The policy is designed to provide cover for the loss of revenue from intangible risks, which Lloyds believes have become increasingly common in the modern pharmaceutical industry.
Plant closures, product recalls and loss of intellectual property are some of the risks the policy covers.
An increasingly complex global supply chain is cited as the reason behind many of these new intangible risks that require a different insurance policy than the ones used to protect against loss of physical assets.
Consequently insurance companies such as Lloyds, Heath Lambert and Samian have increasingly tailored their offerings to cover the shifts within the pharmaceutical industry.
Through conversations with those in the pharmaceutical industry Lloyds’ developed SCAIR (supply chain analysis of insurance risk), a system that gives monetary values to intangible risks.
By adopting this policy, or similar ones, a pharmaceutical company would be covered in the event of a total or partial plant closure by regulators following a suspected manufacturing discrepancy.
The policy also covers against risks associated with the increased use of technology, such as loss of revenue as a result of problems with computer aided design and production.
With regards to intellectual property and company secrets, increased outsourcing exposes companies to the risk of revealing confidential information when dealing with third parties.
This loss could be accidental or through industrial espionage, which is believed to be a growing problem within the pharmaceutical industry.
In 1997 Hsu Kai-Lo and Chester Ho were charged with attempting to steal the plant cell culture technology of Taxol (paclitaxel) from Bristol-Myers Squibb. Both pleaded guilty.
Since then the prevalence of attempted thefts is believed to have grown, with increasingly advanced hacking attempts used to obtain the data.
The Counterpane and MessageLabs 2005 Attack Trends report cited the pharmaceutical industry as being the most targeted sector for cyber theft behind financial institutes and banks.
In offering coverage against all the intangible detailed above Lloyd’s claims to have created a comprehensive policy, which it believes is a “market first”.
Speaking to in-PharmaTechnologist.com Bart Nash, media relations executive at Lloyds, said that owing to the bespoke nature of each client’s policy and the number of variables unique to each company it is impossible to give an idea of the cost of taking out cover.