US president Donald Trump’s insistence that manufacturing move back to the US has sparked a wave of promises from big biopharma firms over the sector’s future.
Leaving aside the fact that biopharmaceutical manufacturing never really left the US, the realities of the current manufacturing environment means moving will take time.
Here’s why:
- Manufacturing capacity is tight across the industry regardless of the location.
- Globally, biopharma companies have spent over $50bn in just the past five years on new plants and equipment. Much of that has been in tax havens, like Ireland and Singapore, and in emerging markets. About a quarter of the projects have been in the US. There just aren’t enough facilities and those that are available are too old for modern drugs.
- It takes nearly four years to design, build, and qualify a new plant. Large scale plants can cost between $1bn and $2bn.
- Merely ordering key equipment can take about 18 months these days. It takes at least another year to install it. So even expanding an existing factory takes a minimum of three years.
- Contract manufacturing organizations (CMO) – which biopharmas rely on develop drugs when they’re busy — don’t have a lot of spare capacity and don’t have the cash to invest in massive capacity increases themselves. Patheon’s recent acquisition of Roche’s small facility was attractive because it was inexpensive, but is far from the norm. Much of the ongoing capacity expansion in the CMO industry is customer-funded.
- It can take up to two years to transfer a single product to a new manufacturing site. To move multiple products at one time will take armies of technical, quality and regulatory staff.
Realistically, moving biopharma manufacturing back to the US in a meaningful way will be a seven to 10 year process.
The industry may find it more expedient to just find ways to put some window dressing on the issue while waiting out the president’s term in office.
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