Pandemic Financial Implications
Has the coronavirus (Covid-19) impacted the pharmaceutical industry as much as the film industry? This may not be a common question to ask, however, the movie Contagion (released in 2011), has seen a significant increase in views and revenue since the coronavirus outbreak. The storyline focuses on healthcare professionals, government officials, and everyday people fighting to survive a worldwide epidemic and the attempt to find a cure for an infection. Sound familiar?
Pandemic Financial Implications
The coronavirus outbreak fuelled concerns about pharma’s global supply chain. Two major centres for production were located close to the epicentre of the outbreak in Wuhan. Active Pharmaceutical Ingredients (API) and intermediates who supply products to the world were therefore under threat as a result. Costs were rapidly rising with the impact on the Chinese economy in the billions. Additionally, 13% of all facilities that make ingredients for drugs used in the USA are located in China, posing a significant disruption to the supply chain. More global impacts include disruption of India’s multi-billion drug production, severely affecting the flow of bulk drug import and intermediates from the country. India, the world’s third-largest drug producer by volume, imports ~70% of its raw materials from China. About 90% of the needs of antibiotic makers in India are fulfilled by Chinese companies. The entire spectrum of industry small, medium, and large was therefore impacted due to the global outbreak.
History and Mortality Rate of the Coronavirus
Coronavirus, first identified in the 1960s, causes a nasal infection, and/or infections in the sinuses or upper throat. These viruses are common among animals worldwide, but only a few cases of the virus can infect humans. Most people get infected with coronaviruses at one point in their lives, but as the symptoms are typically mild to moderate – it’s treated like the common cold. In rare cases, coronavirus has evolved to spread from animals to humans with significant adverse health effects. Notable examples are the Middle East Respiratory Syndrome coronavirus (MERS-CoV) and the Severe Acute Respiratory Syndrome coronavirus (SARS-CoV), both of which are known to cause more severe symptoms.
Following the December 2019 outbreak in China, WHO identified a novel coronavirus believed to have been transmitted from reptiles such as snakes. This new virus displayed similar symptoms to previously identified coronaviruses, although with greater severity. Patients have a greater risk of developing severe pneumonia causing breathing difficulties. The most severe cases were seen for people with weakened immune systems, the elderly, and those with long-term conditions like diabetes, cancer, or chronic lung conditions.
Pharmaceutical Opportunities
Traditionally, the road to a final approved drug is a long and difficult one that typically takes around 12 years. With the contagious outbreak announced as a global medical emergency, the pandemic provided a new challenge for pharmaceutical companies to make an impact, looking to streamline drug development, decentralise testing centres and develop new ASSURED point-of-care testing. The healthcare industry developed a series of diagnostic tests to detect any member of the coronavirus family. It, therefore, catalysed the development of novel vaccines across the biotech industry, both by pharmaceutical companies and research organisations. For a pharmaceutical product to be taken to the market, it must first prove it is innocuous, and then demonstrate a certain degree of effectiveness. However, effectiveness alone is not enough to qualify a new product as innovative. It is the novelty of effectiveness that ultimately classes a drug as innovative. According to the Food and Drug Administration (FDA), there has been a total of 195 new products taken to the market in the past four years covering a variety of therapeutic areas. With the rise of new diseases such as coronavirus, a significant increase in pharmaceutical innovation over the next decade is therefore expected, with the potential to improve treatments and reduce response times to future outbreaks with improved systems/protocols.
Possible Solutions
The work initially began to tackle the new virus with pharmaceutical industries aiming to develop a drug for viral infection in two different ways.
- The development of small molecules that stop viruses from replicating by interfering with viral proteins. However, small-molecule drugs tend to be less specific and subsequently bind to many other receptors causing side effects. Antivirals are usually simple to manufacture with an easy mode of administration often taken in pill form orally.
- The development of antibodies. The human body usually applies these as a defence mechanism. Antibodies are large proteins that bind to viruses and trigger their apoptosis (programmed cell death). This may have been the optimum strategy as antibodies are quite specific and reduce side effects which would mean finding a safe and effective drug. However, the problems of mass production of the antibodies are significant. This in turn provides another challenge for manufacturers to design and develop mechanisms for an efficient large-scale production of drugs for the targeted condition.
As approximately 99% of potential small molecule drugs fail, developing new antivirals from scratch could take years. However, over the years scientists developed small-molecule drugs targeted at different families of the virus which helped accelerate the discovery process.
Can Pharmaceutical Companies Adapt?
Advancements in technology are constantly changing how industries operate. Although the desire for innovation is still a fundamental aspect of the pharmaceutical industry, the need for an innovative culture and how to encourage innovation is an area that needs development. To remain competitive, pharmaceutical companies must enforce a culture of innovation at every level and every stage of the drug discovery process. Researchers learn from failure, but unfortunately, there are limited platforms to convey the findings of a failed project/process. Additionally, pharmaceutical industries generally tend to refrain from making this information public for various reasons such as intellectual property (IP) and competition. When a particular project/clinical trial fails to achieve the targets, further novel research could benefit from the findings and failures of historical projects to cut costs, save time, and increase efficiency. This could be achieved by open platforms that encourage sharing of data without the risk of losing intellectual property. Additionally, to further drive innovation and optimise research capabilities, pharmaceutical companies must incorporate data analysis as a core competency of their organisation. This is to streamline baseline processes and elucidate the fundamental basics of research and development. This will in turn help create a multidisciplinary environment and help accelerate the drug discovery process thereby increasing business efficiency and the desire for research. One of the approaches to achieve this would be the incorporation of bioinformatic methods into drug development. Therefore, the need for innovation and collaboration is more important than ever before.
A clear message from the coronavirus outbreak was highlighting the need for biotech and pharmaceutical organisations to come together and mark the beginning of a new era of collaboration and unity. Through learning from mistakes and failed projects, sharing ideas, and helping push the boundaries of science and technology, it would be possible to help tackle future diseases with more confidence and resilience. Do industries need to re-evaluate their business model? In movies, when human existence is under threat, rivals, and competitors put aside their gains for the greater “good”. Will we witness such fictional movie endings become a reality?
To further support pioneering businesses within the pharmaceutical and biotech industries, R&D tax relief is available to reward companies within these sectors (and many others) who are investing in innovative projects and processes. These benefits are available to companies of all sizes, not just big pharma. RCK is experienced in maximising the client benefit received by businesses within these industries and the secure, reliable and compliant cornerstones of our business model facilitate a unique proposition to clients within this space.
Contact us to explore the opportunities available.
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