6 Biopharma CFOs Discuss The Pandemic's Impact On The Supply Chain, Their Job And More
By Rob Wright, Chief Editor, Life Science Leader
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The first year Life Science Leader began involving finance executives in our annual outlook issue (2018) we had just one biopharmaceutical company CFO participate. This year we had eight. And while we are thrilled to have so many CFOs eager and willing to share their knowledge and perspectives, it can present a challenge for a print publication. Fortunately, we created our exclusive Beyond The Printed Page online section of the magazine, where you will find all sorts of interesting articles. For this latest edition, we’d like to share some of the CFO responses to a cross section of questions we couldn’t seem to squeeze into the December 2020 print edition. We hope you enjoy, and will consider becoming a Life Science Leader subscriber today.
WHAT SUPPLY CHAIN RIPPLE EFFECTS FROM “LOCKDOWNS” ARE BEING SEEN IN BIOPHARMA, AND WHAT WILL BE SOME POSITIVE AND NEGATIVE OUTCOMES?
ROGER SAWHNEY, CFO, OMEGA THERAPEUTICS: Within R&D, active clinical-stage companies have certainly been disrupted, from recruiting patients and visiting sites to collecting data and submitting regulatory filings. Companies have had to find additional sites and learn how to quickly pivot from one to another. There is a lot of potential innovation for trials through virtual check-ins with physicians via telemedicine, remote monitoring, data collection, etc. As it becomes increasingly difficult and more expensive to conduct trials, some of these solutions may be here to stay.
In the supply chain, there hasn’t been significant disruption in the ethical or patented pharmaceutical industry. However, the generic market has a large supply from India and China, so as the COVID outbreak emerged, there was disruption, along with a bit of nationalism in wanting to keep supply in-house. There has certainly been angst and risk, and companies are looking to diversify beyond China or India to mitigate that should another geopolitical disruption occur. This is particularly true for APIs and raw materials.
Commercially, the ability for sales representatives to access and provide details to physicians has gone almost completely virtual; another paradigm that could prove to be substantially more cost-effective and may reshape the commercial model post-COVID.
HOW HAS THE PANDEMIC STRENGTHENED BIOPHARMA MANUFACTURING AND SUPPLY CHAIN RISK MITIGATION STRATEGIES FOR 2021 AND BEYOND?
MICHAEL ARENBERG, J.D., CFO, DURECT: The pandemic has reminded us how important it is to maintain a strong supply chain. On a macro level, maintaining biopharmaceutical supply chains is crucial to ensure people are able to receive the medicines they need, and medical research continues with minimal disruption. On a micro level, supply chain disruptions can cause major delays in a company’s development timelines or hamper its ability to manufacture commercial supplies. I’m sure that most companies in the industry have experienced shortages and delays in supply of certain components of their supply chains in the past few months. Lead times for basic supplies like certain chemical reagents, stoppers, and vials, not to mention PPE, have increased significantly. As a result, many companies are reviewing their supply chains and taking steps to mitigate risk. For example, due to long lead times, companies are ordering supplies farther in advance. And, due to concerns about future shortages, they may be placing larger orders. This extra ordering of supplies to mitigate supply chain risk may actually be contributing to the shortages (similar to the toilet paper shortages in the early stages of the pandemic). This has definitely been a wake-up call for the industry to review and strengthen our collective supply chains.
SANJAY SUBRAMANIAN, CFO, OCUGEN: Many companies, particularly those in cell and gene therapy, have been hit hard due to the complex manufacturing required to drive development and manufacturing processes through the clinic to commercialization. With up to 80% of the FDA IND package related to manufacturing, there is more demand than ever on cell and gene therapy manufacturing. We were strategically focused on developing a strong gene therapy partnership with a large manufacturing provider early in development, and achieved this goal before the pandemic hit. While our partner, CanSino Biologics, has been working on COVID-19 vaccine development, we have not seen any impact on our preparations as we prepare to enter the clinic with OCU400 to treat inherited retinal diseases in 2021.
HOW WILL YOUR BUSINESS BE IMPACTED IF THE PANDEMIC CONTINUES FOR ANOTHER YEAR OR BEYOND?
EMILY HILL, CFO, PTC THERAPEUTICS
Clinical trials across the industry slowed as a result of the lack of access to lab space, clinical development sites and some hospital closings. Additionally, many laboratories turned their focus to the development of therapies and vaccines for COVID-19, which has affected the supply chain and execution of some analyses for industrywide clinical development.
During the pandemic, there is hesitation for patients, particularly those with chronic or rare disorders, to go to hospitals and put themselves at risk. We have worked hard to ensure that patients, in clinical trials or real-world settings, can have consistent and regular access to therapies at home, despite the pandemic. As our commercial therapies are delivered at home, our access to patients as well as our business, in some ways, is continuing to strengthen. For example, there has been a positive response from the spinal muscular atrophy (SMA) community for having an oral therapy (i.e., FDA approval of Evrysdi) for the first time that can be administered at home, rather than requiring to go to the hospital once a month for an intrathecal injection.
HOW HAS THE PANDEMIC CHANGED HOW YOU DO YOUR JOB?
KEN MYSZKOWSKI, CFO, ARROWHEAD PHARMACEUTICALS: From a finance perspective, very little has changed as a direct result of the pandemic. We were fortunate to raise a significant amount of capital just prior to the COVID-19, so our cash position was solid. We did advance purchases of lab supplies when supply chains were uncertain, so we are carrying more inventory to keep our operations moving as fast as possible. Of course, there have been increased costs on cleaning and PPE, but those amounts are not significant compared to the rest of our operations.
ALLAN SHAW, CONSULTING CFO, SPECIAL ADVISOR, AND BOARD MEMBER: Notwithstanding the huge economic dislocation and social upheaval that pummeled our society with tsunami force, the collateral consequences of the pandemic have indeed provided some silver linings. For example, productivity has been significantly improved and enhanced by recapturing time previously consumed with pre-COVID travel and commutation activities that can now be effectively be redeployed. To put in formal context, this has provided a windfall of additional time (e.g., on average: 10-20 hours a week, or 40-80 hours per month) that can be re-purposed for additional value creating activities and compression of timelines. This is not an inconsequential consideration as “time is always the enemy.”