Opinion Response to the COVID-19 pandemic in the pharmaceutical industry and its future

Printable PDF

Naoto Murakami, Senior Researcher, Pharmaceutical Industry Policy Institute
Hideyuki Kagii, Senior Researcher, Pharmaceutical Industry Policy Institute
Tomoyuki Shibuguchi, Senior Researcher, Pharmaceutical Industry Policy Institute
Ryuiku Masuda, Senior Researcher, Pharmaceutical Industry Policy Institute

Introduction

Infectious diseases caused by the novel coronavirus (SARS-CoV-2) (COVID-19) ¹⁾ pandemic have caused enormous health problems in the absence of effective means to deter the spread of infection, such as vaccines and antiviral drugs, and there is still no prospect for its containment. Although avoiding contact with others as much as possible is the most effective means of preventing infection at this point, the cost of continued efforts to prevent infection has resulted in social and economic losses worldwide that are greater than those incurred after the collapse of Lehman Brothers. The search for a proper balance between infection prevention and the revitalization of social and economic activities has become a difficult problem with no correct answer for people around the world, regardless of whether they are in industry, academia, or the private sector ^.) This paper will discuss the impact of COVID-19 on the industry, trends in research and development of prophylactic and therapeutic drugs for COVID-19, and future efforts in anticipation of a possible second or third emerging infectious disease pandemic in the future.

1. Impact on industrial activities

(1) Impact on business performance

In FY2020, the domestic pharmaceuticals market is expected to be impacted by the NHI price revision, which is implemented every two years, resulting in a reduction of -4.38% (0.99% on a medical cost basis), as well as by the suppression of patient consultations due to the declaration of a state of emergency against COVID-19 and other ^factors3). In this context, while there have been cases where sales have declined due to a decrease in demand for some items as a result of the suppression of patient consultations, the consolidated financial reports for both the January-March and April-June 2020 periods (Figure 1; based on data from 26 listed member companies of the Japan Pharmaceutical Manufacturers Association (JPMA), whose members are R&D-oriented pharmaceutical companies) show the following The sales and operating profit of the pharmaceutical industry have been generally stronger than those of other industries. In particular, operating income varies from company to company in accordance with each company's management strategy, but as a whole, the restraint of selling and administrative expenses due to voluntary restraint in external operations such as provision of pharmaceutical information and limitation of R&D activities are thought to have contributed to the overall trend.

Needless to say, the environment surrounding the market is uncertain, such as whether or not the trend of medical examinations will turn to a recovery trend, but as far as the April-June period is concerned, the pandemic does not appear to have had a serious impact on the industry as a whole in terms of its ability to continue business. Furthermore, when we examined the changes in domestic and international sales, which comprise consolidated sales (of the 26 companies, 16 companies with pharmaceutical sales exceeding 50% of total sales and for which overseas sales data were available during the survey period were included), there was no clear negative impact of the COVID-19 pandemic on domestic sales (Figure 2). (Figure 2).

(2) Impact on supply chain

As COVID-19 spread, shortages of medical supplies such as masks and protective clothing became a major problem in Japan. There were also concerns about the supply of some pharmaceuticals, as shipments were restricted. Among the pharmaceuticals, there were a total of 14 ethical drugs that could fall into supply shortages between the end of May and the end of July 2020 due to delays in the manufacture and export of the bulk pharmaceuticals needed for their production overseas, but in all cases, the companies are working to avoid shortages by coordinating with each other and with academic societies to find alternative drugs. In ^each case, the companies are working to avoid shortages by coordinating with each other and with academic societies for alternative ^medicines4). As shown in Figure 3, there was no significant change in the monthly trend of domestic production value of pharmaceuticals and import value of pharmaceuticals compared to the same month in 2019, even after February 2020, when the epidemic spread around the world. Fortunately, no negative impact of the COVID-19 pandemic was observed in terms of prescription drug supply.

One of the reasons why the supply uncertainty of pharmaceuticals was averted was that pharmaceutical companies had secured inventories of products and pre-formulated APIs, mainly brand-name drugs, for approximately six ^months5). As shown in Figure 3, domestic production accounts for 70-80% of all pharmaceutical production, including the use of imported APIs, and the supply system has been stabilized by securing not only products but also APIs. In 2008, the Pharmaceutical Manufacturers Association of Japan (PMAJ) issued "Guidance for Pharmaceutical Companies to Prepare for Pandemic Influenza" to prepare for a pandemic of a new strain of ^influenza6), and each company has made its own decision to secure stocks of important drugs based on this guidance, which is thought to have contributed to ensuring stable supply.

(3) Impact on clinical trials

The COVID-19 pandemic has increased the burden on healthcare workers and increased the risk of infection in subjects, which has also affected clinical development. The Japan Medical Association has been surveying the impact of COVID-19 on clinical trial sites in Japan, and some sites have taken actions such as suspending acceptance of new clinical trials, suspending ongoing clinical trials, and suspending new patient ^enrollment7). This trend is similar worldwide, and according to a survey conducted by the New York Cancer Institute and IQVIA between March and April 2020, the percentage of sites that have delayed or suspended oncology clinical trials compared to pre-pandemic levels is 80% in the U.S., 86% in Europe, and 40% in Asia8). In Asia, the percentage is ^40%8). Such delays in clinical trials may lead to delays in the launch of new drugs that were expected before the COVID-19 pandemic, which may affect business plans and mid- to long-term business performance.

2. R&D trends of new drugs for prevention and treatment of COVID-19

In response to the COVID-19 pandemic, pharmaceutical companies around the world are rapidly developing COVID-19-related drugs. According to information from BioCentury, which collects information on pharmaceutical R&D, as of August 3, 2020, there were 243 therapeutic compounds and 35 vaccines that were either approved or in phase I or later clinical trials in countries around the ^world9). Globally, U.S. companies lead in terms of development speed and number, but in Japan, many pharmaceutical ^companies10), as well as bio-ventures and academia, are developing COVID-19 therapies and vaccines. It is the greatest mission of the pharmaceutical industry to verify the efficacy and safety of COVID-19 in humans as soon as possible, and to make it widely available for prevention and treatment around the world.

(1) Therapeutics

Currently, there are two drugs approved for COVID-19 in Japan: Lemdecivir (brand name: Beclury) and dexamethasone. Remdecivir was originally developed by Gilead in the U.S. as a treatment for Ebola hemorrhagic fever, but was granted special approval in Japan on May 7, 2020 based on its use in the U.S. under an emergency use permit after it was shown to have therapeutic effects against COVID-19. Dexamethasone is also a steroid drug that has been used for a long time and is indicated for the treatment of severe infections, but is listed as a "drug approved in Japan" in the Ministry of Health, Labour and Welfare's "Guide for the Treatment of New Coronavirus Infections".

Drug repositioning, in which drugs such as Lemdesivir and Dexamethasone, which have already been used in humans, are diverted to treat diseases other than those for which they were originally intended, is being utilized. Table 1 shows major examples of drug repositioning in Japan, each of which has a wide range of approved indications and pharmacological effects, indicating the diversity of clinical presentations of COVID-19 and the difficulty of its treatment. In addition, RIKEN and Kyoto University jointly used the world's most powerful supercomputer "Fugaku" to select dozens of drugs that are expected to be effective against SARS-CoV-2 from 2,128 existing drugs (12 of which are already in clinical studies and clinical trials for COVID-19). ¹¹⁾, and further progress in the evaluation of these drugs is expected.

In addition to utilizing existing drugs, Japanese pharmaceutical companies are also developing new drugs for the main purpose of COVID-19 treatment. Takeda Pharmaceutical Company Limited is developing an advanced immunoglobulin preparation (H-Ig) from the serum of COVID-19 recovered patients, and Chugai Pharmaceutical Co. Although these new drugs are expected to be highly effective, they will require a longer period of time for commercialization than drug repositioning, particularly because of the need for safety studies.

(2) Vaccines

There is a great need for vaccines that are as effective as or even more effective than therapeutic drugs in preventing infection and severe disease, and many candidate products are being researched and developed around the world with strong support from governments and other organizations. Table 2 summarizes the items that are considered to be in Phase III stage based on information from the World Health Organization (WHO).

Vaccine development by domestic companies includes not only major pharmaceutical companies such as Daiichi Sankyo (RNA vaccine; DS-5670), Mitsubishi Tanabe Pharma Corporation (vaccine using plant-derived virus-like particles; MT-2766), and Shionogi & Co. (genetically engineered vaccine), as well as bio-venture company AnGes Corporation, which is conducting clinical trials (Phase I/II) of a DNA vaccine discovered by AnGes, and various other players, including companies with vaccine R&D and technical know-how and academia, are cooperating to promote R&D for a vaccine against SARS-CoV-2.

Overseas, mainly in Western countries, there have been attempts to deregulate and lift restrictions in a fairly forward-looking manner in order to resume full-scale social and economic activities, but some of the more aggressively promoted countries are now in a situation where the number of infected people is beginning to increase again, and expectations for the start of vaccination are extremely high. Because the vaccine is administered to healthy individuals, the risks and benefits of administration must be evaluated more rigorously and objectively than with therapeutic agents, which are administered to patients. Amid great expectations and pressure for early development success, it is worth mentioning that nine European and U.S. pharmaceutical companies have shown their pride in the pharmaceutical industry as a life-related industry by issuing a joint statement on the ongoing vaccine development, stating that safety is their top priority and that they will not seek approval from the authorities until the efficacy is verified.

3. Preparing for the future

In the U.S., real GDP (gross domestic product, seasonally adjusted, preliminary figures) for the April-June period of 2020 fell 32.9% on an annualized basis from the same period of the previous year, reportedly a historic decline exceeding that of the Great Depression in 1932, and a similar 27.8% decline (annualized, price change adjusted, preliminary figures) was reported in Japan. As reported in Japan as well, the economic downturn associated with the COVID-19 pandemic was confirmed to be significant.

This impact was felt in both major and emerging economies, and across a wide range of industries, from manufacturing, such as the automotive and electrical/electronic equipment industries, to services, such as tourism-related industries and the food and beverage industry. In the pharmaceutical industry, the negative impact on its business in both the January-March and April-June periods of FY2020 was minor compared to other industries. In addition, as a result of the stagnation of international logistics and the functions of overseas production bases due to the spread of COVID-19 infection, there were temporary concerns about shortages or stoppages in the supply of prescription drugs in Japan due to reduced imports of products procured overseas, but fortunately these concerns were not serious. This was the result of efforts by pharmaceutical companies to secure sufficient inventories of active pharmaceutical ingredients (APIs) and finished products to ensure the production and supply of the assumed required quantities, mainly for ethical drugs for which there are no alternatives or limited supply, which was recognized as a necessary measure when there were concerns that a new influenza pandemic might spread to Japan in the past. This is the result of the efforts of pharmaceutical companies to secure sufficient inventories of APIs and finished products to ensure the production and supply of their anticipated requirements, especially for ethical drugs, which are in limited supply.

Stable supply of medicines: more important to improve software than hardware

The "Conference on Measures to Ensure Stable Supply of Ethical Drugs," established in response to the unpredictable re-expansion of COVID-19 infection and a new pandemic of infectious diseases, has recommended that pharmaceutical companies, especially those highly dependent on overseas procurement, take measures to maintain domestic production capacity as well as to secure sufficient inventories as risk management measures against supply shortages or stoppages due to stagnant international logistics. In September 2020, the Council discussed measures to "prevent supply disruptions," "promptly detect signs of supply disruptions and take early action," and "respond in the event of supply disruptions, " ¹²⁾ which are aimed at ensuring a stable supply of pharmaceuticals. The key point is how long the stagnation of international logistics and overseas production functions will continue in the future, but this experience has demonstrated that securing approximately half a year's worth of product and API inventory is sufficient to maintain the supply of pharmaceuticals until the supply of internationally procured products recovers for a few months. The need to return to the domestic market does not appear to be very high. In addition, a cost-benefit comparison should be made between the cost of maintaining inventories and the cost of building and maintaining a new domestic production base, but considering the cost and time involved, it is difficult to say that a policy of returning to domestic production, focusing only on drugs for which there are no alternatives or limited supply, is the highest priority option. It is difficult to say that a return to domestic production, focusing only on drugs for which there are no alternatives or limited supply, is the most preferred option.

In order to operate already established measures such as inventory control more effectively and flexibly in the event of a new infectious disease pandemic, it will be more important to strengthen software measures to enable the collection and more rapid and open sharing of information on difficult-to-control infectious diseases around the world to related organizations and industries than to strengthen hardware measures. To this end, it is desirable to establish a specialized organization to serve as a command post, as proposed by the Pharmaceutical Manufacturers Association of Japan (PMAJ), the Japan Business Federation (Keidanren), the Tokyo Metropolitan Government, and others. The Centers for Disease Control and Prevention (CDC) in the United States, which is said to be a model for such an organization, has a very broad range of roles and functions with the mission of improving health and quality of life through the prevention and control of disease, injury, and disability. The Centers for Disease Control and Prevention (CDC) have very broad roles and functions with a mission to improve health and improve lives through the prevention and control of disease, injury, and disability, with a particular focus on infectious diseases. It is intended to establish a function with research functions such as the National Center for Immunization and Respiratory Diseases (NCIRD) and the National Institute of Allergy and Infectious Diseases (NIAID), both of which are affiliated with the National Institutes of Health (NIH).

Promotion of R&D: Infrastructure and incentives for combating emerging infectious diseases are important.

Needless to say, the successful development of therapeutic drugs and vaccines is important for both the prevention of infection and the revitalization of social and economic activities. As mentioned above, pharmaceutical companies in Japan have been focusing their efforts on this issue, but it is undeniable that they are lagging behind European and U.S. companies when compared to the current development stage. One reason for this may be the delay in initial response caused by the synergistic effects of slight differences in the research environment for handling unknown pathogenic infectious agents, in addition to the amount of information and sensitivity to that information in the early stages of infection spread. In conducting research on unknown infectious agents, it is desirable, at least until their pathogenicity is clarified, to use a high containment experimental facility (BSL-4 (Biosafety Level-4) facility) ¹³⁾ equivalent to those for pathogens with no effective treatment and particularly high lethality, in order to reduce the risk to researchers, but in Japan, only one facility is in operation, and one facility is not yet operational. In Japan, one facility is in operation and one is under construction, which is a significant gap from the U.S., which has more than 10 facilities. In addition, the number of experimental facilities (BSL-3) necessary for research to verify the antiviral effects of drug candidate substances on SARS-Cov-2 is also limited, and the establishment of a specialized command post institution and promotion of shared use will be necessary to respond immediately.

It is gradually becoming recognized that the research and development required to commercialize a new drug takes a long time and has a very low probability of success, and therefore poses a high business risk in terms of return on investment. In the case of an emerging epidemic infectious disease such as COVID-19, the R&D risk is even higher and the future marketability is uncertain, so public financial support is important to accelerate the commercialization of treatments and vaccines and to ensure sufficient supply. The COVID-19 measures include both financial support for commercialization (so-called "push-type incentives") and "pull-type incentives" such as guarantees of prices and government purchase conditions when the product is launched. This system is also effective in preparing for future pandemics of emerging infectious diseases.

Vaccine supply: Need to secure manufacturing capacity

According to recent media reports, the Japanese government has concluded agreements with foreign pharmaceutical companies to supply vaccines in the event of successful development, in quantities ranging from tens of millions to 100 million doses. The volume is estimated to be equivalent to the total production of vaccines in Japan in ^201714). In addition, it is also important to secure sufficient manufacturing sites in Japan in order to be prepared for future emerging infectious disease pandemics. Furthermore, when effective and safe vaccines become available and the new Kan administration aims to secure enough vaccines to reach all citizens, it will be important to secure the cold chain and develop the vaccination system, which will probably be necessary to ensure that vaccinations are administered nationwide without confusion, Close collaboration between the government, medical institutions, and the product supply side will be the key to solving this problem.

Conclusion

While the COVID-19 pandemic allowed the pharmaceutical industry to fulfill its social mission as an initial response, it also allowed us to reaffirm the issues that need to be improved and resolved in order to develop, manufacture, and supply effective therapeutics and vaccines to control the future spread of infection. Measures to address these issues will help prepare for future emerging infectious disease pandemics, but to ensure that they are achieved, collaboration among industry, academia, and government will be necessary, and the establishment of a specialized command post organization will be particularly important as a strategy directly related to maintaining the health of the public.

Looking back to the past, humans have been exposed to the threat of various lethal infectious disease pandemics, such as the plague, which was once called the Black Death, smallpox, influenza, typhus, AIDS, and SARS, and have overcome them with great sacrifice. In the case of COVID-19, the causative virus was identified and its genome sequenced in a short period of time (less than one month after the outbreak), and in less than one year, multiple vaccines using the genetic information were developed around the world. It is a pleasant surprise that in less than a year, several vaccines using the genetic information are in the late stages of development around the world. This is the result of advances in life science-related technologies and information sharing supported by digital technology, and it suggests that we may be able to respond to future emerging infectious disease pandemics in the same way, and we may not need to be as fearful of unknown emerging infectious diseases as we should be. On the other hand, what lessons does the fact that the number of deaths from COVID-19 has unfortunately exceeded 1 million worldwide, mainly in countries with a well-developed public health infrastructure, suggest?

The vast amount of information that people around the world, deprived of the comfortable daily life they once took for granted due to lockdowns, etc., are receiving and hearing includes a great deal of misinformation that they want to trust, which may lead them to take inappropriate actions, for example, not taking measures to avoid the three clandestine avoidance measures. This may have led to cluster infections, more severe symptoms, and, in some cases, irreversible outcomes. In the absence of a vaccine or effective treatment, it is essential to provide correct information and understanding that will lead to optimal actions to prevent the spread of infectious diseases, considering that social and economic activities will have to be carried out while living with COVID-19 risk for some time to come. It is essential that the government, public administrators, and citizens all play their roles and continue their efforts to improve information literacy, which is the foundation of society.

It is therefore important to obtain correct information promptly, formulate appropriate countermeasures and necessary action guidelines, optimize them based on new information, and communicate them to the public in a timely manner. It is also important to educate the public and raise awareness so that they can acquire correct knowledge about infectious disease pandemics on a daily basis.

(This article is partially revised based on the article "The Pharmaceutical Industry's Response to the COVID-19 Pandemic, and Looking Ahead," which was contributed to the "Industrial Location" magazine, Vol. 59, No. 5, September 2020 (Japan Location Center Foundation)).

Return to News List

TOP