EU Pharma Outlook
In your opinion, what will be the biggest challenge(s) facing bio/pharma companies in Europe in 2021? (Feel free to list numerous entries here and elaborate where possible)
For many pharmaceutical companies, the biggest challenge facing them in 2021 will be balancing the need to meet high levels of customer demand while maintaining social distancing on their premises to provide a COVID-secure work environment for their employees.
It is true that the end of the pandemic is in sight. We now have two vaccine candidates that are in the final stages of approval in Europe and North America – with one already approved for use in the UK – and a third potential candidate in the final testing stages. Nevertheless, the scale of the required mass vaccination programme means that it will be some time before we can return to anything approaching the status quo when it comes to social mixing.
With this in mind, pharmaceutical companies will have to keep up their efforts to maintain social distancing in their offices, laboratories and on their production lines for the foreseeable future, with on-site personnel limited to essential team members only. At the same time, they will have to find ways to achieve higher levels of productivity with fewer people on site in order to meet anticipated spikes in the demand for manufacturing capacity to deliver the required number of COVID-19 vaccine doses, as well as treatments for those already dealing with Coronavirus symptoms.
Investment in new production line equipment to increase output and reduce manual processing may be required in the New Year to achieve these goals.
Which areas/sectors might European bio/pharma companies see/experience the biggest opportunities for growth in 2021?
The pandemic in 2020 resulted in greater enthusiasm among pharmaceutical companies for outsourcing their development and manufacturing to CDMOs, as organisations worked together to develop COVID-19 vaccines and treatments.
For many drug developers, this collaboration has added considerable value by helping them to significantly reduce the time-to-market for their new products. As a result, it is likely we will see more companies become open to outsourcing in future – not simply for the development work, but the commercialisation phase as well.
With this in mind, I see considerable opportunities for contract development and manufacturing organisations (CDMOs) in 2021. CDMOs are well placed to support pharma companies in meeting high levels of demand for the production of COVID-19 vaccines and treatments, while also maintaining production of other vital medicines. They have the capacity and flexibility to help customers ramp up production and can provide expertise in delivering complex specialist dosage forms, such as inhalation, to and modified release support customers in commercialising new treatments quickly.
Are there any aspects of the European bio/pharma industry that you believe may be permanently changed as a result of COVID-19 and will these changes be positive or negative? (Perhaps regulatory adjustments will continue to be used in the future or supply chains will be adjusted to be more localized, etc. Please elaborate where possible.)
In the first three months of 2020, the closure of a number of factories in China that produce much of the global supply of APIs resulted in a severe shortage of vital pharma ingredients across the globe. This had to carefully managed by pharma companies in order to ensure adequate supply of treatments.
The impact of this shortage has led many to question the sustainability of today’s highly globalised supply chain. The US government under President Trump began exploring efforts to encourage American pharma companies to onshore their API supply, although it is unclear whether President-Elect Biden will pursue this as policy when he is inaugurated in January 2021. The Indian government has gone a step further, introducing an incentive scheme to entice its pharma industry to reduce reliance on external suppliers . We also see evidence of this approach in Europe too.
Given this push from governments, it is no surprise that a number of pharmaceutical manufacturers have already taken steps to localise and diversify their API partnerships in order to make their supply chain more resilient in the event of a future supply shock.
In 2021 and beyond, I think we will see more companies rethinking their supply chains and favouring more local or regional partners. It is also likely that ingredient suppliers and other contract organisations will look to expand their local presence in their target markets to cater to customers onshoring their supply chains. Whilst the costs of doing this may be a challenge for existing products, it is highly likely that new products will have a more localised supply chain.
Brexit is a big driver for change across the European bio/pharma industry for 2021, could you highlight some of the key areas that you predict will likely be most impacted within bio/pharma as a result of Brexit? (I understand this is more complex as we do not yet know if a deal will be struck but whatever you can suggest here would be great.)
Whether there is a deal or not between the UK and the EU, the end of the transition period on 31st December 2020 will bring with its considerable changes for the pharmaceutical industry on both sides of the Channel.
New checks at customs at ports on both sides of the border – a requirement under World Trade Organisation (WTO) rules – will lead to delays in the import and export of APIs, delivery system components and finished products. This will cause problems for manufacturers used to operating under Just-In-Time principles – if they want to mitigate against supply shortages over the coming year, they will have to act now to build up stocks of raw materials and components, and to invest in warehouses to store their stockpiles.
Over the long term, this new friction in the supply chain may well see companies in the EU that currently rely on UK suppliers switch to more local partners in order to reduce their administrative burden. The same will no doubt happen for UK manufacturers with supplies coming from the EU.
In addition, the end of the transition period will also lead greater divergence in medicines approvals on both sides of the Channel. We have already seen the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) approve one COVID-19 vaccine ahead of the EU’s European Medicines Agency (EMA), although this approval was done in accordance with current EMA rules.
We are likely to see further differences appear over the coming months and years, as the UK government and the EU review and approve new vaccines and treatments independently of each other. Varying approvals in both markets will affect what drug producers can and cannot sell in each jurisdiction, and potentially impact on what they can and cannot develop and where. Everyone in the industry will have to keep a careful eye on both markets in the future in order to understand the new regulatory landscape.