Supply fears drive European vaccine industry to seek the comforts of home

FRANKFURT, Sept. 17 (Reuters) – European companies playing key supporting roles in COVID-19 vaccine manufacturing are working to bring production and supply chains closer to their customers to guard against restrictions that cut off supplies during the pandemic.

Germany’s Merck KGaA (MRCG.DE), whose Life Science unit is one of the world’s largest manufacturers of bioreactor equipment and supplies, told Reuters it is working to geographically expand its production network so that fewer shipments have to cross customs borders.

U.S. regulations in particular, which prioritize companies performing contracts with the U.S. government, have posed a challenge for Merck as it seeks to meet growing demand for supplies such as sterile fermentation bags and filters.

But the United States is not the only country to engage in what some call vaccine nationalism. India banned vaccine exports in mid-April to focus on its national vaccination campaign as infections exploded across the country, upsetting vaccination plans in many countries in Africa and South Asia . Read more

Following production shortfalls at AstraZeneca (AZN.L) earlier this year, the European Union imposed an export surveillance program and accused Britain of withholding volumes of COVID-19 vaccines which, according to it should be shared with the EU. Read more

“Every forward-looking decision we have taken has incorporated the geographic dimension,” Managing Director Belen Garijo told Reuters. “Against the background of the trade constraints that we have seen, we have increased our global diversification whenever we have had the opportunity,” she added.

At Rentschler Biopharma SE, a German subcontractor for large pharmaceutical companies that is helping produce CureVac’s COVID-19 vaccine candidate (5CV.DE), the pandemic has sparked a review of its supply routes.

“The coronavirus crisis has given us an important boost to bring our supply chains closer to home. We have decided to source most of our equipment from Europe in order to no longer be so dependent on the United States,” a said CEO Frank Mathias, naming sterile bioreactor bags as an example. He would not name the suppliers.

Mathias said supply chains collapsed earlier this year when the United States requisitioned certain volumes for domestic vaccine producers.

The U.S. Defense Production Act, with its listed order system that prioritizes U.S. crisis response, has also hampered Merck’s ability to serve vaccine makers elsewhere in the world.

In response, Merck announced in March its intention to invest € 25 million in France to manufacture disposable plastic materials for bioreactors, a critical input for the manufacture of COVID-19 vaccines.

The new site, Merck’s first such facility in Europe, will likely come on stream at the end of 2021, adding to similar serial production lines in the United States and China. Read more

This followed the $ 47 million investment in its U.S. facilities in Massachusetts and New Hampshire in December, at the time touted as boosting global production to meet unprecedented demand.

“The pandemic has been a wake-up call,” said Garijo of Merck. “You want to have a global footprint so that you can cope with potential business constraints. “

Family-owned Merck also manufactures prescription drugs and chemicals for semiconductor production, but its Life Science unit, primarily made up of companies formerly known as Millipore and Sigma Aldrich, has become its primary revenue engine.

Its competitors are Thermo Fisher (TMO.N), Danaher (DHR.N) and Sartorius (SATG.DE).

In another move to avoid long transport routes and any consequences of international feuds, German family-run vaccine maker IDT Biologika announced earlier this year plans to invest more than € 100 million to produce the COVID-vaccine. 19 from AstraZeneca in collaboration with the Anglo-Swedish drug manufacturer. Read more

The production line, which is currently scheduled to enter service in 2023, is said to be designed to produce Astra vaccines or other vaccines of the same class of viral vectors, at a rate of at least 360 million doses per year. .

IDT would manufacture the active ingredient and mix, bottle and package the final product, combining in one place a series of production steps that are currently widely dispersed.

IDT said the project was on track but declined to comment further. The company said the German Federal Ministry of Health helped with the project but the investment was not subsidized.

Re-equipping production networks in a pharmaceutical sector that has relied for decades on cross-border trade and the international division of labor can only be done in gradual stages, warned Merck CEO Garijo.

“You can’t move a factory overnight, it takes time,” she said.

Reporting by Ludwig Burger and Patricia Weiss; Editing by Hugh Lawson

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