The Supply Chain Matters blog provides a capsule of noteworthy updates to prior global supply chain news developments that we have previously highlighted for our readers.

 Report That Johnson & Johnson Knew of Vaccine Contamination Risks

In a posting in early April, we updated readers on the revelation of a COVID-19 vaccine production facility’s snafu in producing the Johnson & Johnson vaccine.

A Baltimore based production facility operated by Emergent BioSolutions, had contracts to produce both the Johnson & Johnson and AstraZeneca developed vaccines. In what was cited by government regulators as human error, a batch of the J&J vaccine was accidently conflated as one of more workers reportedly confused the ingredient mix among the two vaccines. The result was the total spoilage of the production lot with J&J having to cut-back on some of its vaccine supply commitments for April and May and rely on a Netherlands based facility for U.S. vaccine supply needs.

In the wake of this incident, scrutiny turned to Emergent’ s past track record in the production of biologics with the Associated Press reporting that the lab contract producer has a track record for being repeatedly cited with quality control and employee training lapses. The U.S. FDA subsequently conducted a reported scathing inspection report of the Emergent facility citing unsanitary conditions.

The subject Emergent Bayview facility was reportedly never utilized to produce millions of doses of vaccine for distribution, and upwards of 100 million doses that were produced have yet to receive FDA clearance for patient use.

In our Supply Chain Matters update we raised the question: Why, with Emergent’ s prior track record of cited quality lapses, was there not a stricter monitoring and oversight process on the part of J&J before this discovery?

The new update to this development was a published report by The Washington Post (Paid subscription or metered view) indicating that J&J documented serious contamination risks at the troubled Emergent BioSolutions facility in June 2020, seven months prior to the contamination incident. That revelation came from testimony given at a U.S. House of Representatives Select Oversight Committee on the Coronavirus Crisis. The Post report further indicated: “The disclosures by a House subcommittee Wednesday raise questions about oversight by Johnson & Johnson as well as the Trump administration, which the newly released records show also knew of production risks at the Emergent BioSolutions facility.

Johnson & Johnson did not comment to the Post on its 2020 audit and steps taken after its findings. The other aspect brought out by the investigation was that weeks before the vaccine contamination incident, Emergent CEO, Robert Kramer, had sold $10 million of company stock, which he reportedly alleges was done automatically as part of scheduled stock trading plan.

Reportedly, Emergent stock has lost half of its value since February.

 

 

Proposed North America Rail Merger

Once again there are additional developments in efforts of two separate Canadian railroads, Canadian Pacific (CP) and Canadian National (CN) both competing to merge with a smaller U.S. rail carrier Kansas City Southern (KCS). The prize is the ability to operate a North America based single network rail connection spanning Canada, the U.S. and Mexico. Such a network could be pivotal to the newly re-constituted USMCA trade agreement.

Since our last news capsule follow-up update, the latest development is that KCS has now agreed to the more lucrative $30 billion CN merger proposal, scrapping the $25 billion deal previously agreed to with CP. The latter had indicated that it would not participate in a bidding exercise for KCS, especially since the rail operator has serious doubts as to whether U.S. regulators will allow the deal to go thru given antitrust concerns. For its part, both CN and KCS expressed confidence in their ability to obtain the necessary regulatory approvals.

Industry watchers have expressed views that indicate that regulators will indeed be more cautious in granting a trust to CN, since the criteria is whether the merger is in the public interest and will enhance competition.

For KCS shippers, these ongoing back and forth developments are likely to take additional time to resolve, with perhaps more added developments yet to come.

 

Blue Yonder and Kinaxis Lawsuit Developments

In December 2020, Supply Chain Matters updated readers regarding supply chain planning and omni-channel technology provider Blue Yonder announced lawsuit for patent infringement against archrival Kinaxis, Inc. and Kinaxis Corp. The lawsuit, filed in the United States District Court for the Northern District of Texas, alleges infringement of six patents covering supply chain management technologies.

Blue Yonder, headquartered in Scottsdale Arizona, is the former JDA Software, who in turn it its corporate history acquired the former supply planning software providers i2 Technologies and Manugistics.

In late February, Kinaxis initially responded with a motion to dismiss the lawsuit and filed counterclaims indicating that Kinaxis does not infringe any of Blue Yonder’s patents and that the patents are invalid. Further alleged is that Blue Yonder has violated U.S. federal and Texas state law by misappropriating certain of Kinaxis’s trade secrets. There was also a motion seeking Blue Yonder to return or destroy confidential Kinaxis documents and stop using such documents in this case or in competition.

In late April, news came of the planned acquisition of Blue Yonder by Panasonic for upwards of $7.1 billion. Panasonic indicated that when the acquisition is completed, the Blue Yonder brand will be retained and that existing CEO Girish Rischi and the extended leadership team will be part of a Panasonic’s Connected Solutions Company umbrella.

On May 18, Blue Yonder issued a press release indicating that the U.S. District Court of the Northern District of Texas had denied Kinaxis’ challenges and reiterated that a belief that the Kinaxis Rapid Response Platform infringes on Blue Yonder’s intellectual property and unduly benefits Kinaxis. Noted was that the provider would continue to assert its position and a belief that the lawsuit will prevail.

The following day, Kinaxis provided a press release update indicating that the court deferred a ruling on the merits its motion to dismiss the lawsuit. Reportedly the court also granted a Kinaxis motion to strike certain expert testimony that Blue Yonder had submitted in relation to the motion. A statement from Kinaxis’s Chief Legal Officer indicated that the judge in the case did not rule on the merits of the Kinaxis motion, and that it was too early for him to assess the issues properly. Reiterated in the release was the statement: “It remains our position that the patents in question should be invalidated as they cover well-established concepts in the field of inventory and supply chain management, and simply take generic computer technology and apply it to decades-old concepts. We will make these same strong arguments later in the case for the judge to rule on.”

Thus, in spite of the acquisition of Blue Yonder, the lawsuit and claims among two rivals continues and the court will likely have the final word unless a pre-settlement is reached.

Note: Supply Chain Matters has not consulted with any of the above technology providers related to the above update. Kinaxis is further a named sponsor of this blog.

 

USMCA Trade Disputes Formally Initiated

July 1, 2020 marked the official start of the United States, Mexico and Canada Trade Agreement (USMCA) and reports this week indicate that the first formal trade dispute process is about to be formally initiated between the United States and Canada.

The office of the U.S. Trade Representative indicated in a statement that the United States has requested and established a dispute settlement panel under USMCA to review measures adopted by the Government of Canada that undermine the ability of American dairy exporters to sell a wide range of products to Canadian consumers. The United States is challenging Canada’s allocation of dairy tariff-rate quotas (TRQs), specifically the set-aside of a percentage of each dairy TRQ exclusively for Canadian processors.  The statement indicates that these measures deny the ability of U.S. dairy farmers, workers, and exporters to utilize the TRQs and realize the full benefit of the USMCA.

U.S. Trade Representative Kathryn Tai indicated: “A top priority for the Biden-Harris Administration is fully enforcing the USMCA and ensuring that it benefits American workers. Launching the first panel request under the agreement will ensure our dairy industry and its workers can seize new opportunities under the USMCA to market and sell U.S. products to Canadian consumers.”

On May 12, 2021, the United States made the first-ever request under the USMCA Facility-Specific Rapid Response Labor Mechanism – specifically, a request that Mexico conduct a review of whether a Denial of Rights is occurring to workers at the General Motors de México facility in Silao, State of Guanajuato.

Noted in our Supply Chain Matters highlights of USMCA, at the time of ratification was that U.S. agricultural groups remained concerned about increased opening of Canada’s market to U.S. dairy products as well as provisions related to agricultural product imports and exports related to Mexico.

Now at this juncture, and with new government players, the bloom may be off the rose and the notions for having a more defined process for trade disputes is about to be tested.

 

This concludes our Supply Chain Matters Global Supply News Capsule Follow-Up regarding ongoing developments.

 

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