In a conversation with Adrian van den Hoven, director general of Medicines for Europe, which represents the generic and biosimilars industries, and a closer look at Swiss healthcare giant Roche, we find out how supply chain challenges are playing out in biopharma vs generics, and what industry leaders expect to change in the future.
In conversation with
Adrian van den Hoven
Director general, Medicines for Europe
How do the supply chain challenges faced by the biopharma industry compare with those seen in traditional pharmaceuticals?
Most of the recent issues in supply chain risks and drug shortages relate to traditional (chemical) pharmaceuticals. This is mainly because production of traditional pharmaceuticals is heavily concentrated in a small number of regions — for example specific provinces in India and China, or in Northern Italy for Europe — and high levels of consolidation can create risks around security of supply.
But this is far less of an issue in biopharma supply chains, because biopharma supply chains tend to be more vertically integrated and have more of the production steps centralized in one location, to make them easier to control. Outsourcing parts of biopharma production to other locations is therefore much less common and Europe has invested quite heavily in local biopharma production in recent years.
How are the supply chain challenges likely to change over the next few years?
Biopharmaceutical supply chains have not yet seen the same levels of consolidation as traditional pharma supply chains, but I believe this is likely to happen soon. This is mainly due to the rise of biosimilars, demand for which has been steadily increasing over the past decade.
As with generics, governments are starting to pursue commodity type pricing for biosimilars, to try and get the absolute lowest possible price. This price dynamic started in Europe, and it is likely to lead to the consolidation of the biopharma production chain within both Europe and Asia. The challenge for governments is that, as well as wanting to lower the cost of biopharmaceuticals, they want security of supply. In particular, during the pandemic it has been a huge advantage to have certain types of drugs produced in Europe. The dual need for lower prices and security of supply is a difficult challenge for the industry to square.
Which countries are likely to become the biggest exporters of biopharmaceuticals?
At the moment, there are a relatively limited number of countries that are exporting biopharmaceuticals. It is limited to the US, Europe, South Korea and Singapore. However, China and India are getting close to reaching the standards required for exporting biopharmaceuticals — and when this happens there is likely to be a lot of consolidation in the biopharma market.
In my view, there is a much more coherent link between the regulatory process and the manufacturing process in the biopharma industry than in traditional pharma, and this may make it slightly more challenging for China and India to break into the market. We will see how effective they are in the next couple of years.
A closer look
Building a world-class supply chain at Roche
For Jerry Cacia, the key to navigating supply chain difficulties has been to reinforce industry collaboration. Roche’s head of global technical development recognizes the challenges that have led to increased localization — “to make sure the supply of critical medicines is secure for each country”.
But Cacia says that this should not cause a total abandonment of the global system. “In some cases, it makes perfect sense to localize manufacturing — parts of your supply chain,” he says. “In other cases I would argue that it does not make sense, because these are very complex processes and frankly the costs will be really high.”
Roche’s success with manufacturing networks, says Cacia, has come from not having the supply chain “purely relegated to a specific country or region” for APIs, but through close relationships with suppliers that act as a pillar of support. It was able to “mobilize very quickly” to join forces with US biotech firm Regeneron, for instance, to support its production of a Covid-19 antibody treatment.4 In a world without global supply chains, this kind of urgent collaboration would be much more difficult.