Grant Playter

Andrea Lodetti, CEO of Bormioli Pharma, an Italian pharma primary packaging manufacturer, spoke with Grant Playter, associate editor, at this year's DCAT week. Topics of discussion include the company's approach to the US market, supply chain instabilities, sustainability, and more. A full transcript can be found below.

One of the big headlines Bormioli is coming into DCAT with is its 40% increase in North America sales year over year. Can you discuss some of the reasons behind the strong increase in terms of new strategy, certain investments, market forces, et cetera?

: Thank you for the question. I would say it's not the new strategy, we started the approach to the US market back in 2019 when we set up our commercial entity. The timing to get things done in pharma is quite long so you have to invest, especially in time, with money. And so what we did we started our commercial activities and our interaction with customer, showing them what were the benefits from our product, how good we were performing. Also, in some places of the same global pharma company in Europe, we're saying, "Hey, we serve this plant in Europe, why can’t we also serve your plant in the US." So, it all came with the longer work.

Of course, there were a couple of things in the last three years that made things a little bit not so easy as in the past. But we did work a lot in that; we set up our logistic platform here in the US, we have a very well-streamlined supply chain from Europe to US, especially for molded glass. And that is making us more and more credible, and customers that start working with us have immediately increased their volumes and ask, "Okay, you can do more?" And this is why we now are benefiting from this acceleration that is overall in the market, because after COVID, after the crisis we saw in the Russia and Ukraine war, all the pharma companies are nearshoring their supply chain a little bit more than in the past. I would say pharma has been always a risk adverse sector, but in terms of organizing its global supply chain, it was more looking for efficiency, cost efficiency, rather than risk protection.

And what happened during COVID, and also in the in the last 12 months, everybody realized that you cannot afford any more to have your things supply there from the other part of the world. You can do it, but then when things become difficult, then you're immediately in trouble. So we're trying to follow up with this. So I think we will also invest a little bit more in US now and get possibly also an industrial footprint on site. But again, this is a long, long activity that is now paying back and we're quite happy about that. I think there's more to come later on.

You touched on this a little bit. But regarding the extended half-life of the COVID-19, disrupted the supply chain, do you think this basically spells the end for the just-in-time supply model? Or do you think we're going to look towards more onshoring production or whatnot?

: I mentioned the nearshoring or reshoring of some of the activity. I'm not saying that this is the end of the just-in-time, but definitely has to be redesigned along different concepts. I would say that, for instance, for glass production it was never a just-in-time because normally pharma companies they do buy at the very beginning of the year of what they need, and then they use it all over the year. So, it was never like a pure made to order.

But anyway, as I said before, what is now important is to make sure that you have a backup plan for any of the possible risk of disruption that you are facing. This is staying, because it's not like COVID-19 is now over — no, this is staying. It has hit us strong, and also following it up with the macro-economic crisis that we are living nowadays, it really has made everybody rethink that things are not that easy as we thought before. And we have to be sure that things are working perfectly, because in our segment in our industry we have a social responsibility. I mean, if people is left without health care, it is a big issue. And the risk was there during COVID-19 and I can tell you, we had a number of customers scared to death that suppliers were not able to provide the continuous API or whatever. And this lesson is being learned quite well.

So our audience is largely composed of biopharma industry members, but they might not know this between molded and tubular glass. Can you just talk a little bit about this in the biopharma context?

: It's a different process, because molded glass is a process that we dominate from the beginning to the end, where you really start from raw material like sand cullet and you come out with the finished container afterwards. With a little bit of different technology, but basically what you do is you melt all of these stuff in a 1600 degrees container and after that, you pull out a small portion of melted material that is then formed into different processes. And that is normally used for container that go from 30 ml up, so with the bottles.

When you go down, you move towards the vials, then you have the converting a glass, tubular converting technology that comes in. This is a technology you start from a pipe of glass that is made only by four companies in the world: Nipro, Schott, Corning. Three companies, actually, the good ones. And you buy these pipes, and then they run a cutting, heating, and forming process afterwards.

So, what is the benefit? The benefit is that you come out with a smaller container, because with the mold, you can go down to a limited capacity. And then, if you do things properly, the container is lighter, is less heavy, and has a better aesthetic look.

However, there are things that are good for the tubular technology, things that are much better with the molded technology, so it's always a trade off around capacity application and mechanical characteristics that you want. We demonstrated with a dedicated activity, as we mastered both technologies, that there is a huge, on some properties, you can really choose depending on the size and the aesthetic of the vial, but there are things for which molded is much better than tubular; for instance, stability over time, internal uniformity of the chemical aspect inside of the container, and also molded glass has not the issue of delamination, which is an issue that affects the tubular vials.

So, I would say different technologies, different processes, Bormioli can master both of them. We can also provide consulting to small companies, you mentioned the biotech; of course, these are company that totally focused on the drug, on the content. We are good at designing and developing their containers. So whenever we see that whenever we work together in the development phase, things are coming out much, much better.

Talk to me about the 50-in-5 program. Just, what are its goals, how you went about this, because everyone wants talk to me about sustainability. It's the new hot topic at DCAT this week.

: But we need to discriminate from greenwashing and real sustainability. Today, everybody's talking about that.

I watched this segment the other day talking about carbon offsetting. How a lot of companies who are carbon offsetting aren't really actually doing that.

: I want to be carbon-free. Okay, then there's a lot of work to do. And we came with this project that we call the 50-in-5, because when we launched, that was like two years ago, we said, "In five years, we want to get at least 50% of our raw material coming from recycling or sustainable sources by 2025." This means for molded glass to work a lot around the loop of collecting the cullet and using it back into the furnace.

And we are quite advanced with that on the plastic side, in the means to use any type of recycled material that comes from all sorts of industries and use it and convince customer that this can be used and has the same properties as the building material. We are on track for that; we have reached 39% in 2022. And we think we can get up to 50% in 2025. Also, because many of our customers are now in the rush of achieving a sustainable result. So, that will add quite a lot.

The last bit would be a little bit more help from regulatory bodies, that they have to allow a wider usage of recycled material. For instance, nowadays, there is a minor portion of whatever is used in hospital that you can put back into the recycling loop. So, we are also working on that, trying to make activities that basically demonstrate that you can collect material from the hospital with no harm for the people and put it back into the recycling loop.

Can you talk about that a little more in detail? Like say I have a vial and I put like, say COVID vaccine in it, and I use it and how would I go about recycling that while maintaining absolute sterility? Because that is what you need for things are going to be reused.

: So in order to ensure sterility, there's only one way, that is heating. And if you think that in the end of the cullet goes into a furnace at 1600 degrees, you are sure that whatever enters there, doesn't come out. Not alive, at least. So the real issue is the collection from the hospital up to the place where you fragmented it and then to the melting furnace. This is the area in which we have to work.

So our idea is that there is a first step of, I would say, sterilization or cleaning that can happen at the hospital level. So the hospital with a, not a huge facility, like imagine a container that is heated at a certain temperature can ensure that what gets in there is then free of virus, of contamination, and so on. And after that, the whole recycling loop is already defined for water, for food. And so just this step that has to be handled, because unfortunately, today, whatever goes into the hospital then goes to the burn on-site. And then that's not good for being sustainable.

We're in a weird state with the greater global economy. There's obviously a lot of geopolitical events going on in Europe at the moment and we also have the SVP collapse affecting the global market 

 Dow Jones is down, that sort of thing. So can you give me your perspective on how this is going to impact the biopharma space?

: For the pharma environment? This is an industry that requires a lot of investment, a lot of capital, a lot of money, but is pretty much backed up also by healthcare institution — it is a very much protected system. So it's difficult to make very, very, very wrong financial disasters like it is in some other industry. So, you don't have so many startups that are happening and needing a lot of money like in the high tech business, so, I do not expect any of the pharma player to be [affected] so much. There is only so much contagion that can get into our industry.

But on the other side, we have to be aware that not all the financial sources are any more as reliable as we thought in the past. And this is something that I think in our space is less affecting the business than in other space. We must be more aware of what is happening in the public healthcare system. That is really driving the performance of the pharma chain. If broad initiatives are taken by government in this space that you haven't, you are affected in the industry.

However, what is good, if we have to find something good about COVID-19, is that it has brought back into the agenda of the government and public institution. How important is it to ensure a solid and reliable healthcare system for these events that we understood, that can happen at any time, and they are quite fast in spreading around. And so I am confident that our industry will not be affected that much by this crisis.

And about the crisis in Europe, ongoing in Europe, unfortunately, this is very bad. But both Russia and Ukraine are not such a big player of the pharma industry. What I can see there is that, of course, there is a drawback in terms of reliance of government into each other, but not really a disruption that is relevant for our business.

Very fair take. It's an inelastic demand for this. The only concerns I really think people are highlighting are like with the startups, because investors might be a bit skittish for high-risk, high-reward startups, specifically in the biopharma space, but on the supplier end, which is where you're coming from, I don't think you're going to see much change.

: No, no. In this space, where we are coming from we don't see things much affected. The R&D investment will stay, we are keep on investing into that space. So at least for packaging industry, I don’t see that as a big issue.

I'm asking everyone this question, going to ask you it as well. You have any bold takes about the biopharma industry? Where are we going to be five years from now? Ten years from now?

: I like the space, is very much interesting, and is going to be supported a lot by the advance in other areas, like artificial intelligence, or high-speed computing — everything that is, you know, growing in the high tech environment, is bringing to biotech a lift. And this is where we have to go, right?

If, when we talk about personalized application, or very specific drugs for the so-called orphan disease, I mean, there is where we have to go. I mean, the standard was a classical pharma industry, works a lot on chemicals, on things that are good for everybody, don't care that much about the drawbacks effect, because what you are curing is the main thing. With biotech, you can go into really the DNA of people and try to assist it and to come fix it, if there is anything wrong. We saw it in the vaccine, which are the vaccines that work very well, they were the one that acting on the mRNA, rather than the one acting on the death virus and creating the antibody and so on. So that's the future.

And probably, we will see more and more big pharma companies acquiring small, high-performing biotech. So we'll have this increase in this kind of network of different developing hubs that when they get to a point where thing is found, then it is acquired by Big Pharma. So I see Big Pharma going into more being the hub that acquires whatever is developed by single companies, and going out more and more from the bottling and taking care of the distribution is not their topic. So that is where, what I think. Recently I have seen, I think Pfizer made-

: Wow. Credit Suisse was just acquired by three million from UBS, three million for a bank. And yeah, 53 billion is more. But if you think about it, if you get things done in that space, you're good forever.

One other question, before we get to final thoughts. I was just curious. If you would give one piece of advice when talking with biopharma companies who are making decisions about their packaging choices 

: This would be advice for everybody. Remember, people that use your drug will now be people with the disease, will be people maybe needing support from other people to get the medication. So the packaging cannot be like, I buy a vial that is there since many years and I just use it. No. Remember, people will have to use it in a time where it's not in good shape, where he would have limitation possibly in what he can do, or she can do, would have maybe cognitive limitation. So it will be difficult.

So remember, remember, remember, there is a patient at the end. There is a patient at the end. So of course you are saving his life, he's happy, he will take whatever, do whatever to get this drug. But if you can make his life or her life a little bit easier, then you've done a good thing. So I mean, I see treatments that go in drops for blind people. I mean, how a blind, but they're very good, so they can maybe hear it and, but why don't you make something that they can use it? Or a lot of drugs that are used for people that gets amputations that you need two hands to open? I mean, why do you do that? It's something that you have to take care of.

: Accessibility is a very important thing. Plus, nowadays, also self-medication is increasing. And COVID has made a huge step forward in that because people was not able to go to the hospital or to the doctor. So self-medication is important. But of course, the more that you allow people to self-medicate, and the more you have to have the packaging that helps them in the adherence to the administration of the drug. Because if they do wrong things, then they don't get good treatment.

I'm aware we're low on time, but do you have a concrete example of how you can make like glassware accessible?

: Glassware, more accessible? I mean, the total packaging you have to look into to make it more accessible. I may give you an example.

We are selling quite a lot of oral liquid application, especially for the antipyretics for children. Small children, when they are on fever, they cry. And you have to feed them with the oral liquid. So the standard application is a bottle with a syringe to have this, open the bottle, put the syringe, then make the right sizing, and then put it in the mouth of the baby, and then having him sucking it.

So we made this ethnographic with some moms. You see, you have to be, all of this operation. You have to check it and then put it in. And we did it, and we were explaining this to some mothers, you have to do this, very simple, easy, and they say it's very easy, but you have a baby, you're holding a baby that is crying. And you know, you cannot put them in, so how do you do it?

So we came up with this other solution, where we have put a kind of dosing system on top of the bottle and is like, I don't know if we have a sample here. But basically, what you have to do is just turn the bottle around with an end, push on the container, here you have the indication on where the content that you have applying goes, then you turn it up, you open it, and then there is this kind of biberon, like kind of bottle for babies, shape, and then you feed it like this, so you want it, you just put it there and do this, instead of doing this. But also from the look, you see this is very, you know, hospital things. The syringe, the thing-

If I'm a little kid and I see that, I'm running.

: You're scared already. You say, "What is happening?" Whereas if you see like a normal bottle, you just push it and you get it done. And then you feed your baby. I think that is one solution that can help.

Fantastic. Do you have any final thoughts you'd like to share with our audience?

: I will touch most of the things regarding today, is very much keen in the making health a positive practice available to everybody and kind to the planet. And in this sentence there is all what I spoke about.

For more of our coverage on DCAT in 2023, viewers can visit 

Articles

Andrea Lodetti, CEO of Bormioli Pharma, an Italian pharma primary packaging manufacturer, speaks about his company's approach to the US market, supply chain instabilities, sustainability, and more.

Unpacking the Pharma Packaging Market with Andrea Lodetti (DCAT Week 2023)

Blueprint Medicines announced FDA approval of Ayvakit (avapritinib) for treatment of adults with indolent systemic mastocytosis (ISM), a rare hematologic disorder, on May 22, 2023. Avapritinib, a tyrosine-kinase (KIT) inhibitor that selectively inhibits KIT D816V, was previously approved for the treatment of systemic mastocytosis (1). According to a company press release, it is the first and only FDA-approved medicine designed to treat ISM.

FDA’s approval is based in part on findings from a Phase II, double-blind, placebo-controlled clinical trial (PIONEER). Patients who received avapritinib demonstrated significant improvements versus placebo in both the primary and all key secondary endpoints, improving overall symptoms and measures of mast cell burden.

"After decades of caring for people with indolent systemic mastocytosis, I have seen firsthand its profound impact on patients' underlying mast cell burden, symptoms, physical and mental health, and ability to work and participate in daily activities," said Cem Akin, professor of Medicine at the University of Michigan, and an investigator on the Phase II clinical trial. "Despite the use of multiple supportive care treatments, a considerable number of patients with indolent systemic mastocytosis continue to experience a substantial disease burden. [Avapritinib] advances the treatment of indolent systemic mastocytosis by targeting KIT D816V, the primary underlying cause of the disease, and establishes a new standard of care for a broad population of patients with this disorder. [Avapritinib] delivered statistically significant and consistent clinical improvements in the PIONEER trial, and based on these practice-changing data, I feel a tremendous sense of hope for the future for all those affected by the disease."

1. FDA. FDA Approves Avapritinib for Advanced Systemic Mastocytosis. Press Release, June 16, 2021.

Blueprint Medicines’ avapritinib has been approved by FDA for the treatment of indolent systemic mastocytosis.

FDA Approves Blueprint Medicines’ Rare Blood Disorder Treatment

Ironwood Pharmaceuticals, a US-based pharmaceutical company focused on gastrointestinal (GI) treatments, and VectivBio, a Swiss clinical-stage biopharmaceutical company specializing in rare GI treatments, announced a definitive acquisition agreement on May 22, 2023 under which Ironwood will acquire VectivBio for an approximate value of $1 billion, or $17.00 per share. The deal is expected to close in the second half of 2023.

Through the transaction, Ironwood will gain VectivBio’s lead investigational asset, apraglutide, a glucagon-like peptide (GLP)-2 analog that is currently in Phase III clinical trials. It is currently being evaluated for clinical benefit for both short bowel syndrome with intestinal failure (SBS-IF) stoma and colon-in-continuity patients.

“The acquisition of VectivBio, including its compelling asset, apraglutide, is an ideal strategic fit with Ironwood,” said Tom McCourt, CEO, Ironwood, in the release. “We are confident that … we are well-positioned to continue developing apraglutide, with the goal of getting it into the hands of the patients who need it the most and potentially generate significant and sustainable value for shareholders.”

“We are delighted to enter into this agreement with Ironwood to advance the development and commercialization of innovative therapies targeted at GI and rare diseases, which is the mission of VectivBio,” said Luca Santarelli, CEO and founder, VectivBio, in the release. “Ironwood’s capabilities and established track record in GI make it the ideal company to bring apraglutide, if approved, to patients suffering from SBS-IF and other serious GI conditions. We believe this [t]ransaction represents the best outcome for our patients and shareholders.”

Ironwood Pharmaceuticals’ acquisition of VectivBio grants it the rights to apraglutide, a glucagon-like peptide being evaluated for gastrointestinal diseases.

Ironwood Inks $1 Billion Deal to Acquire VectivBio

Shabbir Mostafa, head of Business Development — Advanced Delivery Systems, Recipharm, sat down with Grant Playter, associate editor, during DCAT week to discuss the current state of inhalations forms and drug delivery. The full interview transcript can be read below.

Broadly speaking, if you had to isolate one overwhelming drug delivery trend, whether that's in development, regulatory approvals, or even commercial markets, what would you say is the most impactful at this moment?

: I think for inhalation in particular its sustainability. So at the moment, we, within the metered dose inhaler (MDI) marketplace, use propellants for the user, for the formulations. And these propellants have high global warming potential. And now, these propellants have kind of been slowly phased out from the regulatory side. And they're looking to replace those propellants with low GWP, or low global warming, potential propellants, which are at quite an early stage in terms of their development.

But the environmental, the carbon footprint isn't going away. So there's a real problem at the moment of changing, of moving from high GWP to low GWP propellants. Because the expectation is it's going to be a lot of cost in terms of your development, your clinical batches, and also modifications to your facilities.

So, a number of the big companies that are big players within the inhalation market have already started to move over and started to transition. But there's a lot of other companies behind at the moment that haven't transitioned yet, and are looking to see what the regulatory side will be in terms of what they will have to do as they move across. And so it's quite an important area within innovation, because it's such a large market.

Just building on that a little bit, you say the low GWP are early in development, and some companies are beginning to transition. Can you expand on that, do we have any sort of timetable?

: The phase down is starting to happen now. The high-GW propellants — the products that are currently used today in formulations — they're going to be transitioning sort of to a lower point. They can only sell a certain amount, as it goes. And it's a step down process over a number of years, so by ‘25, ‘26, the amount of propellant available will be very low.

The proponents are used in lots of different markets. And actually in the medical side of it, the medical use is very low, but there was an exemption for medical use for these propellants. However, that exemption has been now taken away, so this step down process is now affecting also propellants for the medical use as well.

Are there any other sustainability measures you want to highlight, anything you can point to as a big trend?

: I think everything comes to sustainability. So they look at the carbon footprint of the factories. Are we doing things like solar power, how are we doing recyclables, etc. is huge. Actually, within Recipharm, in general, sustainability is a huge, huge area, we have people dedicated to that to look at how we can get become a net zero company. So it's huge within the pharmaceuticals.

Can we talk a little bit about like nasal delivery and just broadly inhaled biologics, what's going on in that space?

: So nasal delivery, I think, is becoming more and more popular. Traditional nasal delivery was multi-dose delivery, just your normal nasal spray that you'd use for anti-allergies, etc. But now as you've probably seen, there's what we call one shot unit dose delivery devices, which basically shoots one dose into your nose, and that's been used for things such as rescue medicines and immediate pain relief.

As Recipharm, we've developed a device for single-dose delivery, and it's going to be used in those areas, and as you know, with rescue medicines — its for people overdosing on things like fentanyl — so they need to have this straightaway rescue medicine. Just gives you one shot and you get hopefully relieved from the overdosing of the fentanyl.

What are some observations you’re seeing in terms of inhaled biologics?

: So, from an inhaled biologics side, we're starting to see more and more customers looking for that development. There's two areas which you can go in; the biologics one is either a nebulizer or dry powder inhaler. But the nebulizer, which is a solution, it tends to be quite high-shear, so it can destroy the large molecules as it's being inhaled. So, there's a challenge using nebulizers for biologics.

We've developed a soft mist inhaler, which is one of our newest devices, in partnership with Medspray, where we have a company called Resyca. This soft mist inhaler is very gentle. And we're working with a number of customers biologics, large molecules, for mimicking of the nebulizer route.

The other preferred route is through DPI, dry powder inhaler, where you can spray dry your active or your biologic onto something, a carrier. And that's starting to show some popularity now. The issue with DPI has always been reproducibility. And so that's the challenge with inhaled biologics at the moment, making sure we still get reproducibility of the active.

From a development perspective, can you talk about some of the considerations that go into selecting a drug delivery system? Like what's the discussion when you're selecting between like, say, a nasal inhalant versus an inhalant one would use for asthma?

: So asthma disease is straight into the lungs, so it's looking for respiratory delivery, so you would use an inhaled, so either an MDI or a DPI delivered, or a nebulizer delivery. If you are looking for something for an immediate sort of pain relief in the head like a migraine, you'd probably go through your nasal delivery, because you've got the delivery faster.

Pfizer just had the migraine nasal spray approved the other day, I believe. 

[Editor's Note: This interview was recorded on March 18th, 2023.]

: Yes, it has been, Pfizer. So that's why I'd say the difference is, if you're looking for a sort of respiratory, you'd go inhalation; if you're going for nasal things like pain relief, or as I said, rescue medicines, etc., for the nose to brain delivery.

Can you give me a bold prediction for the future of drug delivery five years from now?

: I think the market for inhalation is definitely going to change. I think we're going through this huge change, as I said with the MDIs, we don't know where that's going to be in five years' time, whether there actually is going to be a business for it, or whether everything is going to transition across the DPIs.

My suspicion, I think, is that there's going to be a hybrid, I think there'll be less of MDIS and I think there'll be more of DPI formulations out there in the marketplace. We, part of our business is huge, is MDIs and valves. So we still see a value for it, but we don't know what the market will be like because of the transition from high GWP to low GWP propellants. We don't know what the market will be like in five years' time. So I think that's the big thing for us. And looking at that and seeing where, you know, what will happen in the future.

: Ten years? That's difficult. I think that it'll definitely be the growth of inhaled biologics, I think, over a ten-year period. I think that biologics will be a lot more in the next five to ten years. I think for nasal delivery, again, I said it went through the uni-dose, so single dose shot for things such as rescue medicines, and it's quite big in America, in Europe, etcetera requirements. So that's where I see the market in ten years' time.

Shabbir Mostafa, head of Business Development — Advanced Delivery Systems, Recipharm, sat down with Grant Playter, associate editor, during DCAT week to discuss the current state of inhalations forms and drug delivery. 

Investigating Inhalation Forms and Drug Delivery with Shabbir Mostafa (DCAT Week)

While the world may have marched on from the halcyon days of the mid-20th century where the United States was the undisputed center of the global economy, the country’s continual impact should not be understated. Particularly as it concerns the biopharmaceutical industry, the US remains a powerful influencer; not only has it proved to be fertile ground for the growth of pharmaceutical powerhouses such as Pfizer and Johnson & Johnson, the country’s 330+ million population is a substantial target for overseas pharmaceutical companies.

That is not to say that powerful players, including the likes of China, Japan, and the European Union (EU) member countries are of lesser importance. Rather, it stresses the reality that the US, for the foreseeable future, is the largest pharmaceutical market; Fortune Business Insights valued the US at a world-leading $534 billion in 2020 and anticipated strong growth to $861 billion by 2028 (1). Correspondingly, a comprehensive understanding of the global biopharmaceutical market is contingent on thorough knowledge of the US landscape and ongoing events in the country. In this vein, while the ink has long dried on the Inflation Reduction Act, the bill must be examined with close scrutiny to understand its full impact on the global bio/pharmaceutical market.

Following narrow votes in both chambers of the US Congress, President Joe Biden signed The Inflation Reduction Act of 2022 (IRA) into law on Aug. 14, 2022 (2). While the $740 billion bill was a compromise among senate Democrats following failure to reach a consensus on a proposed $2.2 trillion framework (colloquially referred to as the “Build Back Better” bill), which aimed to have a transformative “cradle to casket” impact on American healthcare, IRA is nonetheless set to have a discrete impact on the healthcare throughout the country.

While the bill does not solely focus on healthcare, it introduces several key reforms that are set to introduce price controls on medicines. The bill will limit out-of-pocket costs for Medicare beneficiaries at $2000 a year beginning in 2025, passing additional costs onto drug manufacturers. Additionally, starting in 2026, the US government will also be able negotiate Medicare prices on 10 widely-used, costly medicines; this number will be expanded to 20 in 2029. If this price is rejected by the manufacturer, they will be charged a significant fee (3).

One aspect of the bill that has raised a few eyebrows is the difference in the negotiation window between small molecules and biologics; small molecules sit at nine years following FDA approval, whereas biologics are 13 years (4). This variation has led to many outspoken critics of the bill, including John Stanford, executive director of the Incubate Coalition. Incubate is an organization representing various venture capital organizations that seeks to “educate policymakers on the role of venture in bringing promising ideas to patients in need” (5).

“The bill shows a misunderstanding of the basic science—we shouldn’t be incentivizing biologics or small molecules,” says Stanford. “If the cure for Alzheimer’s is a biologic infusion, great. If it’s a small molecule, that’s great too. But now, from an investment perspective, I’m more interested in 13 years than nine years, and that’s a big flaw that’s going to have pretty damning consequences over the next couple of decades.”

According to Stanford, the discrepancy may have arisen from an existing misconception that small molecules were already disadvantaged from an investment perspective. The existing framework for exclusivities is five years for small molecules and twelve years for biologics, but this understanding does not factor additional factors, such as the role of the 20-year patent and possible add-ons.

However, while most agree that some amount of innovation will be lost as profit margins slim and investment risk increases, there is little consensus as to what that will look like. For instance, the US Congressional Budget Office estimated that the drug negotiation provision would ultimately result in a 1% decline in new drugs being introduced to the US market over the next 30 years (6). Others, such as Stanford, feel strongly that this will have broader consequences.

“Capital flows like water. I don't think tomorrow life sciences funds are going to dry up. But there's more barriers, more risk, now going to be associated with it,” says Stanford. ““We have dramatically decreased the perceived reward while increasing the risk.”

Stanford’s argument is that companies will look to diversify and mitigate risk. If $100 million in investment capital would have completed seed funding for 10 life science companies in the past, after these changes, that amount might only fund five life sciences companies as investors look to segments such as banking or technology for alternative investment opportunities. The inherent complexity of the biopharmaceutical development process already makes it a risky bet for venture capitalists; increasing the burden placed on them has a strong possibility of decreasing investor interest in innovations that would otherwise be seen as interesting.

In a similar vein, one could argue that there are already potential knock-on effects from the bill impacting the industry. For instance, the IRA attempted to codify a $35 price cap on insulin for recipients with Medicare and private healthcare coverage. However, because regulating private insurers fell outside the purview of reconciliation (a legislative process that allows for certain bills to pass with a simple majority of votes) that portion of the provision was put to a vote and axed from the bill (7). However, the provision remained intact for Medicare recipients, and arguably set a precedent for Eli Lilly and Company’s decision to cap their insulin prices in the United States at that price in March 2023 (8). Regardless of whether one believes Lilly would have set the cap independent of the bill, it remains prudent for industry experts to acknowledge its potential downstream impacts on bio/pharmaceutical businesses.

Of course, the US doesn’t operate in a vacuum—it’s just one part of the greater global biopharmaceutical market. A market which, as discussed in the 2022 CPHI annual market report, has effectively bottomed out in terms of investment, with hundreds of billions sitting in parked capital (9). Investment, however, is cyclical, and the authors of the report acknowledged that this money will likely have to enter the industry at some point within the next 18 to 24 months. In this regard, of note are the findings of 

s annual survey where approximately half of industry respondents felt that cell and gene therapies presented the biggest avenue for growth (10). However, if the IRA does have a negative impact on investment in US biologics, it begs the question: where will this money go?

“If the US has been degrading its investment appetite through policy, threats to intellectual property, and price controls, China has been going the other way,” says Stanford. “China has extended intellectual property. China is trying to make a warm investment environment.”

China’s rapid economic growth has been the story of the 21st century, and the biotechnology market is no different. The Chinese biotechnology market had total revenues of $23.2 billion in 2020, representing a compound annual growth rate (CAGR) of 8.5% between 2016 and 2020 (11). If the disincentive is strong enough for investors to take pause, it’s entirely possible that looser regulations and the potential for greater profits could bring them to China.

Another contender is Europe, which, as of 2021, had a pharmaceutical market valuation of $282.75 billion (12). Stanford suggested that if the EU were to relax various price controls, à la China’s recent efforts or the US’ implementation of measures such as the Bayh-Dole Act in the 1980’s (13), the EU could easily pick up many of the investment dollars being left on the table in the US.

However, where the capital ultimately ends up is largely moot in terms of US interests: while the government would certainly prefer these dollars go to strongly aligned countries, any investment outside of the US is obviously not preferred. Congress has aggressively pursued bipartisan measures at keeping industry in America; the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act (14), which aimed to take semiconductor business from countries such as China, was passed shortly before the IRA. If the bio/pharmaceutical provisions in the IRA move an equal or greater amount of investment out of the US, then Congress’ efforts at keeping industry housed within the US would be hampered.

The question regarding the IRA isn’t necessarily what will happen regarding investment funding, but, rather, how big of the pie will be leaving the country, and where is it going? No one, including Stanford and his contemporaries, is expecting a mass exodus of biotech funding from the US. If the Congressional Budget Office’s number sticks, most businesses wouldn’t bat an eye. If the impact is more in line with the expectations of Stanford and company, it could severely stifle market growth.

Unfortunately, while it would be courteous of investors to kindly explain why they chose one option over another in detail, oftentimes the downstream effects of decisions such as this are hard to isolate—investors themselves might not fully appreciate the various confounding factors that led them to a decision. However, as competition continues to build in the global bio/pharmaceutical market, tracking where biotech investments in totality are occuring could perhaps give at least a glimpse into the answer.

US Pharmacy Market Size, Share & COVID-19 Impact Analysis, By Type (Branded and Generics); By Therapy Class (Oncology, Anti-diabetics, Autoimmune Diseases, Respiratory, Pain, Nervous System Disorders, Dermatology, Antihypertensive, Mental Health, HIV Antivirals, Multiple Sclerosis, Anticoagulants, Other Cardiovascular, ADHD, GI Products, Viral Hepatitis, Sex Hormones, Antibacterial, Hormonal Contraception, Ophthalmology, and Others), By Setting (Retail Pharmacies, Mail Order/Online Pharmacies, Others), Regional Forecast, 2021-2028

H.R.5376, US House of Representatives, 117th Congress, 130th Session (Washington, DC), Sept. 27, 2021.

Wechsler, J. New Legislation Overhauls Medicare Drug Pricing and Benefits. 

Ferrechio, S. Biotech Investors Sound Alarm on Senate Drug-Pricing Bill. 

Congressional Budget Office. How CBO Estimated the Budgetary Impact of Key Prescription Drug Provisions in the 2022 Reconciliation Act. 

cbo.gov/system/files/2023-02/58850-IRA-Drug-Provs.pdf 

Luhby, T. Democrats Lose Effort to Cap Insulin at $35 for Most Americans Before Passage of Senate Reconciliation Bill. 

Eli Lilly and Company, Lilly Cuts Insulin Prices by 70% and Caps Patient Insulin Out-of-Pocket Costs at $35 Per Month. Press Release, March 1, 2023.

CPHI Annual Report 2022: Psychedelic Approvals, VC Driven Contract Services Boom and Next Generation Manufacturing

Playter, G. Crossing the Same River Multiple Times. 

Biotechnology in China - Market Summary, Competitive Analysis and Forecast to 2025

Europe Pharmaceutical Market Size, Share & Trends Analysis Report by Product (Branded, Generic), by Type (Prescription, OTC), by Therapeutic Category, by Region, and Segment Forecasts, 2021 - 2028

H.R.6933, US House of Representatives, 96th Congress (Washington, DC), March 26, 1980.

H.R.6933, US House of Representatives, 117th Congress (Washington, DC), July 1, 2021

Context surrounding the Inflation Reduction Act is necessary for a comprehensive understanding of the global biopharma market.

The United States and the Global BioPharma Market

ProBioGen, a Berlin-based company specializing in the development and manufacture of APIs, announced its new lentivirus packaging cell line on May 17, 2023. Lenti.RiGHT is a lentivirus production platform based on human embryonic kidney 293 packaging cells.

According to a company press release, the new line is capable of producing lentiviral particles with titers between 107 and 108 transducing units per mL. It includes stable integration of gag-pol, rev, and vesicular stomatitis virus-G proteins.

"With our Lenti.RiGHT platform we have developed a new standard for efficient large-scale lentivirus production and CAR–T [chimeric antigen receptor T cell] manufacturing,” said Volker Sandig, chief scientific officer, ProBioGen, in the release. “It enables an inducible, scalable, and efficient production of high-titer lentiviral particles for gene transfer applications.”

ProBioGen’s Lenti.RiGHT is a lentivirus production platform for use in gene transfer applications.