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One (not so) surprising reason why Pharma may fundamentally not question its solid habits



Who recalls how the pharma industry was doing a year ago, before the Covid-19 pandemia outbreak?


Despite its old and stiff processes, it was doing well and it is now globally still doing well. The pandemia arose the question about securing supply chains while minimizing the risks against patient safety. In 2020, the industry thought about reshuffling value chains to lessen these risks.


But will it now do so in reality knowing that it is still operating in a comfort zone (and margins)?



A QUICK LOOK BACKWARDS


Business Development


  • Big pharmas kept on their usual M&A activities, growing their pipelines, with focus on biotech R&D and commercialization

  • Generics kept on chasing tech transfers, increasing the width of their offer and increasing their geographical reach

  • CMOs kept growing through acquisitions, and starting to seek ways for differentiation

  • The barycentre of raw material and active ingredients manufacturing was in India and China


Regulatory


  • Two worlds coexist: the regulated markets on one hand and the semi- or non- regulated markets on the other hand

  • China significantly improved manufacturing standards

  • Regulatory authorities increasingly demand a good knowledge of the supply chain from market authorisation holders. These supply chains are dispersed, complex and in reality ill-known – exception made for the active pharmaceutical ingredients which benefits from special attention

  • In regulated markets, regulatory bodies increase focus on salient problems related to transparency, traceability and data integrity throughout the value chain of drugs


Value chain


  • Production is constrained by stringent quality processes set in place, impacting supply chain management

  • Innovation has hard time to infiltrate the value chain like production and supply chain management activities, also because of stringent quality processes in place

  • In some cases one can even observe that implemented processes do not allow any room for common sense, indirectly shielding the company from significant progress

  • The Industry 4.0 and IoT topics hardly are a discussion point on agendas



THE IMPACT OF THE PANDEMIA ON THE INDUSTRY



Business development


  • Big pharmas have shown great responsiveness and collaborated efficiently with start-ups

  • Meanwhile some drugs like acetaminophen/paracetamol for instance have seen unprecedented rise in demand, others have seen a stiff drop: it seems like lockdowns and masks prevented other illnesses to spread, hence the consumption of other typical drugs is likely to decrease

  • CMOs are more than ever useful as they can provide supplementary production capacities for vaccines

  • Countries adopt various strategies for the access to the vaccines: multiple sourcing vs. priority to national products

  • Time, or should we say speed to market is more than ever the key to a successful launch


Regulatory


  • In case of urgency, we see that principles can be thought through and subsequent processes can be significantly improved. When was the last time a vaccine has been put on the market within let’s say 10 months?

  • Transnational collaboration is still a dream as there is competition between countries


Value chain


  • Big discussions emerged around national or local production capacities vs. internationally dispersed supply chains. This triggered nation-wide reflections on how to reorganize the pharmaceutical production in each significant market.

  • Sponsors rethink their strategy around “make or buy” activities, which will likely have an impact on the C(D)MOs landscape

  • The well-known double sourcing for critical materials seems to be increasingly demanded: will this, on a long haul, result in a slight shift of the raw material manufacturing barycentre to the west?

  • Traceability, transparency and data integrity stop to be just words and their implementation transforms into tangible projects in every company.



TO CONCLUDE



Under an important external constraint

- the pharmaceutical industry can adapt “quickly”

- the national considerations prime over a global collaboration

- the value and supply chain need reshuffling for lesser risk

- processes can drastically improve


We are in an auspicious moment in time to rethink the business models, not only taking advantage of emerging technologies, but also of the multiple advantages gained from simplified processes.


Will the industry take up this opportunity ? Time will tell.


In medium term, we might see a split between companies which do consider their extended ecosystem to review their business models, and those who don’t.


Which side do you choose?

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