Coronavirus has shed new light on the pharmaceutical sector and healthcare in general. The industry is scrambling to find a vaccine for the pathogen, but despite big investments in a cure, the outbreak is wreaking havoc on supply chains.According to a number of virus deconfinement plans drafted by countries around the world, certain aspects of everyday life will only be able to resume as normal once a viable vaccine is identified and rolled out en masse.
Large gatherings of people at sporting events or music concerts, as well as full-scale tourism, are likely only to be possible without risk factors once a coronavirus inoculation is available. Given the economic value involved, it is no surprise that big investments into virus research have come thick and fast since the pandemic first hit. One of them, made by the EU, was a response to US President Donald Trump’s courting of a German firm working on a vaccine.
Trump was reportedly interested in brokering an exclusive deal with CureVac, prompting the European Commission to intervene with funding worth €80 million. The institution’s president, Ursula von der Leyen, said the cash would help scale up ongoing research, adding that “CureVac’s home is here”.
The European Investment Bank, the bloc’s triple-A rated lender, backed the investment after it too saw the potential in the German firm’s approach, which could drastically slash the costs of vaccines if successful.
On 29 April, the EIB - whose mandate explicitly instructs the Luxembourg-based bank to only pursue strong investment options - signed a landmark deal with a global organisation that specialises in developing vaccines for emerging diseases. Under the terms of the agreement with the Coalition for Epidemic Preparedness Innovations, the EIB will provide the group’s members, which are made up of private and public companies, with financial advice and support.
“The bank offers numerous options for companies looking for funding to develop the next generation of vaccines in the search for solutions to global disease outbreaks,” said the EIB’s vice-president, Ambroise Fayolle.
Donald Trump is not the only American showing an interest in vaccine development, singer-songwriter Dolly Parton has funded work on identifying antibodies at a university in Tennessee, which has attracted the attention of global pharma giant AstraZeneca.
Virus lockdown measures have interfered greatly with global supply chains for medicine. Border closures and mandatory quarantines are obvious causes but the complete fall-off in demand for commercial flights has also made an unexpected dent in supply.
Most airlines supplement their already razor-thin profit margins by filling their aircraft with high-value cargo, much of which is often perishable goods and medicine. Europe’s trade volumes are admittedly small, just 2.6% of commerce, but in value terms, 21% of cargo is shifted by air.
Planes are still by-and-large grounded, although plans are afoot to get the industry back in the air. For now though, there is a gaping hole in the logistics side of the pharma trade.But it is the situation in China and India, two of the world’s largest drug exporters, that is proving to be most damaging to medicine supply chains.
Many countries still remain dependent on China for medical gear like masks and test kits, which its government has taken advantage of as part of its ‘mask diplomacy’ efforts, but it is India, the globe’s number one exporter of generic medicines, where the pinch could be truly felt.
Europe is hugely reliant on India for medicines that are as ubiquitous as paracetamol, after the region’s last factory closed down way back in 2008, due to being squeezed out by cheaper Asian alternatives.
The subcontinent is still wrestling with its own coronavirus outbreak, which prompted Prime Minister Narendra Modi in March to put restrictions on the exports of drugs like simple painkillers and anti-malaria treatment hydroxychloroquine. Although that policy was later relaxed after pressure from Washington, the temporary cut-off has already prompted European policymakers and its drug industry into a rethink over how medicine supply chains are structured.
“The crisis has revealed our morbid dependency on China and India as regards pharmaceuticals,” said the Commission’s vice-president, Věra Jourová, on 19 April. “This is something that makes us vulnerable and we have to make a radical change there.”
According to the Czech official, the EU will reassess the delicate situation so as to boost drug production in Europe. Its action plan will be submitted to national governments and MEPs later this year.
But the supply chains issue is not one where all European countries are on the same page. Despite emergency virus guidelines asking capitals to make sure cross-border medicine trade continues unhindered, restrictions remain in place in Belgium and Hungary.
“The consequence of export bans are directly detrimental to the availability of medicines for patients across the EU and globally, as well as risking retaliatory measures from other regions,” warned the European Federation of Pharmaceutical Industries and Associations. The group also urged the EU to make sure that no state takes unilateral action that would block vaccine development or treatments, adding that “no one country can meet all its pharmaceutical needs on its own”.
The EU insists that its policies will not stray into isolationist or populist territory but the impact of coronavirus suggests that the post-outbreak recovery period will put that pledge to the test.
The pandemic has shaken an already wobbly rules-based multilateral order, as Trump’s attacks on the World Health Organisation clearly demonstrate, as well as the significant lack of coordination between countries.
Coronavirus prompted the EU to relax state aid laws to help the economy, unlocking billions in government aid, and although the bloc’s mighty competition chief Margrethe Vestager insists the status quo will be restored after the outbreak passes, political sentiment at the moment indicates that any policies that strengthen Europe’s hand will remain in place for the long-run.
That could usher in a new era of domestic pharma growth or prove to be misguided faith in an industry that will always be undercut by more economical options elsewhere. Time will tell.
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