MILAN — CDMOs are increasingly fielding inquiries from biopharma clients on how reliant they are on China for their raw materials, off the back of industry anxiety on how the Biosecure Act would play out, manufacturing executives told Endpoints News.
Ashu Tandon“We’ve had customers coming in and saying, ‘I want you to make this product for me. Tell me how much of a China dependency you have in that exactly’,” Aragen Life Sciences’ Chief Commercial Officer Ashu Tandon said on the sidelines of the annual Convention of Pharmaceutical Ingredients confab in Milan. Aragen sources around a quarter of its raw materials from China, which is a drop from about 60% from three years ago, Tandon added.
Swiss-headquartered CDMO CordenPharma is also looking for a more localized approach for raw materials, Stephen Houldsworth, VP and global head of platform management and marketing, told Endpoints News. “We have serious conversations with our customers over our raw material strategy,” he added.
But shifting raw material supply chains out of China is not straightforward because it’s been the go-to for decades, particularly because of lower costs, Houldsworth said. And cost impact is at the forefront of manufacturers’ agendas, considering other external pressures like the Inflation Reduction Act in the US, which is likely to squeeze the cost of raw materials for affected drugs, Tandon added.
Stephen HouldsworthManufacturers are looking to India as an alternative to China. India-based Aragen is building its raw material sourcing at a local level, as it focuses on investing in local suppliers and startups to help the country’s raw material supply, Tandon said.
The Biosecure Act passed the House in September, with many biopharma companies assessing their supply chains. According to a CPHI report, 70% of survey respondents said geopolitical tensions are the biggest threat to biological supply chain resilience.
While CDMOs outside of China have spotlighted how the bill would be an opportunity for them to bolster their client list, such manufacturers are also dependent on China to varying degrees on their raw materials. The bill has a grandfather clause that gives biopharma and CDMO companies some time to review and potentially make new arrangements.
Jonathan HuntWhile there’s more discussion about moving raw material sourcing outside China, this overall trend is not new because of the Covid pandemic, India-based CDMO Syngene CEO Jonathan Hunt said. “If we had everything in China — what happens if there’s a problem with China?”
Other factors such as reducing manufacturing carbon footprint are also a reason for CDMOs and their biopharma customers to source services more locally, Germany-based Rentschler Biopharma CEO Benedikt von Braunmühl added.
The execs said there is doubt if there will be a complete exit out of China in raw material supply.
Biopharma companies with candidates in the earlier stages will be more concerned about moving their studies along as quickly as possible, rather than changing suppliers, said Jeremie Trochu, CEO of the Belgium-headquartered manufacturer Ardena. Meanwhile, companies with assets in Phase 3 trials and in commercial production would be more concerned with shifting as they have longer-term plans, he added.