Editor’s Note:This article was published in Pharmaceutical Technology Europe’s August 2020 print issue.
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COVID-19 has brought to light the issues of European manufacturing capabilities, leading industry to question whether it is now time to reinvest in domestic medicines supply.
Editor’s Note:This article was published in Pharmaceutical Technology Europe’s August 2020 print issue.
As countries went into lockdown and borders closed from March 2020 because of the COVID-19 pandemic, Europe’s window to bring critical APIs from Asia to Europe to manufacture essential medicines narrowed rapidly. The pandemic has brought the European domestic manufacturing capabilities into sharp focus, and the question becomes, can Europe compete with Asia? The answer is yes and increasingly so, if industry takes important lessons learned from COVID-19 forward when this pandemic is over.
During the past 30 years, pharmaceutical manufacturing has been moved out of Europe and into Asia. COVID-19 has exposed the flaws in relying so heavily on a market so geographically far from our own, but is sole sourcing the solution as political leaders hurriedly review the gaps in their domestic supply?
Sole sourcing offers a guaranteed, national supply of the treatment manufactured in its local country, which is especially valuable in times like this when importing is heavily disrupted. However, governments open themselves up to other risks by limiting production to their own countries. It is neither quick to establish nor quick to fix when things go wrong.
Dual, or multi, sourcing is therefore the best strategic solution. It is integral to look at the total supply chain when seeking resilience and integrity of the supply of medicines—not just the location of a manufacturing plant, which is after all, only one small part of the whole process of sourcing medicines. Where do the APIs come from? Some can be sourced from Western Europe, but many are imported from abroad. Where are the raw materials for the API? What about access to critical delivery materials, such as vials and prefilled syringes? These are the questions the industry has had to ask itself to produce each of its medicines to ensure consistent supply across Europe during the pandemic.
For security of medicines supply from a manufacturing standpoint, vertical integration is a proven successful strategy. By vertically integrating all the aspects of the pharmaceutical value chain, it is possible to deliver high quality medicines to patients, fast, economically, and reliably.
As well as considering where the materials and manufacturing infrastructure is located, it is also important to consider where the workforce is.
In many areas of manufacturing in the United Kingdom and Europe, there is a workforce gap, ranging from the people on the frontline of manufacturing through to R&D and compliance functions in quality assurance (QA), qualified person (QP), and regulatory. As these skills transferred to Asia, Europe was afforded with an opportunity to re-establish itself higher up the value chain in discovery, and new and exciting roles spanning identification of disease, biologics, personalization of medicines, and diagnostics were unlocked. Yet it has also been a significant loss when it comes to reinvigorating Europe’s traditional manufacturing capabilities during this crisis and as we look ahead to the future post-COVID-19.
Historically, Asia has been able to be competitive due to low-cost labour that has powered cheap production of its infrastructure and equipment. As inflation increases in India and China, in turn increasing workforce wages, that cost gap is slowly closing.
Not only is rising workforce cost in Asia having an impact on the attractiveness of Europe for manufacturing investment, but advances in technology, such as robotics, have had a positive effect on competition between the two continents by reducing the need for such large workforces.
Productivity has always been a focus of manufacturing equipment development, but one of the biggest and most profitable challenges to address is production line changeover—managing the cost of complexity. In the generics industry, each company typically manufactures a broad range of products for a variety of markets. Each of these markets have different requirements for packaging size, language, and product administration. Changeovers and cleaning of the machines requires time and labour, which can add up to a lot of cost and lead to many companies driving lean programmes to remain competitive.
New technologies have helped companies in Western Europe to changeover machines faster, thus reducing competition with Asia. As quality and standards of manufacturing have improved globally, with regulatory review processes to match, Asia has even begun to turn to European suppliers for some of its equipment and technology, rather than using its own.
COVID-19 has been a driver of technological innovation across multiple industries. When its effects on the industry are eventually reviewed, it will hopefully be seen as the catalyst for positive and necessary long-term changes that facilitate a more competitive Europe in the manufacturing space.
When considering how we successfully bring a larger proportion of pharmaceutical manufacturing ‘back’ to Europe, it is necessary to review the way medicines are delivered to patients and to adopt digital platforms and technology to make companies more compliant and competitive in the marketplace. While it is still possible to make the same products as were made 20 years ago, it should be done better today.
For example, it would be hugely advantageous for the European market to have a ‘pan-European’ product pack, to minimize changeovers and potential compliance issues with errors in packaging materials. Abolishing the need for a hard copy patient information leaflet (PIL) to be placed inside each pack and, instead, making use of the unique digital codes on each box to link to a digital version of the PIL that patients could access from home or via a pharmacy could be transformative for manufacturing efficiencies. Country language and identity can then remain by the use of the ‘ePIL ‘, which can easily be updated while providing a standard uniform pack. There is enormous waste, not only generating PILs, but the destruction thereof of expired PILs due to regulatory changes. The paper PIL is a yester-year tool, today, information needs to be made available immediately.
What does the implementation of such innovations require? Movement by national authorities and regulatory boards to allow manufacturing to be more flexible, without compromising on safety—everyone’s primary focus.
During COVID-19, companies, such as Accord Healthcare, have been working closely with health authorities and industry bodies, such as Medicines for Europe, across the European Union to find practical solutions that ensure the speed of supply of vital medicines, by agreeing unusually fast turnaround times for normal regulatory requirements, contracts, and licenses. Switching to digital instead of hard copy permissions for the movement of critical medicines under emergency laws during the pandemic is one example of a small win that has had a major impact for hundreds of thousands of people across Europe.
One of the biggest positives to come out of this experience has been proof of how Accord, and other industry partners, have been able to work collaboratively with a wide range of pan-European and in-country health authorities to systematically remove the European COVID-19 lockdown roadblocks to ensure consistent supply of vital, life-saving medicines across Europe.
Another silver lining to be seen from this catastrophic episode in our living history is a reminder of the impact of industry on the environment.
COVID-19 has changed the way we think about the transport of goods, with Europe being hugely reliant on aeroplane and sea shipments from Asia. Most medicines and healthcare products when shipped by air were flown by using the cargo of passenger airlines. Air and sea logistics have had a significant setback, and it will take a long time to get to the same levels as before and this should be seen as an opportunity to review the impact that transportation is having on the environment.
Air shipment costs have increased four-fold, which were already 10 times more costly than sea shipments (based on internal costs). With increased costs of importing from Asia, it is advantageous to look at ways in which more of the manufacturing supply chain can be brought to Europe, as well as reducing the environmental impact of transporting goods halfway around the world. Pollution in India has dropped to a record low because of mass factory closures due to COVID-19 (1,2). Lowering the carbon footprint of medicines has an inherent global value that is not currently captured in the cost of manufacturing.
A strategy that weighs environmental costs with direct costs is, therefore, most likely to be sustainable in the long-term. No longer is NIMBY [not in my back yard] a solution to offshore—the environment is now everyone’s yard to take care of, relocating doesn’t remove the problem.
However, understand that Asia has played a fantastic role giving access to cost competitive medicines, but the over reliance and dependency needs to be rebalanced beyond just the price of a pill.
Furthermore, a strong manufacturing strategy must consider what is important to Europe and local countries within the region. For Accord, in the COVID-19 pandemic, the strategy involved identifying medicines that could potentially be repurposed and fast-tracked through clinical trials in the battle against COVID-19, as well as predicting demand for critical intensive care medicines (e.g., for people on ventilators) and rapidly adapting the business operations to ensure there were provisions for these medicines across the continent.
Now, the strategy is being built upon to identify the optimal technologies to invest in for the future as well as the product groups that best meet patient needs. Bringing these two elements together is the key to competing in the marketplace and making Europe a suitable hub for manufacturing, notwithstanding understanding where API and critical components come from. Additionally, using geographical multi-sourcing to provide a resilient supply chain, because a single source will always be its weakest link no matter where it is sited.
In May 2020, President Trump announced that he was beginning the repatriation of generics manufacturing to the United States, feeding into existing and prompting further discussion around the potential merit of nationalizing the medicine supply (3).
Moving manufacturing close to the customer and establishing close working relationships with local healthcare systems has clear benefits for all. However, an important lesson from COVID-19 is that having a unilateral or nationalistic approach is not good for patients. No one company or country can produce everything that is needed and in the case of generics, produce the range of generic medicines for the same condition that provides choice to clinicians to personalize care. Only together can we find better ways of servicing all of the patients that need to be served across Europe and beyond.
The freedom to be able to operate and supply to other markets is critical to make manufacturing in Europe a worthwhile investment for private companies. Governments should aim to invest in continuity, rather than ownership of generics manufacturing.
The question, therefore, isn’t ‘can more medicines manufacturing be done in Europe?’, but the age-old problem of ‘who is going to pay for it?’ Despite the closing gap, European manufacture is still likely to be more expensive than Asian, which means industry needs governmental mechanisms in place to allow competition to occur on a more even playing field. Companies should not be penalized by having to incur higher costs in Europe compared to providing lower costs through outsourcing to Asia, especially when the hidden environmental cost is considered and the fragility of long supply chains.
The real solutions to COVID-19 are likely to come from the life-sciences sector and hopefully that will have a positive impact on the way society and authorities value medicines; as more than just a commodity to be made as economically as possible using the cheapest labour, but as a precious resource, whose manufacture should be more evenly distributed across the world.
Digitalization has been proven to be essential to maintaining business operations during COVID‑19. Embracing technology helps to drive progress and that applies to manufacturing as well. Building a digital manufacturing strategy should be a future focus of businesses post-pandemic and may hold the key to transforming the remaining labour-intensive processes that continue to give Asia and its lower cost workforce the competitive edge over Europe.
COVID-19 exposed the weaknesses in our existing system, but in finding solutions in this pressured environment, we have the opportunity more than ever to rebalance generics and pharmaceutical manufacturing in Europe. It should never be to the exclusion or replacement of Asian manufacturing, but a more conjoined approach than the current polar dependent situation we find ourselves in. There are unfortunately still too many patients who do not have access to medicines today, so rather than continue as we are, there is an opportunity to rethink how we can best serve the global patient population.
Encouraging Asia to diversify and invest in Europe may be somewhat contentious in this climate, but it’s another option, alongside European investment. However, there will be new rules to play by, new rules that will reward supply beyond just price, but service, continuity, environmental benefits, reduced carbon footprints, and so on, through institutional/governmental incentivization that goes beyond cost but to value.
1. IQAir, “Air Quality and Pollution City Ranking,” Real-Time Data Monitor [Accessed 16 July 2020].
2. Air Quality News, “Air Pollution Drops to Record Low in India Following Lockdown,” Press Release, 30 March 2020.
3. Forbes, “New Pharma Company Lands $354 Million Government Contract to Produce Coronavirus Drugs in the US,” News Release, 18 May 2020.
Tony Cordrey is vice‑president of European Strategic Operations, Accord Healthcare.
Pharmaceutical Technology Europe
Vol. 32, No. 8
When referring to this article, please cite it as T. Cordrey, “Reinvesting in European Manufacturing,” Pharmaceutical Technology Europe 32 (8) 2020.