As European manufacturers localize their supply chains and production, they are also warning that drug prices could creep up if the European Commission doesn’t provide more regulation on drug purchasing strategies and medicine pricing.
One reason for localizing manufacturing is concern that the Biosecure Act could see European pharma companies struggle to get drugs approved in the US if they use a China-based service provider, Stephen Houldsworth, CordenPharma’s VP and global head of platform management, told Endpoints News on the sidelines of the Convention on Pharmaceutical Ingredients confab in Milan.
Local manufacturing will also give Europe more control over its supply chains, with the region being vulnerable to drug shortages. The European Medicines Agency has called for member states to work together to ease GLP-1 shortages as well as launched new initiatives to improve supply of critical medicines.
Europe appears to be following in the footsteps of the US, which has been making a push for more domestic supply chains. “There’s a kind of EU for EU, North America for North America. And, even within the EU, a little bit of UK for UK,” Ardena CEO Jeremie Trochu told Endpoints. Biopharma clients are increasingly asking CDMOs how much of their raw materials are from China.
However, production in Europe is more expensive compared to cheaper alternatives such as China and India, which could lead to drug price increases. “If you decrease the cost of the drug, then you kill the pharma industry in Europe,” Lonza’s head of bioconjugates Christian Morello said.
During a panel discussion at CPHI, Olon Group president Roberta Pizzocaro told delegates that most of the key intermediate substances used in Europe are made in China. Olon, one of the largest producers of APIs in Europe, has an antibiotic manufacturing facility that’s been empty and out of business for the past 15 years because it cannot compete with the lower prices of other foreign suppliers like China, she added.
European companies need more regulation from the EC, such as a stricter drug purchasing criteria, and to rethink medicine pricing models, Sandoz’s chief commercial officer Rebecca Guntern said at the panel. “I think this legal certainty and clarity would be extremely helpful,” she added.
But Philippe Drechsle, VP of the EU portfolio at Teva, said that localizing should not be absolute. “The expectation is not that we produce and manufacture everything in Europe. It is simply impossible, because the pharma industry is highly fragmented, specialized and reliant on global collaboration,” Drechsle said.