Editor's desk: An uphill climb

With the ongoing energy crisis, Rebekah Jordan considers the effect of surging manufacturing costs on the pharma sector in Europe, and pharma's hopes to mitigate production and supply chain issues with resiliency and innovation.

It’s been a long winter – and an expensive one for a lot of us. The European energy crisis remains a pressing concern, for both the industrial sector and on a personal scale.

Disruption to access of raw materials from Covid-19 lockdowns in China, coupled with a surge in energy costs following Russia’s invasion of Ukraine, has left pharma companies sounding the alarm on the rising manufacturing costs.

Being that pharma is an energy-intensive sector, from containment labs through to industrial manufacturing sites, cutting down costs would not prove easy without impacting product quality and capacity. Both of which are non-negotiable when it comes to pharma.

On top of this, the rising costs are widespread across Europe. Combine this with the looser regulatory requirements, many pharma companies have been indirectly swayed to move their production of active pharmaceutical ingredients (APIs) to less energy intensive countries – such as India and China.

As a result, European drug manufacturers are warning they may stop making some cheap generic medicines. Generic drug pricing is reduced by around 80-90% from patented drugs, and the small profit margins are not able to absorb the extent of inflation pressures - despite the fact that generics account for around 70% of all dispensed medicines in Europe. A recent Teva report found that the breast cancer drug, tamoxifen, was halted due to the sole European API producer, stating that it was no longer economically feasible to manufacture. With drug shortages headlining the news at the end of 2022, who knows what this could mean for supply chains down the line?

On the upside however, pharma is no newbie to providing innovative solutions in unprecedented circumstances. Take the pandemic, for example. Vaccines were rolled out in a matter of weeks compared to the typical vaccine development timeframe of 5-10 years. Meanwhile, supply and demand were not amiss during the Russia-Ukraine war. The pharma industry donated over 29 million doses of essential medicines to Ukraine and its neighbouring countries according to EPFIA in 2022. I think it’s in examples like these where the pharma industry shines in its resiliency and efforts to identify and commit to alternative solutions during uncertain times.

As stated by Matt Watson, European Manufacturing Sector expert at Aggreko Europe: “the pharmaceutical industry cannot stand still.” This is true in the sense that doing nothing and continuing to act in the same way would yield a bigger cost than investing in alternatives. I believe 2023 will see a lot more news surrounding energy consumption, carbon footprint and sustainability.

Problems activate new ways of thinking. With an industry as large as pharma, even incremental changes can make a big step towards a sustainable future.