When the COVID-19 pandemic struck in early 2020, Europe’s reliance on active pharmaceutical ingredient (API) and generic medicine suppliers outside of the continent was laid bare. In the face of crisis, countries like India and China understandably looked first to safeguard their own populations which, combined with supply chain strains and border closures, meant that Europe struggled to access the medicines it needed.
This situation has led to much soul searching on the part of European stakeholders, both in government and industry, and calls for more nearshoring of essential medicine manufacturing within Europe to protect against future health crises.
Some of the challenges faced during the pandemic were the result of 20 years of an incomplete industrial policy for the pharma industry
As Ángel Luis Rodríguez de la Cuerda, secretary general of Spanish generics association AESEG notes, “The COVID-19 pandemic revealed that the country in the best position is the one that has the most manufacturing plants and, within Europe, Spain and Italy are the two leading producers of generic medicines. Spain has learned that it needs to bet on and promote Spanish production to avoid being dependent on third countries, which will guarantee security of supply for the population while boosting the economy.”
His equivalent in Italy, Egualia Director General Michele Uda, strikes a similar tone. “Some of the challenges faced during the pandemic were the result of 20 years of an incomplete industrial policy for the pharma industry. Generic and biosimilar medicines play an important role in European healthcare ecosystems, as evidenced by the more than 500 manufacturing sites and around 26 R&D sites across the continent. Italy alone has 40 manufacturing sites that employ directly over 10,000 people. However, without a comprehensive industrial policy for over a decade, we were relying too much on India and China for APIs, especially intermediate ingredients.”
Policy Reform: Just Rewards Needed
However, industry representatives believe that to ensure essential medicine manufacturing remains in Europe, authorities must put in place policies that incentivise companies to sell their products on the continent.
“To fully appreciate the value of having a strong generics manufacturing base, the country must implement pharmaceutical policies in which price is not the only criteria used when evaluating medicines,” states Rodríguez de la Cuerda. “Do we want to have a very low price but depend on third countries for supply, or have a reasonable price, the certainty that patients will not experience shortages during emergencies, and a larger industry that will boost economic output and jobs? For us, the answer is clear.”
Do we want to have a very low price but depend on third countries for supply, or have a reasonable price, the certainty that patients will not experience shortages during emergencies, and a larger industry that will boost economic output and jobs?
“At a European level, there is important work being done in this regard, such as the Strategic Plan for Pharmaceutical Policy led by Dolors Montserrat. The European plan has five pillars: an update of pharmaceutical policies that put patients at the centre, boosting R&D investment for pharma products, new measures to guarantee the sustainability of the health system – which positions generics as a crucial sector –, incentives to increase industrial investment in laboratories with a manufacturing plant in the European Union, and focusing on diseases that do not have alternative treatments.”
Hubert Puech d’Alissac, veteran general manager of the Italy cluster for Israeli generics giant Teva, adds, “We believe that it is time for Europe to move away from the healthcare system’s unsustainable preference for the lowest cost generic option, which does not account for companies’ investments to both secure supply and comply with Europe’s key transformative priorities.”
Puech d’Alissac continues, “In one study conducted by Teva, patients were asked which criteria should be considered by health insurers when selecting pharmaceutical companies. The results highlight that 72 percent of patients believe that supply security should be the top priority … the pandemic has triggered interest among patients on pharmaceutical manufacturing – seven in ten people now care about the origin of their medicines – and 76 percent of participants believe Europe is too dependent on other regions.”
“Teva believes three pillars are especially important for further development of our industry: support for a robust supply chain for medicines by addressing the economic and regulatory root causes which are pushing investments outside of Europe, secure European investment by maintaining an outward-looking and open trade system, and map Europe’s pharmaceutical manufacturing capacity and capability and monitor investments.”
Supply Chain Transparency
For Marc Comas, managing director of Indian generics firm Accord Healthcare’s Iberian operations, greater visibility and transparency across the supply chain will also be crucial in the future. “Supply chain is becoming a very complicated business,” he proclaims. “Commercial teams struggled to predict stable sales in recent uncertain times, while managing the global surge in costs and a shortage of transportation.”
“The entire industry needs to improve. However, hospitals, governments, and others involved in the sourcing of these products need to provide greater visibility on the volumes they will source. Producing a medicine takes months from the making of the API to the production of the tablet or vial. Subsequently, it is sent to Europe for warehousing, testing, releasing, and is then sent to a hospital to be administered to a patient. As a result, all parts of the supply chain need to assist each other to allow for greater lead times to supply the appropriate quantities to the patients at the end of the chain.”
Manufacturing Relocation: No Quick Fix
The relocation of manufacturing to Europe is, however, not something that can be achieved overnight. As Comas explains, “Much of the resilience of today’s EU based industry relies on supply chains that begin in Asia. Re-locating all that API and FDF out-sourced production to the EU is impossible, but it is true that post-COVID we expect a surge in local production preference if an option to choose is available.”
In terms of production, we in Europe need to be much quicker and more proactive
Juan Carlos Conde Ibarra, Teva’s general manager for Spain & Portugal, is similarly cautious on what can be achieved. “What the European Union and member governments can do for the future is slow down or prevent future moves of production outside Europe; it is maybe not about re-localization but rather about changing a trend,” he observes. “Being able to bring back well-established operations to the continent is not easy. However, in the pharma sector we are constantly making decisions on where to allocate new projects, where to grow production, and having a better environment will allow for manoeuvrability.”
Conde Ibarra’s Italian equivalent Puech d’Alissac adds that Europeans need to be more open to the concept of having manufacturing facilities closeby. “In terms of production, we in Europe need to be much quicker and more proactive. As well as price, one of the advantages of producing outside of Europe is the time it takes to get authorisation for a factory and build it. While European stakeholders are cognizant of the importance of regional production, there remains a ‘not in my backyard’ mentality regarding factories. This means that the exercise of creating and approving processes of a new facility can take years rather than the months it might take in a country such as India.”
He concludes, “Anyone should have the right to challenge the creation of new facilities, but the decision-making process should have clearer milestones to speed it up. As an industry, we take the responsibility to build facilities and run them professionally and with care. No organization wishes to damage the environment and there is far more scope to trust entrepreneurial ventures here in Europe.”
