and then New Jersey had another hurricane, we would be in a severe medicine shortage. So the benefit of having more supply chain diversity isn't only to ensure that there's a geographic distribution, but that we can become cooperative in our supply chains. So having more diversity but real diversity, not diversity, meaning not in the US but diversity meaning US is playing a meaningful role across the supply chain and purchasing from many places not only one. And I skipped the second one so I'll come back to that one later. The transparency and data sharing I think is absolutely critical to be making better decisions. Simple as that. The last on the list I'll mention that maybe it may not come up in all industries but in the pharmaceutical industry is really important, which is a strengthening of regulatory systems or the drug regulators, as well as their ability to conduct quality assurance. Because two thirds of drug shortages occur due to quality issues. One of the one of the underlying problems is making sure that the manufacturers are able to meet high quality expectations in a consistent basis. The second reason though to strengthen regulatory systems is that the ability to for, for let's say US or Western Europe to purchase medicines from countries that don't have a robust regulatory system means that the country of the purchasing. Let's say the US the US then is responsible to have to be establishing the level of quality and medicines that are being imported from dozens of other countries, whether that's India or Latin America, Africa, Southeast Asia. If those regulatory systems are strengthened if those regulators were able to hold their domestic companies to the international standards. Then it makes it much, much easier for for the US to be able to purchase those medicines and those medicines can become a part of that supply chain. So this last one loops back to the first that it allows there to be more supply chain diversity. And also as the added benefit of creating an export market for US manufacturers where they can compete fairly at a quality level without being undercut by poor quality products at low prices. Now last I'm going to talk about this strengthening the manufacturing capacity, and in particular I'm going to talk about the adoption of new technology which in the pharmaceutical industry is is actually quite a big deal. Surprisingly, to most people who don't work in pharmaceutical manufacturing, the vast majority and by vast majority I mean 99.9% of medicines in the world are still produced in batch, which is how the, how cars are made before the Model T. So essentially you're producing precursors to precursors moving along in a batch releasing a batch at one time, rather than what in again in pharmaceutical advanced continuous manufacturing and what in every other industry would just be called manufacturing is something that is being done on a continuous basis, monitoring the quality and the attributes along the way and creating and producing the medicine, or even the precursors and the API in an ongoing basis. So, it sounds like it's a good idea. The evidence is is strong that when done right and at scale, it'd be more efficient. But what's that have to do with shortages. One, two, two things. First, manufacturing for medicines has largely left the US shores and the manufacturing for the precursor ingredients, even more so, the vast, vast majority are from outside the US. And so the US participates in less of its medicine supply than it consumes in the world. How does one bring that back. Well, one way to bring that back is to have an advanced manufacturing technique that is less that is less labor intensive, and therefore economical to produce on US soil and such technology does exist. But there are barriers. And I'll come back to the next slide some of the barriers to to the uptake of this technology. The second reason to bring it forward is that in advanced manufacturing, you have the ability to scale and quickly switch from product to product and be able to address things like an unexpected shortfalls or even just to move with market changes to produce the medicines that are most in demand. So these are the two advantages. I think the second second advantage of having lower labor intensity as well as being able to produce more reliable consistent quality products makes it really, really a powerful opportunity for the US in particular. So, this is my last chart here. I mentioned the generics industry for a reason. And the reason is just simple. 92% of medicine prescriptions in the US are for generic medicines. It's most of our medicine. In fact, it's the vast majority of our medicine. But right now in today, there's virtually zero examples of generic medicines produced in the world under advanced continuous manufacturing, nearly zero there may be one or two in the entire world. It's remarkable. And here's why the margins are small in generics, the chance of taking a risk on a new technology and not working out is just not worth it. There's a regulatory uncertainty, because it's not been done, who wants to be the first one to show up at a drug regulator and convince them that your product is of good quality with nothing to compare it to. There's not a workforce. No one's worked on it before you starting from scratch. So, how do we address it. Well, there's actually quite a few things that have just begun in the last year or two. And there's quite a bit more that we can do. I won't go through the list here, but we believe that this is something incredibly important. And also, a really, a really pressing opportunity for right now to both make investments in advanced manufacturing to grow the workforce, and to create one, I think really important solution to the long term challenge of drug shortages and lack of security in the US drug supply. One last thing I'd like to mention is what role others outside the industry would have to play. Some of these barriers I think are obvious so having the US FDA has devoted quite a lot of time and energy over the last several years to better preparing itself for being able to approve medicines made under continuous manufacturing. So far that has been going, there's been the vast majority of that work has been done with branded companies, those are the ones who have made those early investments, but the generic industry will have to come next. The second part I think I would mention is the need for investment on the workforce development on the front end. It is very hard to start from zero and this technology is quite different and the usage is different, as well as the amount of data analytics. The level of sophistication is quite a bit higher. So I mentioned these as important areas for government investment to help spur and produce something which I then believe would become sustainable on its own. So with that I will say thank you very much and my contact information is here and I look forward to the Q&A. Thank you Dr. Pervin Genzi. For all of our speakers we'll go ahead and transition to our Q&A section if you want to turn on your videos at this point. We'll start by doing so. I'm going to start since we didn't get time to do any direct Q&A for Dr. Pervin Genzi yet I'm going to go ahead and ask him a question first that came in. First of all, how closely if at all does USP work with the International Drug Information Association and coming up with and compiling some of these statistics. Yes, thank you. I'm sorry if my lamp just fell off my table. This is the joys of working from home and stepping on the wire. So two answers. We are partnering with multiple organizations. In fact, we've had discussions just the last year with the IA to advance our partnership, especially when it comes to the training and awareness building. So we've begun discussions, they've been perhaps a bit disrupted by COVID but we're not stopping. And the notion here is to partner with their reach to a very broad audience which includes very much the manufacturers but as well as the regulatory professionals in the US and abroad and help them to come up to at least what I would call basic fluency if not expertise in the advanced technologies. Good. I'm going to ask you one more than I'll open some questions up for all the panelists. So beyond just more US government investment, what do you think would be some other enabling steps to make ACM really be more widely adopted across the industry. And what kind of policies, not necessarily monetarily might help foster that transition with time as well. Yeah, well there's one. I'm going to give you one, I think one strong answer to that. And it's somewhat monetary but it's actually indirect and that is pay for quality. In the current time, no patient would ever say they don't care about the quality of their medicine. But there's no link between the purchaser and the expectation of quality. And it's actually watered down for three or four different handovers of which all of them are relatively opaque. So the point is that the there's no premium on quality and reliability, like you would want there to be there can be though there can be choices made, at least in the middle of the supply chain on behalf of the patient to say I will pay an extra four cents a pill instead of 13 cents I'll pay 17 cents, and that will guarantee us quality and reliability by having longer term contracts for example. So it's not an idea that couldn't happen. In fact is a nonprofit that has been formed, just in the last couple of years, who is both manufacturing but also procuring medicines under these type contracts, paying a fair price for a long term reliable supply wherever that manufacturer might be. And actually I think it's the missing piece in the puzzle because once you're willing to pay for quality and you're willing to invest over a period of time, you then change the ROI for the manufacturer to say you're willing to invest in the new technology. Thanks, Michael. Very good. Okay, I'm going to transition to a question that maybe largely targeted at David and Kevin, you know, as as an industry, the chemicals industry puts a lot of emphasis on PBE and the safety of our workers there. Do you feel that our industry has really set a good example for other industries, be it consumer products or other, as far as attention to the, the safety of our personnel and resilience through the COVID pandemic and really setting a good example. And if you want to comment, I will say, I do think the safety protocols in the industry are really second to none. You know, it comes with a long history obviously, and of sometimes learning through failure on what we needed to do to do better as an industry overall. From resiliency, we've talked a lot about hand sanitizer here, but it is an example of resiliency in the supply chain in the industry, a lot of non-traditional companies stepped right up and started making hand sanitizer around the world to help hit that demand. And something that wasn't mentioned just to divert slightly on that topic was, you know, we talked a little bit about government's impact. In the US specifically, the FDA did take some temporary changes to their, to their regulations to allow that to happen. Certainly wouldn't have been as possible if it wasn't that regulatory body stepping in, in that way and letting that happen overall. And maybe Kevin, you want to comment from an industry safety standpoint. Sure. If you look at the OSHA statistics or the statistics published by Bureau of Labor Statistics or Department of Labor. We are either the most the safest industry with a manufacturing or the second usually were it's neck and neck with petroleum refining. You're safer working in a chemical plant than you would be at a retail store. It's a very strong safety focus that aids back centuries. I mean, to the 19th century. More recently, it's been embodied in, for example, at the American Chemistry Council on our responsible care program, which is a condition of membership within the association. Okay, I'm going to again, I'm going to again just make a comment to all of our attendees here if you do have a question for the speakers. If it is for all speakers, or if it is for a specific speaker, please indicate that in Q&A function. At this point, I'm going to, I'm going to be selfish and I'm going to ask one of my own questions that has been alluded to by some of the questions that have actually come in. And this could go for any of our three speakers, right. In more recent years, sustainability and environmentally conscious technology has really been important in some of these recent years, but certainly especially with the economic disruptions we've seen this year there's going to be a lot of attention on profit abilities and profit margins. So how in the rest of this year and the next couple of years, can we strike that balance by maintaining profitability and continuing to make advances both technologically, etc. In the areas of sustainability and environmental causes. Anyone is welcome to answer that. Thank you, Michael. I'll go first and the pharmaceutical industry has been perhaps slower in reacting to environmental concerns partly because it's less volume is overall smaller so it doesn't have as quite a larger footprint, but it's not insignificant. The changes have been gradual and positive so the techniques and technologies have improved to some degree but even more than that the the processes and change that's been that's been the main driver. But many of those have been slowed by the reluctance to innovate because the innovation requires a new filing from a regulatory standpoint and creates there's a risk there's a risk associated with change. USP US FDA have been working for quite some time to actually go to flip that script and have it become a, you know, incentivize versus, you know penalized to work towards those those innovations. So just good opportunities. One thing I would mention is that it's not just about the environmental. The USP we think about sustainability we think of both the quality as well as the environment. And from the quality side, those changes can you can produce some more quality product over time, then that sustainability sustainability of the supply chain as well as the sustainability of the planet. Okay. Go ahead. Oh, I can say that, you know, I mentioned our responsible care program that's a whole ethos and you know code of conduct for our member companies. But, you know, the circular economy sustainability have been big issues. We as an industry are investing. I've launched a program to combat plastic waste. A multi billion dollar program. And it's become an issue and I think every company. The space has, you know, some stake in that. So we've been working along the supply chain with downstream, you know, customers, manufacturers of packaging containers, all the way down to the, you know, the finished consumer good. Very good. So there was a question came in through the chat that was directed at David. But anyone is welcome to answer this. But I don't think everyone saw David's answer. So the question was, with, with all of the overall effects of COVID there's been a kind of a motivation to change the supply chains and move away from certain parts of the world. Is this really a realistic and feasible goal and are there any risks to those drivers. So run run actually said something in his talk which I very much agree with what's key is to get out of the geographic concentration and to have geographic diversity. You don't want to concentration anywhere it's really not about anyone country or etc. There might be some exceptions there from critical materials for our defense infrastructure, but otherwise, I think it's more about the diversity. And, you know, there is a cost with that. Because, again, for as particularly as we get into your more basic or your intermediates in the chemical industry. There is this efficiency of scale and with the new capacities that are going in. They're almost always following again those low cost speed stocks we saw a great example of that for Kevin. We showed all that investment going on in the US as a result of our shell gas opportunities. And those for us to have that diversity, you're going to have to sometimes upset that that high efficiency, which comes at a cost and ultimately that cost has got to be paid by you and the consumers because that cost is real and it's going to need to basically just be something we accept. Now that's a cost of stability, if we think of it that way. So it's the long term way to look at what is probably a fundamental lower cost situation than on any point day of pricing for something. Good. I'm going to go ahead and pivot to another question that came in through the chat and this is more directed for run. So the question is, are there any platform manufacturing models for certain drug types that might allow kind of a pivot to a note new chemical manufacturer, making a little bit easier for some of these small chemical manufacturers. Oh, yeah, it was all quite interesting. Here's one side effect of the switch to advanced manufacturing is certain criteria that didn't matter. Suddenly matter a lot. So we're talking about physical performance becomes a critical element, like it isn't any continuous chemical process, not just the chemical at the end of the end of the line how it behaves. What mixes how it behaves. Those then become more valuable to be able to meet those criteria so first we have to have standards that define those criteria reliably but once they're established and there's an opportunity for premium product, if you will, and for potentially smaller manufacturers to be able to step in meet those specialty needs and be able to share some of the some of the value created by this more efficient method mechanism overall, which conveys a bit more value to the upstream. One of the issues is many of the ingredients in the pharmaceutical supply chain are themselves so low price that there's no incentive for innovation or change or really just no incentive to even participate. This might create some more incentive and I hope that's a positive benefit. We had an email come into the CSR email remember that is CSR at nas.edu if anyone wants to email in their question. Outside of the Q&A. This question is other disruption of the first half of this year. It's really actually related to the OPEC sorry to the OPEC increasing their production of hydrocarbons, which really ruined a lot of specifically the US fracturing process and the production as a result. How much did those initial increased productions immediately prior to COVID really change any of the forecast related to the manufacturing? I guess I should probably answer that one. Yeah, I mean it was a shock. I mean, you know, essentially there is a incredible demand destruction as nations locked down across the world, you know, in terms of transportation and economic activity. And so, you know, the demand plummeted, but supply kept on expanding well and something he had to give and that was the price at a particular point. We've seen supply in this country start to fall. There's been a number of notable bankruptcies and such. And so, we as a nation, I had a nice chart which I decided not to include in this presentation but I took the EIA forecast of both natural gas and oil and oil production in this country. And what they made in their December outlook, and then their most recent June outlook, and it's completely different. But, you know, production will be off this year and both oil and gas, but it's still going to be relatively high levels, very elevated levels compared to, you know, 10 years ago. And you know the price of Brent and the price of the WTI have crept up to around $40 per barrel, which in some particular basins regions, it's economically feasible to continue on production. Thank you, Kevin. This is going to be a broad question that probably anyone can answer here from our panel. The question is, has the consolidation of ownership of these companies and larger venture capital buying companies reduce the geographic diversity of production of either pharmaceuticals medicines or some of the chemical products. Let me share on the pharmaceutical supply chain. The answer is relatively no. The pharmaceutical supply chain is relatively unfragmented. And in fact, the areas of fastest growth are coming in middle income markets, like Russia, Mexico, Nigeria, Bangladesh, Pakistan, where you see huge growth of new companies brand new, who are entering the space they're usually producing locally originally to begin with and then begin to, you know, raise their game for export markets, including into into Europe and the US. At the same time there is consolidation, but it's it's more than made up for on the other end on the innovation so it's quite dynamic. So that increases the complexity, but it's also a really good opportunity. So I think the pharmaceutical supply chain sort of bucks the bucks the trend mostly around the world. Sorry, I'm muted. Any, any additional comments Kevin related to the chemical industry on that on that side. I forget the first part of the question. The question is related to how how consolidation and some of these venture capital moves have kind of changed the outlook for the industry, as well as specifically the delocalization of some of the manufacture. Okay. Yeah, I mean there was a trend towards, you know, sort of like with globalization that we've seen in the last 20 years, I think, you know, this particular from since Fukushima. Particularly since now there's been a move to reshor and maybe the diversify supply chains. The industry, I mean if you look at it in terms of the high 30,000 foot level, it appears to be fragmented but once you get down to individual products. You know, the titanium dioxide or ABS resins or things like that it's actually quite consolidated already in some cases, probably can't get much more consolidated because of anti trust rules here in the United States and in Europe and in other nations. So, Very good. Thank you for that. So, this is another question again we probably got time for about one or two more questions. This will be a big one and I think this is already alluded to a bit Ron's presentation. So I'm interested to get David and Kevin's take on this. Let's let's talk a little bit about just in time manufacturing. Is the move to that kind of a leader process and just in time manufacturing really part of the problem in the chemical space specifically, and what are some of the implications of reversing something that's done for economic efficiency. As we argue, in some cases just in time manufacturing isn't just economics is also safety. Right, particularly with chemical intermediates they're highly reactive they're often produced and consumed very quickly to really have a fundamental safer process so there's a sort of double edged sword to that inside of the envelopes in the chemical industry that needs to be considered. Certainly, you know the ability to forecast and produce and then deliver as quickly as possible isn't as an advantage right overall for any company or for the chemical industry overall. It does produce some risk, we talked about a lot of the risk in the supply chain disruptions related to the manufacturing side. But there's also risk when the actual means of transportation are disruptive and that was seen at some level recently when air traffic dropped because a lot of small special chemicals are actually air freight around the world. And we saw some crazy things like 600% increases and cost of things just driven on the lack of ability to get the products to to the different points. So, so there are weaknesses that I think come up from that that really what's critical is to stand back and start to map where those communication points are and interest points are and then build a company or a strategy for that diversification of role. Anything else on just in time or any clarifying comments from you on that on that particular topic. Yeah, maybe just what I have one thing based on what Kevin also said that while there's a huge industry and thousands of medicines what you see when you get down to one medicine is you see the concentration I wanted to pick up on that. Reflect back. What does that mean on the push pull between the efficiency and the robustness in the medicine side you less often although not never have you know so dangerous intermediaries. But what you do have is a higher regulatory burden, and the need to qualify, not only the final product you create but you're responsible for this for the sourcing of your own ingredients. And because all that responsibility falls on one entity. There's, there's a reluctance to have to be switching suppliers, and yet there's a cost pressure to be able to not purchase too far ahead so you already have attention in place. So it's not a new tension is it's not it's not a new idea. There is that tension but the more that shifts only to the economic side. It can counterbalance the risk management portion. So we have time for one last questions and then I'm going to go ahead and wrap up for today. So the question is, and actually I'm glad that David brought up the question of safety to you also. So, in the space of safety with the increase in non traditional PPE and hand sanitizers is what are what are the thoughts that these kind of changes are going to change the future of traditional manufacturers, as well as the customer base for chemical manufacturers. Who is it. Sorry. So, so the question started with again, the increase in non traditional PPE and hand sanitizers, how some of those ad hoc changes have actually potentially led to some changes in the future for chemical Well, I'll attempt to answer that I mean some of the alternatives to, you know, say IPA based hand sanitizers have been an alcohol or ethanol. I do remember with back in early March when there was a one at the ABC store in Virginia and Carolina for, you know, grain alcohol that people were making their own. But that's, it's a very small scale proposition. And definitely don't meet USP standards either. Yeah, the last question. You know, certainly David highlighted this, there are certain chemicals you don't want to have too much inventory stored at any given place and I can think of a couple. But also within this country. There may be diversity of supply. We're heavily concentrated in say petrochemicals and downstream derivatives such as plastic resins on the Gulf Coast and we're starting to see the emergence of the petrochemical hub in Appalachia. You know, it's a very large project that's currently underway being developed there's another. They keep delaying their final investment decision but there's actually a lot of natural gas and ethane in the Utica and Marcellus. You know that could support a fairly diverse supply of petrochemicals and plastic resins within the United States away from hurricanes now they have to worry about snow, which you don't have to worry about in the Gulf Coast. Very true. Well, team. Thank you guys very much. We want to do we're out of time at this point. So I want to give a special thanks to our three speakers. Dr. Ben, Dr. Swift. Dr. Pervin Genzi note for all of our attendees that the presentations and the recording of the webinar is going to be posted on the chemical sciences round table website by the end of the week. And you will see the URL pop up on the screen here in just a second here. If there are any additional questions, comments or concerns, please go ahead and email us at the see our email address which is CSR at nas.edu. A note also for any other anyone interested in these types of webinars. Our next webinar will be held November 12 this year and we're going to discuss the future of agrochemistry for sent for any more information on that or if you'd like to subscribe for updates. Please go ahead and do so on the chemical sciences round table website. And with that again. Thank you all. Thank you Michael. Thank everybody. Thank you. Thank you.