Page 178 - CW E-Magazine (31-10-2023)

Special Report Special Report

The road ahead for CDMOs in 2024 drug product manufactured from that new reporting duties. Some CDMOs Infl ation Reduction Act (IRA), which
particular API. This has been framed may have to alter or install IT systems permitted drug price negotiations by
hether it’s an imminent sup- COVID and OWS continue to reshape GIL ROTH as a means to battle drug shortages, but to better manage manufacturing data; Medicare for the fi rst time. Pharma
ply chain reckoning, or a raft the world Pharma & Biopharma Outsourcing it’s no stretch to see this as a mecha- with increased technology and work- companies – large and small – have
Wof new modalities, excellent No matter how much we act like Association nism to better understand dependence force investment comes increased made statements about cancelling
opportunities still abound for the ‘right’ the pandemic is behind us, COVID on certain countries for API supply. operating costs. Areas that are extremely pipeline projects out of fear that, if
CDMOs. and Operation Warp Speed (OWS) Some parties are trying to deter- With trade tensions high between the cost-sensitive – such as commodity successful, those drugs will be caught
continue to reshape the world. Lock- mine which medicines are really criti- US and China, a clearer idea of “what generic oral solid doses – could face up in “price controls” and fail to
The last several years have been down and export bans created an cal, and how can their supply chains be comes from where” will create a map new price pressures as these reporting recoup their R&D investment. In theory,
tumultuous for the CDMO sector. Some instant stress-test of global supply better protected from system shocks of what’s at stake. (Again, don’t sleep requirements proliferate. such cancellations will trickle down to
companies benefi ted from a surge in chains. CDMOs had to adjust to delays and trade wars. This has led to the reali- on excipients and KSMs.) CDMOs losing out on associated pro-
demand for COVID vaccine and therapeu- in critical materials while also protect- sation that, even if APIs and dosage All of which is to say: Supply chain jects, and even the loss of generics of
tic manufacturing capacity, while others ing their workforce. As the months sites are located in “friendly” nations, When it comes to China, CDMOs, issues – whether they involve onshor- such products years down the line.
struggled to maintain supplies of key progressed and OWS led to unprece- key starting materials and excipients and the larger pharma sector, my Magic ing, transparency requirements, rated
components and materials, and the drop dented acceleration in vaccine deve- are likely sourced from “not friendly” 8-Ball is murky. The most recent US orders and export controls, or rerout- (I’ll note that some drug compa-
in COVID-vaccine demand and thera- lopment and production, CDMOs who nations and can’t readily be made else- rhetoric has moved away from talk of ing production due to drug shortages – nies cited the IRA as the reason for
peutic obsolescence due to virus vari- were not part of that effort had to con- where. ‘decoupling’, but there are still trade will be critically important to the pipeline-culls within days of its be-
ants have caused further disruption. The tend with government reallocations of barriers that both countries are exer- CDMO sector and its customers in the ing signed into law, long before there
decade-plus of low interest rates gave resources via the Defense Production So, even though globalisation has cising. Combined with China’s recent years ahead. For our part, the PBOA was much clarity on how negotiations
way to infl ationary pressures that im- Act to prioritise vaccine manufactur- put hard limits on it, various nations and economic slowdown and corruption and its members have engaged with would be handled, which makes one
pacted biopharma pipeline funding and ing. This (semi-) artifi cial supply chain regions are developing similar prio- crackdowns on some business sectors, stakeholders to fi nd ways to stream- (me) think those announcements were
workforce hiring and retention. Trade constraint further tested production rities for ‘domesticating’ their supply it’s unclear if the CDMO market in line the process of moving products less a response to IRA and more an
issues and generic market erosion have timelines at CDMOs and the viability chains to a greater or lesser extent. China will primarily be for in-China to new sites or lines in order to miti- excuse to cancel projects while blam-
created opportunities for some while of global manufacturing networks. Canada, for example, realised it had drugs and biologics, rather than global gate against supply disruptions, and to ing outside forces.)
shutting out others. And the promise of no scaleable vaccine manufacturing supply. incentivise investment in new facili-
new modalities has been tempered by What came from this was a heigh- capacity during COVID, and has made ties in key dosage forms and areas. Related to this, the PBOA member
slow regulatory reviews, manufacturing tened awareness of supply chains, signifi cant investment in building it As mentioned, pharma-neigh- companies I surveyed agree that the
hurdles, and other obstacles. And then which will have a major impact on domestically, albeit without changes bour India is trying to jump-start its Impact on R&D top CDMO business challenge is the
there’s AI . . . the CDMO sector in the years ahead. in some of the regulations and poli- domestic API market – again, everybody Another aspect of the COVID- slowdown in biotech funding, largely
(The OWS initiative and the role of cies that may have led to the decline of has a shore – to reduce its reliance on hangover has been the impact on R&D. a result of higher interest rates that
These and other factors affect the CDMOs like Catalent, Grand River domestic manufacturing in the fi rst place. China. Other high-tech industries are The lockdowns and uncertainty in make investment less appealing than,
CDMO sector just as they do the larger Aseptic Manufacturing and Lonza in The EU and India both have initiatives expanding investment in India as a 2020 led to slowdowns and shutdowns say, buying a CD at 5%. Hesitation and
biopharma industry. Let’s look at some the pandemic response also created to boost local API production. But as hedge, so it’s possible the Indian pharma in clinical trials in many regions. The yet more pipeline-trimming by virtual,
of them and see what they may por- a heightened awareness of CDMOs we’ve pointed out to legislators, regu- industry – and especially CDMOs – immediate result was a reduction in emerging and small biopharmas can
tend for the next several years ahead. among the public, which I generally lators and other stakeholders, manu- will shift toward high- translate very quickly into
Please note that when it comes to pre- consider a good thing.) facturing on smaller, local scales can value biopharma manufac- It’s possible the Indian pharma industry – reduced opportunities for
dictions, there’s an awful lot that can actually lead to greater fragility. turing, while managing its and especially CDMOs – will shift toward CDMOs. No one has hazar-
derail them, like a pandemic, a natu- Restructuring supply chains reputation as the hub of ded a guess as to when
ral disaster, or an unexpected election The desire to restructure supply At the same time, one can’t low-cost generic drugs. high-value biopharma manufacturing, while the fi nance-fl oodgates may
result (there are also surprise boons, chains through onshoring, nearshor- reimagine a supply chain without under- managing its reputation as the hub of low- reopen, but this has cast a
like a potential $50-billion market for ing, friendshoring, etc. will only gain standing that supply chain. In the US, Those aforementioned cost generic drugs. pall over many CDMOs,
weight-loss drugs springing up virtu- steam in the US and elsewhere – we saw the Congress empower FDA in FDA reporting regulations both public and private.
ally overnight!). Also of note: my role repeat after me: everybody has a shore – 2020 to require all API and Finished contain confi dentiality rules
as President of PBOA means I spend though it’s unclear how extensive Dosage Form (FDF) facilities to report so that the public will not have demand for development services, but, One could argue that this slow-
most of my time involved in policy those changes can be. The 2020 publi- the amounts of product they make access to sensitive manufacturing in- cascading from that, this will result in down is also tied into COVID, as in-
advocacy – both regulatory and legis- cation by the US Department of annually. As I write this, more FDA formation, but they will still require “lost” commercial projects that were fl ation and interest rates were affected
lative – rather than market-driver- Health & Human Services (HHS) of reporting authorities are being debated CDMOs to report customer data in new scuttled due to clinical delays from by government spending to keep econo-
watching; between that and my vast a Critical Medicines list has become a in the House and Senate, potentially ways. In some cases, this may require 2020-21. mies afl oat amid mass lockdowns/
overlapping network of NDAs, there jumping-off point for initiatives aimed requiring dosage facilities (including mass rewrites of quality agreements, shutdowns. One could also argue that
are some trends I can allude to without at refashioning the US pharma supply CDMOs) to report the source of each and likely will also require added This phenomenon may also occur it’s a bill-come-due function of artifi -
naming names, as it were. chain. API they use and the amount of each staffi ng at CDMOs to handle these as a result of the US Congress’ 2022 cially low interest rates following the

178 Chemical Weekly October 31, 2023 Chemical Weekly October 31, 2023 179

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