Politics and COVID driving manufacturing back to the US, says Avid

“Southern California is not a bad place to be right now,” says CDMO Avid Bioservices as it discusses how politics and COVID-19 have made localized manufacturing more appealing.

Contract development and manufacturing organization (CDMO) Avid Bioservices’s Myford and Franklin facilities are in California. Meanwhile, a third plant is in the works at the Myford site.

But speaking last week to discuss its FY2021 Q2 results, CEO Nick Green did not dismiss the idea of expanding its capabilities further afield.

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“We do have a global market. Europe and Asia are both very active markets. And if we’ve got a successful formula, then there’s no reason why we shouldn’t want to market that capability to a broader base of clients that ultimately at the end of the day custom manufacturer does benefit from some degree of localization and being close to your client in terms of project execution and transfer,” he told stakeholders.

“A broader geographic spread would not be out of the question from my thinking,” he added though stressed that getting the expansion Myford expansion moving is the priority in the short term.

Locally made

In the pharma industry, small molecule manufacturing fled the shores of the US many years ago in favor of lower-cost countries such as Europe and India. While large molecule production did not quite follow this trend, manufacture remains global with hubs as diverse as Singapore and Ireland supplying the world with biologics.

But political rhetoric and a realization of the fragility of supply chains in light of the coronavirus pandemic has brought in-country production to the forefront, something which chief commercial officer Timothy Compton said could be a boon for Avid.

“To be frank with you, we’ve seen a lot of molecules coming back from Asia back to Western manufacturers for a variety of reasons,” he said.

“In terms of large molecule or biologics, I don’t think anywhere near as much of the manufacturing has gone abroad as it did in small molecules, but we had already seen that trend coming back. I think politically we’d seen a strong push towards more localized supply. And then COVID on top of that, I think, has made everybody very much aware of the risks and the frailties sometimes global supply chains can have. And so I do think that we will likely benefit from that in the foreseeable future.”

Green added: “We’re seeing quite a lot of sort of domestication of our supply chains of late COVID adding to the need to do that. So we’ve seen sort of localization rather than globalization as an outsourcing strategy amongst many of the pharmaceutical companies. In some cases, even we’ve seen regional purchasing by some people who literally want to stay on the West Coast and not move to the East or vice versa.

“So if I look at the US market it’s probably the strongest market in the world in terms of pharma development. California Corridor is the very strong component of that overall market. So I think being in Southern California is not a bad place to be right now.”