BIOSECURE Act: Pfizer To Lilly - Where Are The Likely Sourcing Gaps?

As the BIOSECURE Act gets closer to reality, Scrip looks at a couple of products where it could create gaps for US pharma majors and opportunities for other contract research, development and manufacturing organizations (CRDMOs) as business moves away from WuXi AppTec Inc. and WuXi Biologics.

Way before the bill for the BIOSECURE Act cleared the US House of Representatives in September, Scrip took a detailed look at the possibility of sourcing shifts. (see sidebar below)

Here’s a follow-up with relevant details curated from an Evaluate Pharma dataset, which covers organizations offering services in drug discovery/development, manufacturing or support or combinations of these.

The Evaluate Pharma data are drawn from publicly available sources on contract manufacturing organizations (CMOs), contract development and manufacturing organizations (CDMOs) and contract research, development and manufacturing organizations (CRDMOs). They will be collectively referred to as CRDMOs in the article, though pure contract research organizations (CROs) are not included.

It’s no secret that some of the largest pharma firms are based in the US, which also happens to have the highest per capita pharmaceutical spending. Juxtaposing infographics on the count of headquarters and facilities (R&D centers, manufacturing units) in the US with CRDMOs' global revenues shows just why the proposed Act has potential to cause a significant shift in the industry landscape if its execution matches intent.

The proposed BIOSECURE Act names Wuxi Biologics, Wuxi AppTec, BGI, MGI and Complete Genomics Inc. as biotechnology companies of concern without regard to other criteria listed in the bill for a company to qualify as such. WuXi STA, WuXi XDC, WuXi Advance Therapies and WuXi Vaccines are other firms of the same group, but they have not been named so far.

About one-third of the total 2023 revenues of the global top 10 CRDMOs went to Wuxi Biologics, Wuxi AppTec and WuXi STA, which is described as “an integral part of WuXi AppTec”, proving without doubt that these three are among the titans of the industry.

The BIOSECURE Act now provides for time before 2032 to shift business away from the named Chinese CRDMOs, but the clock is ticking.

Analysts expect a few Chinese firms that don't fall under the definition of a "company of concern", apart from Indian and South Korean CRDMOs, are likely to benefit from an expected shift in sourcing given the imperative need to keep development and manufacturing costs in check. For them, a growing focus on drug pricing in the US, particularly post the Inflation Reduction Act, is a definite tailwind.

However, clientele of the WuXi group of companies includes Chinese, Indian and South Korean names too, implying that not just the language of the final BIOSECURE Act, but also its implementation will have significant bearing on the extent of the impact.

It is not clear if and which other CRDMOs might be caught in the BIOSECURE Act net in the future, but here are some of the other big fish in the Chinese ocean.

From Eli Lilly and Company’s tirzepatide, sold both as Mounjaro to treat type 2 diabetes and Zepbound for obesity, to Pfizer Inc.’s hit COVID-19 drug Paxlovid (co-packaged nirmatrelvir and ritonavir), Wuxi AppTec and Wuxi Biologics have been part of pharma majors’ supply chains and the infographic below lists a couple of the biggest products for which sourcing shifts could be imminent.

The client list also includes names like AbbVie Inc. and Merck & Co., Inc. and the infographic is not exhaustive.

Akhil Ravi, CEO at Aurigene Pharmaceutical Services, a subsidiary of Indian major Dr. Reddy's Laboratories Ltd.’s, had previously told Scrip technological expertise, cost competitiveness, quality assurance and proximity to market play a major role in selecting outsourcing partners. Besides, “the CRO/CDMO selection process is quite rigorous and can take 6-12 months based on the complexity of operations.”

As seen below, a client with a smaller number of CRDMOs available for modalities, like gene-modified cell therapy, genome editing and plasma-derived therapy, will likely be in a tough corner, with suppliers commanding premium pricing and favorable terms.

However, for other modalities like monoclonal antibodies, peptides, recombinant proteins and small molecules, there is a wide field to choose from depending on capacities, expertise as well as track records required by a client.

The Evaluate Pharma dataset lists 28 product modalities mapped to CRDMOs where information is available. Scrip could not find data against BGI, MGI and Complete Genomics.

For brevity, a limited number of products where sourcing gaps could arise are shown above, but Evaluate Pharma data show many more products being developed or manufactured by the WuXi group or firms linked to it.

The group has a finger in several pies, including in biotechs on the cusp of making breakthrough discoveries. According to Bernstein, emerging biopharma-sponsored pipelines increased their overall CDMO industry share to 64% in 2022, compared to 50% five years back in 2017.

Thus, opportunities could be created for non-WuXi group CRDMOs to develop and make other drugs as well, but this assessment surely gives an idea of what is in store as the bill progresses to the Senate. As part of ongoing curation and maintenance, these mappings will continue to be expanded and updated.

Be prepared, change is afoot!