CPHI REPORT a USA NATO exit or another cataclysmic event (Taiwan anyone!) throwing all bets off (again). So when we reviewed the issues de jour in early 2024, we saw four major uncertainty’s affecting prospects, namely: funding, inflation, war and reshoring. The first question was when will funding return to biotech and how quickly this would transfer through to CDMOs. The answer to this first question appears to have been slower than expected, but with steady improvements showing up all across the industry in 2025. In fact, late-stage funding had already returned in the second half of 2024, but what we now report and the broadly positive sentiment at JPM was further anecdotal evidence of this, is, funding has finally returned to the early phase pipeline. The second issue of inflation in last year’s analysis was correctly identified as ‘falling back in 2025’ and, of course, while the form it takes is a long way from certain – by ‘hook or cruck’ we do appear to be approaching the end game for the war in Ukraine. Which leaves finally the elephant in the room that has unsettled drug discovery and development paradigm (again ignoring the recent NIH issue) – reshoring, near-shoring and stability in supply chains – and in particular the continuing tensions between the United States and China. At the time of writing in early March 2025, we have seen an added new complication of tariffs for China, Mexico and Canada… and we can only guess if when you come read this they remain on the table, so we apologise in advance if this narrative has been superseded by the irrepressible pace of change. For example, if markets decide, mistakenly in my view, to fight fire with fire – e.g. with one ‘expert’ suggesting that “Canada should suspend US patents to fight the new tariffs”. Yet putting aside the inflammatory rhetoric whether these have material short term or permanent longevity, the damage – rather like we see with BIOSECURE (more on that later) – is already done as pharma will look for the safety-net of US domestic manufacturing. Which means for the growing CDMO sector, owning a USA site is now at an all-time premium. For example, a journalist recently told me a rumour that an acquisition of a US fill/finish site failed to complete due to a technicality [post Trump Tariffs]. Why is this important you ask – happens all the time surely – well the cynic in me believes the seller may well have smelled an opportunity to see how this plays out and, of course, in a world where near-shoring is out – or at least uncertain – inevitably that asset is now instantly more valuable. And so to BIOSECURE, an area of policy that really has kept even the best informed of us guessing… it’s all gone rather silent recently and the view from the Capital is, once the dust settles, its prospective future depends on the new administrations direction of travel. My guess – and it is a guess – having heard rumours from the five named parties, the increasingly confident Indian CDMO base and, most importantly, the whispers of power in the now all too secretive American legislative hamster wheel… I think a new version does indeed pass as a separate bill. However, to quote JFK during the Cuban missile crisis, ‘cooler heads will prevail’ – so that means a much greater degree of watering down and I suspect far greater freedom for private industry to go their own way. In fact, in line with the Senate concerns before the New Year, I believe if it passes, the named parties may well be removed in favour of a more prescriptive description of China based CDMO or CRO entities. What I don’t see is it passing in full in the way it was most recently proposed – for those unaware that meant all ‘US drugmakers had until 2032 to dissociate their supply chains from the named Chinese companies’. While it really is crystalballing, perhaps even spit-balling. Removing the Chinese Chemistry engine from the USA innovation community is a huge own goal in my view and therefore it, ultimately, won’t happen that way. I also think we should note that WuXi’s industry role is also markedly different from BGI, MGI, and Complete Genomic. So a different fate my await those with data concerns and perhaps the new legislation will sensibly separate out these divergent issues. For the purpose of this analysis, I am looking only at the CDMO concerns where WuXi plays such a critical role in so many novel drugs. So, I am going to speculate wildly, that I can see a version passed with perhaps the insistence that at least primary or a secondary supply chain [for commercial products] is completed in the USA for innovators with China-based partners. 57 TWENTYFOURSEVENBIOPHARMA Issue 1 / March 2025
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