European CDMO Worries about Inflation

European CDMO worries about inflation

Inflation is at an all-time high, opening an opportunity for CDMOs in Europe. In late September, the industry body Medicines for Europe sent an open letter to the European Commission (EC) asking it to exclude the pharmaceutical industry from the EU’s gas demand reduction measures. The organization argued that amid the pressures of inflation, such measures may restrict access to medicines for European citizens, and would also be difficult to implement given the increasing costs of pharmaceutical manufacturing.

Trying to be sustainable in this climate

The difficult financial climate and growing calls for accountability for manufacturing’s impact on the environment mean that contract development and manufacturing organizations (CDMOs) must evaluate how to consider sustainability despite potential financial constraints.

The increasing rates for raw materials, cost of excipients, and more, are affecting generic drug manufacturing particularly harshly. CDMOs are urged to invest in potentially cheaper sustainable alternatives. Furthermore, the international authorities have been slow to adapt drug reimbursement prices to match the increasing cost of contract manufacturing, leading to a difficult situation for many CDMOs. Countries within the EU have had variable reactions in response to these rising costs. If a product becomes non-profitable, the manufacturer may decide to stop the production of that product. This could lead to drug shortages or products being no longer available in Europe.

Long-term solutions

With increased costs in every corner, businesses are being more vigilant about the spending than ever, and sustainability efforts are being seriously considered. Medicines for Europe also hopes to see further action from government organizations to support the pharmaceutical industry. For example, one of its demands concerns the inclusion of the off-patent medicines sector in the temporary crisis framework for State Aid measures. This would allow the pharmaceutical sector to be included in the EC’s liquidity support measures and measures covering increased energy costs. Furthermore, pharmaceutical businesses would become viable for aid supporting the roll-out of renewables and the decarbonization of the industry. Being the essential product manufacturer, CDMOs are asking the energy ministers and industry ministers to have the pharma industry protected from energy supply restrictions.