As the pharma industry awaits congressional action on the bill, gaping holes in the domestic drug manufacturing ecosystem have never been clearer.
When Fernando Muzzio first began working with pharmaceutical companies back in the 1990s, he found their manufacturing processes “primitive.” Protocols entirely lacked the modeling and experimentation that he’d seen when he worked in the petroleum and fine chemical industries.
“Immediately my thinking was pharma could benefit a lot from adopting these techniques, and the patients would benefit a lot because we could improve the quality of the product and we would likely decrease the cost,” he told BioSpace.
But according to Muzzio, professor of engineering at Rutgers University, not much has changed. Branded pharmaceuticals have remained profitable and pumped resources into implementing advanced methodologies. But generics, which the Food and Drug Administration estimates account for 91% of all prescriptions filled in the U.S., are a different story. China and India are the largest manufacturers in the world when it comes to generic drugs. According to Muzzio, overreliance on manufacturing firms led the U.S. to neglect boosting homegrown capabilities.
“I do think outsourcing has been a factor in delaying incorporation of more advanced methods [in the U.S.],” Muzzio said.
With the BIOSECURE Act, which was introduced in the House of Representatives in January, that overreliance is becoming clear. The act prevents pharmaceutical companies in the U.S. from accessing federal funding for projects if they work with China-based contract development and manufacturing organizations.
In a survey of small, emerging biotech firms in the U.S., the Biotechnology Innovation Organization (BIO) found that 65% work with China-based CDMOs in some capacity. Switching to new manufacturers, or manufacturing in the U.S., would temporarily halt production and potentially cost more in labor.
While the bipartisan bill has yet to pass, the anticipated effects are already rippling through biopharma, with the legislation threatening to put a strain on an already tenuous biopharmaceutical supply chain. The solution, Muzzio and others argue, is to finally bring U.S. manufacturing into the 21st century so the country may begin producing its own drugs at scale.
Untangling the Ecosystem
The number of active and ongoing drug shortages in the U.S. was at 300 or higher between December 2022 and June 2024, according to the American Society of Health-System Pharmacists. Cutting ties with Chinese CDMOs threatens to exacerbate those shortages.
Simply switching to Indian CDMOs isn’t an across-the-board solution. Even if the U.S. outsourced all generics manufacturing to India, the majority of ingredients for the drugs in shortage—including chemotherapies, ADHD therapies and some pain medications—still come from China. A report from the Coalition for a Prosperous America, which encourages manufacturing in the U.S., found that India imports about 70% of active pharmaceutical ingredients (APIs) from China. Aurobindo Pharma, for example, a manufacturer in India that is the main supplier of generics to the U.S., gets 55% of its raw materials from China. If the BIOSECURE Act is enacted, these India-based manufacturers could lose U.S. customers if they source from certain businesses in China.
Righting the situation at this point, Muzzio said, is a tall order. He coauthored a white paper for the National Institute for Pharmaceutical Technology and Education in June that outlined a set of protocols the U.S. would need to follow to reverse the effects of 30 years of outsourcing, which would include developing formulations for active ingredients found in critical drugs.
“This is like trying to turn a battleship right in the middle of the ocean,” Muzzio said.
Emerging Players
Enter biomanufacturing. Once heralded as a sustainability savior for the carbon-intensive chemical industry, biomanufacturing is seeing a resurgence after the Biden Administration issued an executive order in 2022 to promote its use domestically. In biomanufacturing, cells, tissues, enzymes and other naturally occurring biology are used to create and scale commercially viable food or pharmaceutical products.
Capra Biosciences, a Virginia-based biotech startup, announced in July that it received $7.5 million in federal funding from the BioMaP Consortium, which was established in 2023 following the executive order. Capra, which developed a bioreactor platform, will work on scaling its manufacture of three APIs.
Capra cofounder and CEO Elizabeth Onderko said sustainability has been and remains a motivator for the company, noting that “active pharmaceutical ingredients are responsible for up to 50 times more [carbon output] than finer specialty chemical manufacturing.” But she said the supply chain implications of a switch to biomanufacturing, which have long been a priority for U.S.-based biotechs, were “not as much in the national consciousness until we all lived through the pandemic.”
Scaling the volatile molecules that make up APIs is not easy. Current large scale industrial biomanufacturing works much like a brewery—picture large stainless steel tanks bubbling away. While that works for some chemicals, like ethanol, it’s not always an effective infrastructure.
Capra’s’ bioreactor platform is modular, allowing for more predictable scaling and right sizing production capacity. It also integrates downstream processing—which separates the end ingredient from the microbes—into the platform.
“I think right now it’s a great time in terms of a lot of these programs that have come out of the White House’s biomanufacturing initiatives,” Onderko said. “[They’re] really focusing in on a lot of these pieces that add capabilities to extend already existing technology.”
Capra isn’t alone in mobilizing to boost U.S. manufacturing capabilities. In March, the Mark Cuban Cost Plus Drug Company, which specializes in generics, announced it would begin manufacturing its own medications in Texas. Pharma giant AstraZeneca announced it would split its supply chains depending on if the drugs are being manufactured for patients in the U.S. or in China. And Eli Lilly said in May that it would double its commitment to an API manufacturing plant in Indiana to the tune of $9 million.
A Higher Price Tag
Even with new domestic capabilities, moving supply chains away from China could potentially raise the costs of drugs, according to David Crean, a longtime biotech investor in San Diego.
“It’s only going to drive up pricing. On the due diligence and compliance side, there’s going to be greater stringent issues with due diligence to comply with the Act. When you have that, there’s increased risk management and increased costs,” he told BioSpace. “If I have to [look for] a U.S.-based or European-based or India-based CDMO, it’s bringing me, you know, additional cost to shift my work over to a different CDMO.”
And that ultimately impacts the patient.
“When it comes to pharmaceuticals,” Muzzio said, “how many millions of people do we have that depend on prescriptions just to stay alive?”
Editor’s note (Aug. 27): This story has been updated to include Fernando Muzzio’s affiliation.
