IRA matches BIOSECURE in driving CDMO sector in India

The biggest story affecting the pharma supply chain of 2024 is arguably the BIOSECURE Act. The bipartisan Act, which passed through the US House of Representatives in September, is likely to prohibit specific Chinese biotech companies – most significantly WuXi AppTec, WuXi Biologics, MGI, and Complete Genomics – from doing business with the US if enshrined into law.

Removing those service providers from the biopharma supply chain could leave a hole in global development and manufacturing capacity that burgeoning India-based contract development and manufacturing organizations (CDMOs) are eying up.

At the recent Biotech Week Boston event in September, Roger Lias, chief commercial officer of Dr Reddy’s CDMO offshoot Aurigene, told us the sector is scaling up and ready to be “a very viable alternative” to the likes of WuXi Biologics if Chinese manufacturers are removed from the supply chain.

At CPHI Milan in October, the world’s largest pharma event, fellow Indian drugmakers generally concurred, but Ashu Tandon, chief commercial officer (CCO) at Aragen Life Science said that while the wheels are already in motion, they are spinning far faster on the R&D side than the manufacturing side, at least for now.

“The [R&D] business is relatively easy to move from one supplier to another supplier, or one country to another country… literally a matter of weeks,” he told BioProcess Insider. Whether in chemistry work, or protein development large pharma customer are asking their Chinese-based teams “to start looking at options and building relationships with partners in India.”

Specifically at Aragen, there has been a lot of pre-sales activity, in terms of inquiries, people visiting sites, auditing facilities, and starting pilot projects on the back of BIOSECURE. But on the clinical and commercial manufacturing side, things move a lot slower, said Tandon.

“The BIOSECURE Act has an eight year window. Even if it gets signed in its current form, biotechs are not moving wholeheartedly because in eight years’ time they'll either be bought off by a large pharma or they'll be shut down if their science isn't successful.”

Those who have products further along development already working with Chinese companies are, however, beginning to look to India, he continued. “That part is not as easy to move from a supplier or a location to another supplier or location because of the intricacies of that business, registration batches, validation badges, filings and all that have gone to the regulatory agencies. What we are starting to see is that while that business is not moving yet, we are seeing a lot of inquiries coming in – a lot of customers wanting to explore new relationships.”

In the shadow of BIOSECURE

But one US policy that has bolstered these latter opportunities for Aragen and the Indian CMDO space, yet is not being talked about in the same scale, is the IRA, passed into law in 2022.

“The BIOSECURE Act isn't driving [the Indian CDMO space] as much as the IRA is, because that is potentially going to cap the price of a large number of drugs for a large number of companies,” Tandon said.

The IRA’s intention was to reduce US inflationary pressures and avoid recession by boosting clean energy, strengthening supply chains, and increasing tax revenues. But the biopharma industry has rallied against the Act, decrying it as anti-innovative, potentially stymying future drug development.

“If your pricing is capped, there's a pressure on your bottom line. If there's a pressure on your bottom line, you've got to figure out a way to do more with less. If you've got to do more with less, you've got to go to China and India,” Tandon told us. And with BIOSECURE looming, India is already benefitting. “We are seeing a lot of traffic coming our way, both on account of the inflation Reduction Act and the BIOSECURE Act.”

Alex Del Priore, an executive at Syngene International Limited, said his CDMO has also seen an uptick from the two policies, specifically in R&D from large pharma. However, he placed less weight on both BIOSECURE and IRA, saying clients’ needs will always remain the same, despite the policy.

“Any client is looking to solve problems. They're looking for solutions. They assume that the science is good, but they're seeking speed, number one, and number two, transparency, which really speaks to trust,” he told us at the event in Milan. “This hasn't changed, not before the BIOSECURE Act, after the BIOSECURE Act; before the IRA, after the IRA, and I don't see that changing.”

As for BIOSECURE, “it's the topic that everybody wants to talk about, but that journey has been happening well before this and will continue well after this. We're a global industry, and it just makes sense that you're going to have a global supply chain.”