Since its introduction in January, the BIOSECURE Act has sent shockwaves throughout the pharmaceutical sector.
Although the Act does not propose a blanket ban, its definition of prohibiting federal funding for “biotechnology equipment or services” from a “biotechnology company of concern” has raised concerns about the Act’s impact on collaborations with Chinese companies in particular. Specifically, the ban on purchasing equipment or hiring services from Chinese companies such as WuXi AppTec and WuXi Biologics, using US federal funds, has been under the spotlight. Many small and large pharmaceutical companies rely on federal grants, through the US National Institutes of Health (NIH) and the US Department of Defense, to fund their clinical programs.
The Law also leaves space to include other entities to be identified that are subject to the control of a “foreign adversary”, namely China, North Korea, Iran, Cuba and Russia.
In an exclusive interview with Pharmaceutical technologyAnshul Mangal, president of Project Farma, a consulting firm specializing in the manufacturing and technical operations of complex biologics and novel therapies, talks about the impact of the BIOSECURE Act on pharmaceutical companies and outlines steps companies can take to mitigate its impact.
This interview has been edited for length and clarity.
Phalguni Deswal [PD]: Following the provisions of the BIOSECURE Act, are there alternatives to using China-based contract development and manufacturing organizations (CDMOs)?
Anshul Mangal [AM]: Pharmaceutical companies prefer Chinese CDMOs like WuXi as they are cost-effective and efficient. This is a big driver of the dependence on these CDMOs. A recent research US trade association BIO found that 79% of 124 US companies surveyed had at least one contract or product with a Chinese-based or Chinese-owned manufacturer. The Chinese CDMO industry has evolved to a point that no other country comes close to.
India offers an interesting alternative as costs can be similar to China. I have heard that Indian CDMOs such as Syngene International, Cipla and Aurobindo are receiving more calls from US-based entities as potential alternatives to Chinese CDMOs. There are also US-based alternatives, especially for cell and gene therapies, such as the Center for Breakthrough Medicines, Catalant and Lonza. However, companies need to be cautious when switching CDMOs as the process is expensive, labor-intensive, and you may not get the same results.
The BIOSECURE Act set a January 1, 2032 deadline for U.S. biopharmaceutical companies to terminate their contracts with these Chinese companies. So, we have a little time and it is possible to scale over a period of eight years. But I have been encouraging all of our clients to start making alternative plans and thinking about their exit strategies. Companies need to figure out what the CDMO costs might be, both in the short and long term, and at what point you might want to structure an alternative CDMO.
Planning ahead can be advantageous as Indian markets or other low-cost CDMO markets may not have large-scale capacity, but if you hire them in advance, they can scale up and provide a good long-term low-cost solution.
PD: The US Congressional Budget Office (CBO) said the bill will not increase federal debt as “goods and services replace it at a comparable price.” Do you think alternatives to companies like WuXi can provide these services at a comparable cost?
AM: It depends. For certain medications, there may be other alternatives at a similar cost. For others, there may not be any alternatives at the same cost. I don’t think you can find other comparable companies at the same cost level, especially if you are looking at the US or European CDMO market.
CDMO services provided by Chinese companies are offered at the lowest cost and at the same time with good margins. If US biotech companies switch to European or US-based CDMOs, it will increase the cost of drug development, at least in the short term. While low-cost markets like India may offer comparable prices, it will take some time for the Indian CDMO market to transform into what is currently being offered in China.
PD: Will the BIOSECURE Act affect the drug approval process if companies prepare data packages using data collected by Chinese CDMOs?
AM: It may not affect the drug’s approval, depending on the drug’s development stage. Companies may have enough time to do business with a company like WuXi and get the drug approved if they are at the end of Phase II or Phase III of development. Even Phase I therapies can be approved in the US while using Chinese CDMOs to manufacture their products. Therefore, the law is not expected to impact drug approvals in the US in the short term.
Long term, let’s say if you’re a company looking to start a Phase I trial, four to five years down the road, you’d be foolish not to look at other CDMOs or move production in-house. Because if you are on schedule with your clinical trials by 2032, you may not be able to manufacture your product in China and face delays in approval.
Even if a company that has a drug approved in the US uses WuXi for manufacturing, it will need to find alternative suppliers to ensure commercial supply of the drug.
PD: How can companies mitigate the impact of the BIOSECURE Act?
AM: If a pharmaceutical company is contracting with a Chinese company, it needs to make sure it has termination rights and technology transfer provisions. They must have multiple suppliers who can provide materials in the event a Chinese company or foreign suppliers are listed as a biotechnology company of concern under the BIOSECURE Act.
The same concerns apply to both large pharmaceutical players and small and medium-sized biotech companies. A large pharmaceutical company may have the means to incur higher costs for a European or American CDMO. They may also have the financial means to develop production in-house rather than relying on any CDMO.
Small and medium-sized biotechnology companies may not have as much flexibility or capital as a large pharmaceutical company that has the resources to invest in its production. So, they will probably have to hire a CDMO to guarantee the supply of the product.
Due to the BIOSECURE Act, the pharmaceutical industry in general is avoiding Chinese CDMOs. Pharmaceutical companies are concerned that other Chinese companies will be added to the law later. If a company is working with a Chinese CDMO, it would behoove them to ensure they have identified other alternatives. A company must have a backup plan identified with a non-Chinese CDMO if, for some reason, its Chinese CDMO is mentioned in the law in the future.
Additionally, companies must constantly monitor the Law and speak to others on the ground to see how they are interpreting it and understand the steps they are taking to protect themselves in the future. The law has bipartisan support and has reached a fairly mature state. Therefore, regardless of the outcome of the US elections, the law is expected to pass with the same flavor as it has now.
“Drug Development Costs Expected to Rise as BIOSECURE Act Gains Momentum” was originally created and published by Pharmaceutical technologya brand owned by GlobalData.
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