The pandemic and the pharmaceutical world
Pharmacist Ezeokafor Ifeoma Charity explores to what extent COVID-19 has prompted the growth of the pharmaceutical industry.
“Are pandemics an opportunity for growth or a source of decline in the pharmaceutical world?”
This is the question that plagues the minds of those working in the pharma industry. Looking back at previous pandemics, namely the black death (1346-1353), flu (1889-1890, 1918 and 1968), sixth cholera (1910-1911), Asian flu (1956-1958) and HIV-AIDs (2005-2012), many industries were affected negatively, individuals had complete upheaval in their daily activities, millions died and the pharmaceutical world was hugely affected. The current pandemic – the novel coronavirus disease 2019 (COVID-19), spanning from 2019 to date – is no exception.
The overall financial gains likely brought by the pandemic and the funding that has been fed into pandemic-related research means COVID-19 has primarily been a source of growth”
Due to the upheaval caused by the COVID-19 pandemic, pharmaceutical retail shops have seen fewer walk-ins, which has brought about a loss in profit. In the long run, these decreases in revenue may require redundancies. This revenue loss also applies to manufacturers, as the demand for various pharmaceutical products changes. For example, the dramatic surge in demand for personal protective equipment (PPE) and over-the-counter (OTC) medications during the current pandemic, as well as the onset of panic-buying by patients, brought about shortages, making it even more difficult to maintain quality of life.
Pandemics can also bring about the economic collapse of a country, which in turn can slow the growth of the pharma industry. When China and India, the two main global suppliers of active pharmaceutical ingredients (APIs) and generics, implemented initial export bans due to COVID-19, there were shortages of both products in most countries, which slowed down the manufacture of finished products and caused certain medicines to become scarce, especially in emerging markets like Iran.
Additionally, shortages of APIs and finished products brought about price increases and prompted governments to consider whether their supply chains are robust enough or could benefit from a more self-sufficient approach. Some countries also revised regulations to restrict the importation of generics and APIs to avoid future shortages, such as President Trump’s ‘Buy American’ Order in the US. Other regulations were revised to fast-track approvals for pandemic-related treatments and compulsory licensing, which is accessed by World Trade Organization (WTO) member countries, causing a delay in the approval of non-pandemic related treatments.
Following the approval of treatments or vaccines, pharmaceutical companies can be subject to scrutiny due to the large profit margins they impose to recoup the investment in R&D. This sparks an ethical dilemma, as some struggle to decide whether to invest in researching potential cures, with the promise of boosting their reputation if they can become the first pharma company to produce pandemic-related medicines. Additionally, the impacts of the pandemic on patients’ livelihoods may present the opportunity to implement patient support strategies. In these instances, companies have to decide whether the expense is worthwhile in the long run. Facing these challenges, while still upholding ethics, requires pharmaceutical companies to have strong policies.
Reservations or not, pharma companies are at the forefront of the fight against any pandemic, together with other healthcare providers. One example of a patient support strategy implemented during the COVID-19 pandemic was that of Eli Lilly, which introduced resources guiding diabetic patients undergoing financial challenges to an appropriate generic of their Lilly branded drug. They also informed patients about other ways to reduce prescription costs via different communication channels in their Lilly Diabetes Solution Center. While it may help patients, these kinds of programmes are likely to create a long-lasting loss in revenue for branded products.
Although the economic damage caused by a pandemic is unavoidable, pharmaceutical companies continue to donate medications, funding, services and more to countries to improve healthcare. For example, during the COVID-19 pandemic, Bayer donated three million tablets of the antimalarial drug chloroquine and pharma pledged over $155 million to support COVID-19 relief funds. This included $50 million from Johnson & Johnson, $35 million from AbbVie, $20 million from Novartis, $10 million from GlaxoSmithKline, $10 million from the Biogen Foundation and $40 million in grants and cash from Pfizer, among others.
This generosity is likely because pharmaceutical companies will gain financially from crises such as these. For example, panic-buying also means an increase in sales and reduced wastage in the supply chain as medications become less likely to meet their expiry date in shipping/distribution. Therefore, we can say pandemics are an opportunity for the pharmaceutical industry to grow. During the initial wave of coronavirus infections in 2019, demand for chronic disease medications such as those for diabetes, hypertension, cholesterol, etc, increased because there were fears about shortages due to the export bans in China and India (these have since been lifted). In addition, the worldwide policies surrounding wearing face masks continue to drive sales of PPE and there continues to be high demand for immune-boosting OTC medications, both of which financially benefit pharmaceutical companies. Also, for their therapeutics pertaining to COVID-19, some companies have applied for Orphan Drug Designation (ODD), which, if granted, provides huge tax benefits and prevents the introduction of cheaper generic/biosimilar options. Remdesivir (Veklury), produced by Gilead Sciences, is one example of a pandemic-related medication that received ODD.
Moreover, because research projects shifted to focus on pandemic-related medications and priority was granted to these trials, the development of some new therapies for other indications has been delayed or their market launch disrupted.
Overall, pandemics bring both positive and negative effects to the pharmaceutical industry. The increase in collaboration and sharing of information expedited the development of vaccines and the repurposing or design of treatments for COVID-19. The overall financial gains likely brought by the pandemic and the funding that has been fed into pandemic-related research means COVID-19 has primarily been a source of growth, rather than decline, for the pharmaceutical industry.
About the author
Ezeokafor Ifeoma Charity is an Executive Operations Manager at Remfall Healthcare with a Mpharm and MBA from SVKM’s NMIMS Shobhaben Pratapbhai Patel School of Pharmacy & Technology Management, Mumbai, India.