Page 36 - CW E-Magazine (Oct-Nov-2023)

Pharma Services

ing COVID, and has made significant tic API market – again, everybody has a velopment services, but, cascading from
investment in building it domestically, shore – to reduce its reliance on China. that, this will result in “lost” commercial
albeit without changes in some of the Other high-tech industries are expand- projects that were scuttled due to clinical
regulations and policies that may have ing investment in India as a hedge, so delays from 2020-21.
led to the decline of domestic manu- it’s possible the Indian pharma industry
facturing in the first place. The EU and – and especially CDMOs – will shift to- This phenomenon may also occur as
India both have initiatives to boost local ward high-value biopharma manufactur- a result of the US Congress’ 2022 Infla-
API production. But as we’ve pointed ing, while managing its reputation as the tion Reduction Act (IRA), which permit-
out to legislators, regulators and other hub of low-cost generic drugs. ted drug price negotiations by Medicare
stakeholders, manufacturing on smaller, for the first time. Pharma companies –
local scales can actually lead to greater Those aforementioned FDA report- large and small – have made statements
fragility. ing regulations contain confidentiality about cancelling pipeline projects out of
rules so that the public will not have ac- fear that, if successful, those drugs will
At the same time, one can’t reimag- cess to sensitive manufacturing informa- be caught up in “price controls” and fail
ine a supply chain without understand- tion, but they will still require CDMOs to recoup their R&D investment. In the-
ing that supply chain. In the US, we saw to report customer data in new ways. ory, such cancellations will trickle down
the Congress empower FDA in 2020 In some cases, this may require mass to CDMOs losing out on associated
to require all API and Finished Dos- rewrites of quality agreements, and projects, and even the loss of generics of
age Form (FDF) facilities to report the likely will also require added staffing at such products years down the line.
amounts of product they make annually. CDMOs to handle these new reporting
As I write this, more FDA reporting au- duties. Some CDMOs may have to al- (I’ll note that some drug companies
thorities are being debated in the House ter or install IT systems to better man- cited the IRA as the reason for pipeline-
and Senate, potentially requiring dosage age manufacturing data; with increased culls within days of its being signed into
facilities (including CDMOs) to report technology and workforce investment law, long before there was much clarity
the source of each API they use and the comes increased operating costs. Areas on how negotiations would be handled,
amount of each drug product manufac- that are extremely cost-sensitive – such which makes one (me) think those an-
tured from that particular API. This has as commodity generic oral solid doses – nouncements were less a response to
been framed as a means to battle drug could face new price pressures as these IRA and more an excuse to cancel proj-
shortages, but it’s no stretch to see this reporting requirements proliferate. ects while blaming outside forces.)
as a mechanism to better understand de-
pendence on certain countries for API All of which is to say: Supply chain Related to this, the PBOA member
supply. With trade tensions high be- issues – whether they involve onshoring, companies I surveyed agree that the
tween the US and China, a clearer idea transparency requirements, rated orders top CDMO business challenge is the
of “what comes from where” will create and export controls, or rerouting produc- slowdown in biotech funding, largely a
a map of what’s at stake. (Again, don’t tion due to drug shortages – will be criti- result of higher interest rates that make
sleep on excipients and KSMs.) cally important to the CDMO sector and investment less appealing than, say, buy-
its customers in the years ahead. For our
When it comes to China, CDMOs, part, the PBOA and its members have ing a CD at 5%. Hesitation and yet more
and the larger pharma sector, my Magic engaged with stakeholders to find ways pipeline-trimming by virtual, emerging
8-Ball is murky. The most recent US to streamline the process of moving and small biopharmas can translate very
rhetoric has moved away from talk of products to new sites or lines in order to quickly into reduced opportunities for
‘decoupling’, but there are still trade bar- mitigate against supply disruptions, and CDMOs. No one has hazarded a guess
riers that both countries are exercising. to incentivise investment in new facili- as to when the finance-floodgates may
Combined with China’s recent econom- ties in key dosage forms and areas. reopen, but this has cast a pall over many
ic slowdown and corruption crackdowns CDMOs, both public and private.
on some business sectors, it’s unclear if Impact on R&D
the CDMO market in China will primar- Another aspect of the COVID-hang- One could argue that this slowdown
ily be for in-China drugs and biologics, over has been the impact on R&D. The is also tied into COVID, as inflation and
rather than global supply. lockdowns and uncertainty in 2020 led interest rates were affected by govern-
to slowdowns and shutdowns in clinical ment spending to keep economies afloat
As mentioned, pharma-neighbour trials in many regions. The immediate amid mass lockdowns/shutdowns. One
India is trying to jump-start its domes- result was a reduction in demand for de- could also argue that it’s a bill-come-

32 Chemical Weekly October / November 2023