The life sciences industry in the U.S., and perhaps globally, is typically most concerned with market risk. That perspective has shifted tremendously as wars, changing regulations, policy upheavals, and a global pandemic have scrambled expectations.
On Tuesday, a panel of biotech operators from well-known life sciences companies in the U.S. and overseas explained how each of them are wrestling with geopolitical change and the lessons from the past few years. The event was organized by consulting firm BCG during JPM Week in San Francisco.
Pushkal Garg, chief R&D officer, Alnylam
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Garg recalled how Alnylam had launched a clinical trial in Ukraine just weeks before Russia invaded the country, wreaking havoc on the company’s plans and sending it scrambling.
“Supply chains are quite challenging because, obviously, the move for many, many years was to really outsource a lot of those and offshore a lot of those supply chains and I think we learned the criticality of having redundancy in every step of the manufacturing supply chain,” Garg said.
He noted that having that redundancy in the supply chain is “top of mind” for executives at Alnylam and over the past couple of years, the company has doubled down on that element.
“We’ve built our own manufacturing plant and invested so we have more control over that process,” he said.
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Having said that, he added that many of the raw materials that the biopharma industry is reliant on come from China, a country for which the current administration has no love lost. But sourcing the right raw materials from an alternate source is not that simple.
“It’s actually very expensive if you think about some of the raw materials and sourcing them from other geographies,” he said. “There’s a lot of work, particularly in that side of the house, for us to figure out how to do that.”
Running clinical trials in other parts of the world is also proving to be tough because there is “civil unrest” in many parts of the world.
Eliav Barr, senior vice president, head of global clinical development, chief medical officer, Merck
Barr described the current environment as deeply uncertain, stressing that the things that “were standard” are no longer so. He talked about how Merck had significant investment in clinical trial programs in Russia and Ukraine, “both of which are no longer available.”
He added that now “there is enormous amounts of storminess around access to various datasets now that the U.S. has imposed — and this isn’t the Trump administration but the Biden administration — control over the use of U.S. data in the Chinese context in the same way have made it difficult to export data to the United States and you are starting to see barriers being raised.”
Barr said that Merck is trying to use cloud datasets to keep data separate to comply with these requirements and regulations. He added that the U.S. has also decided not to bear the cost of innovation and so the fact that some countries pay less for American drugs and vaccines — that’s going to change.
Barr said companies have to be “very nimble” in understanding all the different “rules and subrules, clauses and exceptions” so that the work that each company does continues to be global.
“There is no way you could do all studies in one country …,” he said.
Roland Rott, president and CEO of imaging, GE Healthcare
On the medtech front, GE Healthcare and other companies have been battling a whole host of challenges, starting with Covid, but then extending to “the chip crisis,” and now there are issues of export controls, Rott said. All of this has had an impact on how companies set up their supply chains.
But the benefit has been that supply chains are much “more transparent today than they were before.” Before these crises, companies could manufacture in one part of the world and then ship products wherever they needed to go.
“At some point, you didn’t even know who your tier 3 or tier 4 supplier was, but now all that has become much more transparent, which is a good thing” he said.
Rott essentially said these challenges have led the company to become much flexible and produce products “as close to customers as possible – produce in China for China, produce in the United States ideally for the United States.”
In concluding the panel discussion, which also included other topics such as what’s next in biotech innovation and the role of AI, Barr struck an ominous tone.
“The amount of inefficiencies that are being built into trying to think about all the different rules and regulations and the quick changes that occur … that inefficiency is going to create enormous costs,” he said.
Barr also warned that if that a wall between U.S. and China is raised, it’s going to “cataclysmic.”
“As much as we try to onshore things, you can’t do the kind of work without having both these countries working in a very cohesive way. It’s not just a matter of where you manufacture but all the way to your original chemicals … it’s in China so it’s not going to be easy to completely dissociate the two countries and I hope it doesn’t happen.”