Could you provide an overview of how 2023 has unfolded for PBOA and its members?

In 2023, our focus shifted to the pharmaceutical supply chain and how the CDMO sector can (and can’t) help address drug shortages. We are engaged in working with the US Congress and the FDA to enhance their understanding of supply chain intricacies. The primary focus is on achieving supply chain transparency, especially regarding drug origins. We are working with Congress to define reporting responsibilities for CMOs versus those of license holders, recognizing the latter's clearer view of its supply chains. We've worked with those regulators and legislators, and other stakeholders to explore ways to better understand not just upstream drug supply chains, but also the forces that can lead to drug shortages, and how some of them are outside the realm of actual drug manufacturing. Can you share your insights on the current state of the industry, particularly upcoming challenges and opportunities for CDMOs?

The R&D funding drought during 2022 and 2023 has impacted many CDMOs, especially those relying on early-stage clients. This led to challenges when funding dried up. At the same time, the COVID Cliff has impacted CDMOs who played a key role in the global COVID response.

Despite challenges, there are opportunities. There are signs of funding returning in the first half of this year, potentially revitalizing early-stage projects, and benefiting the CDMO sector, and there’s also massive demand for prefilled syringe manufacturing capacity and secondary packaging driven by compounds like Novo Nordisk’s Ozempic and Lilly’s Monjauro. CDMOs have had to evaluate their offerings and, in some cases, rationalize their operations, but navigating this industry requires a strategic approach, especially with the introduction of new projects and new modalities.

Of course, the biggest news in the sector is Novo Holdings’ planned acquisition of Catalent Pharma Solutions, and NH’s follow-on sale of Catalent’s three fill-finish sites to Novo Nordisk, to increase their capacity to deliver Ozempic/Wegovy and next-gen treatments. I’m interested — to put it mildly — to see how that transaction affects the CDMO landscape, particularly in the sterile injectable space. How has the reshoring conversation evolved?

In November and December 2023, White House statements emphasized a national security approach to supply chain resilience. Thankfully, the focus is not on complete domestic production but rather on establishing resilient supply chains through ‘friendshoring’. Recent legislative developments include a bill for mapping the supply chain that includes key starting materials and excipients. This reveals the complexity of reducing dependence on specific countries. How will the current regulatory changes and potential shifts in drug pricing negotiations impact the life science industry in 2024?

Drug pricing legislation — through the Inflation Reduction Act’s section on Medicare drug pricing negotiation — marks a momentous shift in US policy. The impact of the IRA will be wide-ranging and has led to legal challenges. The implications for the CDMO sector could be significant, as potential changes in clients’ reimbursement may influence development decisions. The R&D landscape might strongly shift toward biologics at the expense of small molecules, to extend product lifespan before price negotiations.

Despite the IRA, the pharma industry's commitment to patient well-being remains, and CDMOs will be there to help companies innovate and bring new solutions. Still, the IRA may introduce uncertainty in the R&D space, and there have even been calls to extend it from Medicare to private insurance in the US, which could significantly alter drug pipelines.

On the regulatory front, one area of interest to our members is FDA’s pursuit of a Quality Management Maturity “scorecard” for drug facilities. FDA hopes QMM can be used to track facilities’ quality over time, to see which are trending better or worse. It’s an approach that has undergone a few evolutions since FDA first proposed it, and we are doing our best to make sure that they work on this responsibly, and that the end-product remains confidential. In 2024, what will be the main objectives for PBOA?

I’m optimistic about the sector's future, especially as R&D funding refuels drug pipelines. Our main objectives for 2024 are addressing supply chain and drug shortage issues, helping members navigate regulatory complexities, and providing a space for CDMOs to discuss best practices with their peers.