Pandemic Gives Drug Onshoring New Momentum

The shortage of masks, respirators and other medical supplies that accompanied the rise of COVID-19 cases has added momentum to government efforts to encourage the onshoring of medical manufacturing.

Since the beginning of the year, the US government through the Biomedical Advanced Research and Development Authority (BARDA) has awarded at least billion dollars to bioscience and contract development and manufacturing organizations to create or expand production capability in the US.

In May, four-month old drug manufacturer Phlow got a $354 million award from the federal government to manufacture generic medicines and pharmaceutical ingredients that are needed to treat Covid-19.

In June, Emergent BioSolutions announced a $628 million deal with the government to commit its Baltimore facility manufacturing capacity for production of COVID-19 vaccine candidates through 2021.

Last week, Grand River Aseptic Manufacturing, announced it had completed work on a $60 million privately financed expansion of its Michigan fill/finish facility. GRAM is a contract development and manufacturing firm that completes the final, sterile packaging of injectable drugs for companies that developed or market them.

These are just the latest examples of what FiercePharma describes as a “growing wave of manufacturers and drugmakers pitching their domestic footprint.”

While political interest in bringing drug manufacturing back to the US isn’t new, the current pandemic has given the effort greater momentum. A raft of legislation has been introduced in Congress from both sides of the aisle. FiercePharma says a bill by Arkansas Republican Sen. Tom Cotton “would require government payers to phase out reimbursement for drugs made or sourced in China by 2022. Other bills have also directly targeted China’s role in the supply chain as a possible national security issue.”

The White House said it is working on an executive order to require federal agencies to purchase only US made medical products and drugs.

Though the pharmaceutical industry is opposed to compelling all manufacturing to move to the US, the political winds, not to mention the incentives the government is dangling, is beginning to interest investors.

The real estate equities firm Lincoln Equities Group and H.I.G. Realty Partners, the real estate arm of private equity firm H.I.G. Capital, LLC, which owns the 422 acre former Bristol Myers Squibb lifesciences campus in New Jersey, is making a direct pitch to pharmaceutical manufacturing firms to locate there.

“Given the current public health crisis, we anticipate pharmaceutical and life sciences manufacturers to consider ‘reshoring’ and expanding operations in the U.S.,” said Joel Bergstein, president of Lincoln Equities. “This spacious, modern BMS campus – located in the center of ‘Einstein’s Alley’ in Central New Jersey – is a prime location for continued innovation and expansion.”

Image courtesy Grand River Aseptic Manufacturing

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