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Biopharma 2021: The resilience rethink

In an age of crisis, can the biopharma industry withstand global shocks?

At no point in the modern era have the health and resilience of the biopharma industry been more crucial. But 2020 revealed some uncomfortable truths about a sector that has become a globalised system of production, trade and distribution. Are the benefits of a global supply chain now outweighed by overdependence on a small group of countries for essential medicines and active ingredients?

In April, as a fear of critical drugs shortages took hold a month after Europe was plunged into panic by a rapid surge of coronavirus cases, Stella Kyriakides, the European Union’s health commissioner, urged the bloc to “reduce our dependency on other countries”.1 The previous month, authorities in India — the world’s largest provider of generic medicines — had ordered the country’s pharmaceutical firms to stop exporting 26 drugs and drug ingredients.2

Constraints in air freight3 and blockages to talent have come as a shock for the biopharma industry. That’s hardly surprising, as it is accustomed to a sprawling network of processes to get everything from generics to biosimilars and other biologics to the market.

“There is huge political interest in this,” says Adrian van den Hoven, director general of Medicines for Europe. “Any politician, minister of health or minister of industry you speak to will say, ‘This is a top priority. I want to be resilient’.”

But van den Hoven also points out that there is a “struggle to understand” where the pain points across the sector are, let alone how the public and private sectors can address them. “The difficulty is in saying, ‘What do you do to actually make supply chains resilient, or ensure more investment in manufacturing?’,” he says. “What other things can you pursue?”

So just how prepared are countries and their respective biopharma industries to meet a soaring demand for critical drugs?

Developing blockbuster drugs should not be about making a billion dollars. It should be about serving a billion patients. That's when you will have equity in global healthcare.

Introducing the Global Biopharma Resilience Index

To assess the strength of the global industry and its capabilities, Cytiva has created the Global Biopharma Resilience Index. The index scores and ranks 20 countries on five factors — supply chain resilience, access to talent, strength of the R&D ecosystem, quality and agility of manufacturing processes, and effectiveness of government policy in supporting the industry. The overall index score for each country acts as a proxy for the strength of its biopharma industry.

The index is based on data from a survey of more than 1,100 pharma and biopharma executives and healthcare policymakers from 20 countries. You can view the full index methodology here.

The income divide: Resilience by country

Of the 20 countries included in the index, the US came out on top with an index score of 7.12, with Switzerland (7.08) and the UK (7.01) in second and third place. Towards the bottom were Indonesia (5.91), Thailand (5.93) and South Africa (5.95).

Perhaps unsurprisingly, the scores show a clear divide between the high-income economies and the upper-middle-income to lower-middle-income economies (as defined by the World Bank). However, when we plot the index scores by gross national income (GNI) per capita (see chart 1), a more nuanced picture emerges.

The top-right-hand quadrant of chart 1 highlights the US and Switzerland as clear leaders when it comes to both GNI and index scores. This indicates that their biopharma industries are thriving and their populations are unlikely to experience shortages of essential medications.

In contrast, the bottom-left-hand quadrant of the chart reveals a group of ‘at risk’ countries, which fall into the lower-income categories and also have lower index scores. Many of these countries have large populations — Indonesia and Brazil, for example, with more than 200 million people each — which means that greater swathes of people are at risk of not having access to vital drugs in the event of serious disruption to their nation’s biopharma sector.

Yet despite having relatively low GNIs per capita, some countries’ biopharma resilience matches that of countries in the high-income group. As the bottom-right-hand quadrant of the chart shows, India, China and Russia score high on the index compared with other countries in the same income bracket. This suggests that their biopharma industries are thriving.

What can the biopharma industry learn from these outperformers? Drawing on the findings of the survey, and a series of interviews with leading biopharma experts, we answer this question in a series of articles that you can read here.

Kiran Mazumdar-Shaw, the chairperson and founder of Biocon, India’s largest listed biopharmaceutical firm by revenue, believes that India’s approach to developing biopharmaceuticals provides a template for supply chain resilience that other countries can follow.

“I think companies need to be global in their business models,” she says. “Today, India is able to cater to large populations in low- and middle-income countries because of our high-volume, low-value approach, which is really inbuilt in everything we do. Whether it is vaccines, generic medicines, or biologic drugs, we are building our business at scale. In contrast, if you look at what is happening in the US and Europe, in terms of delays in vaccine supplies or shortages of vaccines, it is largely attributable to western models of catering to the needs of small populations.”

Chart 1: Index scores by gross national income per capita

Scores in detail: Where is the biopharma industry strongest and weakest?

Looking at the index results by pillar (see chart 2) allows us to identify where the biopharma industry is strongest and where countries need to improve. Strengthening performance across the pillars will help to address some of the imbalances shown in chart 1, and ultimately increase the availability of essential medicines while speeding up the development of novel treatments.

The industry’s weakest area is the talent pool, which has the biggest gap below the mean (see chart 2). That is a symptom of the lockdown restrictions that are limiting how far industry leaders can cast their net to find skilled workers. Where will their future workforce come from?

Chart 2: Resilience Index Pillar Scores

The survey responses show that the industry has ample scope to improve in other areas, too: manufacturing agility is another pillar where most countries are below the mean, and the R&D ecosystem manages little better. There are also weaknesses in collaboration and innovation that could put security at risk.

Roche, the world’s largest biopharma company, understands the importance of collaboration across all aspects of the industry. “We synthesise so many materials, and therefore our suppliers are critical,” says Jerry Cacia, Roche’s head of global technical development. “That is why we have such strong partnerships with our suppliers — because they are crucial to the products we manufacture for patients. We want to make sure that there are strong partnerships across the ecosystem: not just between the companies producing medicines, but also with their suppliers and the individuals that develop the technologies required to produce the medicines.”

The relatively low index scores may come as a surprise after globally coordinated efforts produced multiple Covid-19 vaccines in record times. But that outcome is the exception rather than the rule. According to van den Hoven, part of the challenge is in regulatory approval: efforts to get biologics manufacturing sites up and running in the US and Europe, for example, often go through long, drawn-out procedures before getting the green light. But efforts during the pandemic have shown that governments can act quickly.

“During Covid, there were some rapid procedures, just because the governments wanted additional scale,” he says. “So they accelerated certain approval procedures by using more IT tools or gave temporary approvals for example under emergency use rules for some medicines like dexamethasone.”

It is not all bad news. Despite the severe headwinds of 2020, the supply chain scores higher than the mean, as does government policy and regulation — traditionally an obstacle. Accelerated rollouts of vaccines are likely to have signalled to the industry that it can, to some extent, count on policymakers when the stakes are high.

For some countries, the pandemic has also highlighted a need to scale up domestic biopharma manufacturing. “It is not that we should be reducing globalisation, but we should make sure we have sufficient capacity to help biopharma companies build locally in the UK and then become global distributors of medicines when they have found something that works,” says Clive Page, professor of pharmacology at King’s College London. “Over the next 10 years, I think there will be a big push to scale up biopharma manufacturing in the UK — enabling us to take innovations forward and make sure we retain better control over them.”

Time for a domestic comeback

The pandemic has certainly led to lots of thinking about the resilience and robustness of supply chains. We know that for complex products, it takes a global team and global organisations to make most of them happen. And that is probably the right way of continuing to operate. However, it is vital that every country brings something to the global table.

Over the past two decades, biopharma has taken full advantage of the revolution in global supply chain management, leading to many benefits for patients. However, the Cytiva research shows that, faced with Covid-19, policymakers and biopharma executives no longer see this approach as resilient.

That research and the Global Biopharma Resilience Index that has come out of it pinpoint the areas that need the attention of business leaders and industry bodies and the politicians who hope to establish strong domestic biopharma industries.

Index Methodology

The Cytiva Global Biopharma Resilience Index is built using data from a survey of 1,165 respondents across 20 different countries, with 95% of responses coming from pharma and biopharma executives, and 5% from healthcare policymakers. The Index results are based on 19 different performance indicators across five different pillars”. These indicators, or questions, and pillars are”:

Pillar 1: Supply chain resilience

  • How prone is a country to drug shortages?
  • How much dependence is there on imports?
  • How effective is the country at boosting supply when there are shortages?
  • How easily can suppliers be switched?

Pillar 2: Talent pool

  • Can talent be sourced easily?
  • How much dependence is there on imports?
  • Is there sufficient education and training to nurture talent?
  • How friendly are labour regulations towards accessing talent overseas?

Pillar 3: R&D ecosystem

  • ● Are partners readily available in the ecosystem?
  • ● How sufficient are existing R&D capabilities?
  • ● Is there healthy cooperation among industry actors to drive innovation?
  • ● How supportive was the R&D ecosystem in responding to the Covid-19 pandemic?

Pillar 4: Manufacturing agility

  • Is the existing manufacturing capacity sufficient to meet current needs?
  • What impediments are there to manufacturing with agility?
  • How effective are contract manufacturing organisations in terms of quality, adaptability and speed?
  • How open has the manufacturing process been to tech adoption?

Pillar 5: Government policy and regulation

  • How effective are government agencies in ensuring industry resilience?
  • What policies are in place to promote industry integrity?
  • How much funding is available?

Survey respondents were scored out of 10 based on their responses to these questions, with a score of 10 indicating excellent performance and a score of 0 indicating complete failure.

The scores were then aggregated and averaged to provide an overall index score, as well as individual scores for each of the five pillars. The scores act as a proxy for the resilience of the biopharma industry overall, and in each of the five areas.