From The Editor | March 17, 2020

Sign It, President Trump; Don't Go There, President Xi

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By Louis Garguilo, Chief Editor, Outsourced Pharma

US-ChinaDice

U.S. President Donald Trump is considering signing a  “Buy American” executive order specific to ending overreliance on “medical supplies” from China.

Sign it, Mr. President.

On the other side of the globe, China claims the U.S. is responsible for the coronavirus, and in retribution, medical supplies should be held from the U.S. These statements would have to come with a level of approval of the general secretary of the Chinese communist party.

Don’t go there, Mr. President.

For Trump, the time is at hand. The country’s populace has finally focused in on our potentially debilitating reliance on generics, antibiotics, vaccines and other medical supplies made in large part by contract manufacturing organizations in China.

That it took a pandemic is unfortunate. But if that is what it has taken, run with this one piece of positive momentum to bring about supply-chain security.

Regarding Xi, readers are probably best to provide him an idea of his predicament by your answering this direct question:

If any drugs – from the lowest priced generics used daily in hospitals, to more valuable APIs, or indeed finished drug product – are discovered as purposefully held up by China to create a supply issue in the U.S., would you ever again employ a China-based CMO?

A Moment In Supply-Chain Time

Details of President Trump’s potential executive order are not public at this writing, but Sen. Marco Rubio, R-Fla. – emerging as a durable voice against China reliance – has said it would be a strong first step toward increasing domestic production for pharmaceuticals and medical supplies, immediately related to the coronavirus but well beyond.

In fact, quite a growing and bipartisan contingent in congress have been for some time amplifying the focus on our near complete reliance on antibiotics and other drugs.

I reported on testimony given last October at a meeting of The Subcommittee on Health, part of the U.S. Congressional Committee on Energy and Commerce (see: Congressional Testimony: Stop Targeting U.S.-Based API Manufacturers).

Ed Price, long-time chief executive of a U.S. CDMO, as well as Rosemary Gibson of the Hastings Institute and a leading voice for bringing the manufacture of antibiotics and other drug manufacturing back to the U.S. – both contributors to these pages – testified forcefully on some of our supply chain challenges.  

Today we have a veritable army of mainstream media pundits – both liberal and conservative – joining the chorus against the supply-chain status quo.

Meanwhile, an article in China’s state-run Xinhua news service on March 4th included an open threat to impose restrictions on medical exports to the U.S., which would then be “plunged into the mighty sea of coronavirus.”

The Xinhua article was titled: Be Bold: The World Owes China a Thank You. It was, as one news outlet stated, “largely composed of standard Chinese Communist Party propaganda about how the world stands in awe of China’s amazing response to the coronavirus outbreak.”

China also took to Twitter.

China's Foreign Ministry spokesman Zhao Lijian tweeted: "… It might be US army who brought the epidemic to Wuhan. Be transparent! Make public your data! US owe us an explanation!"

If China wasn’t amused with how the U.S. is handling the situation, the U.S. shares the sentiment.

The U.S. State Department quickly summoned Chinese Ambassador Cui Tiankai, where we are told, he was read the riot act.

Next Steps

What has transpired vis-à-vis the coronavirus reaching pandemic proportion (and some pugilistic pronouncements) may have already altered our drug development and manufacturing outsourcing equation.

Today, can any U.S.-based reader of Outsourced Pharma avoid inserting a great deal of these current events into your next decision of where to outsource your drug development and manufacturing services?

Whether you agree with overall “Buy American” sentiments or not, you have become a battleground in a widening conflict.  

Consider this:

Should we, in fact, be impacted by a China-originated drug supply shortage, besides China, on who else will responsibility fall?

The same industry called upon to rescue the populace from COVID-19 by developing therapeutics and vaccines would (once again) wrestle a negative impression from a positive outcome.

The first business question when it comes to outsourcing must now be: Are there alternatives in the U.S. for our production of drugs intended for use in this country?

Options are increasing, at least as regards the future of drug development, such as for cell and gene therapies. For example, we recently reported on three new CDMOs coming on line (read: The Biggest CDMO Show On Earth; A Harvard Assist For Cell And Gene Bottlenecks; U.S. Manufacturing On The Rise: Add Another CDMO To The Heartland).

A second business consideration: While capabilities and capacity are paramount, so are costs.

Whether in the long run it actually does cost less to outsource an API, for example, to China, instead of have it processed at a U.S.-based CDMO, is challenged by many. (For example, see: Do The Math: "Reshoring" Adds Up For Biopharma Manufacturing.)

Nonetheless, it is around pricing of product that the biotech and pharma industries must align with the consumers and patients. And the entire health-care system to boot.

At least at first, it’s safe to say a safer supply chain will come with some price escalations.

How well we deal with that collectively as a nation will help determine how well we  come to understand the complete threat of this coronavirus.

There are some signs of public enlightenment. A young woman on Twitter – just one example of many I’ve seen – recently posted:

“i’m not sure what the final impact of the chinese coronavirus will be but it’s taught me that i’ve been wrong on trade and globalization. we can’t have supply chains for essential items located thousands of miles away in countries that hate us. bring it all back”

Which brings us back to presidents Trump and Xi.

For Xi to allow narratives of supply-chain retribution will only hasten a departure of drug companies to alternative locations. Actual action would cause a more full reversal for certain: He’d leave the industry no choice. Better to work with his counterpart in the White House, even if a “Buy American” statement is on the way.

As for Trump, who enjoined this battle for U.S.-based manufacturing as a component of national security, while unfortunate a circumstance as the coronavirus helping push his agenda, now would not be time to waiver when it comes to our drug supply.

A successful national debate must include not only supply-chain stability, but our entire system of health care, and the attitudes of consumers and patients.

Who would have thought Outsourced Pharma readers would be front and center in presidential politics? But here we are.