Sanofi outlines big API plans as coronavirus outbreak reportedly threatens shortage of 150 drugs
As the world becomes increasingly dependant on Asia for the ingredients of its medicines, Sanofi sees business to be done in Europe.
The French drugmaker said it’s creating the world’s second largest active pharmaceutical ingredients (API) manufacturer by spinning out its six current sites into a standalone company: Brindisi (Italy), Frankfurt Chemistry (Germany), Haverhill (UK), St Aubin les Elbeuf (France), Újpest (Hungary) and Vertolaye (France). They have mapped out €1 billion in expected sales by 2022 and 3,100 employees for the new operations headquartered in France.
An IPO on Euronext Paris is also in the works, with a decision by 2022.
The announcement came shortly after Axios reported that 150 prescription drugs are now at risk of shortage in the US, spanning antibiotics, generics and some branded drugs without alternatives.
Sanofi cites “increasing medicine shortages that critically impact patient care” as impetus for the new venture, which will support API manufacturing for “Europe and beyond.” As a drugmaker, it plans to enlist the new entity as a long-term supplier while holding around 30% of its stake.
Although factories in China are gradually reopening, restrictions in travel and disruptions at transit hubs are still slowing down production. An Indian company that relies on active pharmaceutical ingredients (API) from China told Bloomberg last week that it’s seeing prices of commonly used drugs jump by 40% to 70%.
China accounts for 13% of all manufacturing sites of API for the US market, following the US (28%), EU (26%) and India (18%), according to agency data. But the share by volume of ingredients from China that end up reaching American patients could be higher, STAT previously reported.
The drug supply chain has become “longer, more complex and fragmented as companies have located more production overseas” and used contract manufacturers more frequently, the FDA’s drug shortages task force wrote in a report updated a few days ago.
“Although typical markets would respond to a shortage by increasing production, logistical and regulatory challenges, especially the complexity of the supply chain, can limit the ability of drug manufacturers to increase production,” the report read.
The US biopharma industry has grown reliant on China in more ways than one. There have also been concerns about both preclinical research and clinical studies getting delayed, due to contract service providers’ limited working capacities and strained medical systems.