Q&A: UK pharma manufacturing prepares for imminent shake up in 2024

Broader international events continue to affect the pharmaceutical sector, as the generic drugs market faces its own challenges in keeping up with inflation and drug shortages.

At such a time, the UK generics manufacturing industry also faces increasing competition from other European countries ramping up their domestic manufacturing potential. As per the British Generic Manufacturers Association (BGMA), while there are supporting 40 generic manufacturing side projects going on within the EU, at different stages, but there are none in the UK.

Additionally, major regulatory changes beckon in the UK’s pharmaceutical industry with the implementation of a new voluntary scheme for branded medicines pricing and access (VPAS), and the impending Northern Ireland Windsor Framework, which will start being implemented in 2024.

The BGMA says VPAS, which deals with a new framework of drug payments, also threatens competition in the life sciences market. The Windsor Framework aims to address issues with the flow of trade in and out of Northern Ireland that has majorly disrupted supply chain operations.

Following disruption from Brexit and the Covid-19 pandemic, the UK pharmaceutical manufacturing industry has undergone considerable changes, with companies adapting to a tougher economic climate and new political barriers. Paul Fleming, BGMA’s technical director says that this has increased the need for supply chain preparedness, but there is more the government can do to help the industry flourish.

In an interview with Pharmaceutical Technology, Fleming discussed issues plaguing the county’s pharmaceutical manufacturing industry and how businesses are facing newer challenges. This interview has been edited for length and clarity.

Paul Fleming: Over the last three or four years, the two biggest challenges revolved around Brexit-related planning and then the pandemic. We planned for the worst-case scenario around Brexit, which did not turn out as bad as expected.

The general consequence of [these events] is that it is increasingly difficult for companies to anticipate demand, even for things that are not directly related but closely consequential—for example patient treatment backlogs in the National Health Services (NHS). This was not such a big feature several years ago.

Another thing that has become increasingly difficult is issues with the UK regulator—the MHRA (Medicines and Healthcare products Regulatory Agency). The agency is still carrying very substantial backlogs [in terms of submissions for medical products], causing companies to have submission reviews delayed by up to a year. As a highly regulated sector, a large number of changes that companies would want to make to increase the resilience of their supply chains involve regulatory submissions. If that process takes about a year, that is just too slow. So, responsiveness or the ability to anticipate and take preparatory actions, has become more difficult.

Also, since the pandemic we have had global conflicts, the war in Ukraine and now the situation in the Middle East, that have impacted different elements. Things like the availability of cardboard, pallets and aluminium foil were not issues, even during Brexit and Covid-19 planning, but there are longer supply chain delays now for those commodity-type components.

Paul Fleming: Even though some branded medicines are off-patent, quite a lot of generics come into the branded drug category. With biologic medicines, for example, they have to be prescribed by a brand name for clinical reasons. This can include biosimilars and anti-epilepsy treatments. Also, they [regulators] have been very punitive with sales taxes, particularly this year, as the tax rate reached 26%. That has made it much more difficult for companies to do things like stock building and that is a problem specific to the UK.

Paul Fleming: The MHRA is trying to improve and is slowly turning the corner, but the nature of the backlogs is a bit like turning around an oil tanker. It is very, very slow. And really, it is a consequence of earlier decisions that has created the problem we are in now because MHRA went through a restructuring exercise where it substantially reduced its workforce. That was a mistake.

Paul Fleming: One is probably looking at things like R&D tax credits, whereby companies who invest in their manufacturing facilities in the UK should be eligible for tax relief. That would give more encouragement to UK-based companies who invest in their manufacturing facilities, and level up the playing field with other European markets.

Separately, there are initiatives for critical products, for example with antibiotics, that are also being discussed within the EU. There is a risk that the UK gets left behind because the EU and individual European countries are recognising the benefits of local manufacturing and the UK does not. There is a risk of investment drifting away from the UK and going to other countries within Europe. And we see examples of that happening already.

Paul Fleming: Our industry generally applies a multi-layered approach to resilience. One important element to emphasise is the general amount of stock that companies hold in the UK has increased. A particular feature of the Brexit planning was to look at how much stock is actually kept in the UK and to perhaps have less of a “just in time” approach. This single action is probably the one that helped most to mitigate against the range of potential shocks to the supply chain.

The lack of political stability in the UK has also contributed to these shocks. The situation around supply to Northern Ireland is still not complete with the Windsor Framework’s stipulations around medicine due for implementation due to start in January 2025.

Moreover, there are three different types of regulatory approvals in the UK, which confuses companies. You have one for the whole of the UK that has been held historically, you might have one that only covers Great Britain, and you might have something separate for Northern Ireland. So, the various political changes that have come through implementing different aspects of Brexit have increased the complexity. Companies now try to have multiple suppliers at all levels of the supply chain, including with components. This is not just thinking about active ingredients and finished pharmaceutical product, but also cardboard and foil suppliers amongst others. Companies are also anticipating longer lead times. Also, due to the geopolitical situations, people are having to organise the movements of goods through different groups.

Paul Fleming: A potential change in government could be a point of inflection to look out for. You could argue we have had several changes of government within the same political party in the last few years. The need to be able to manage the unexpected is going to be a key characteristic for success. Also, the situation with the Windsor Framework and the new VPAS scheme will be very important to monitor in the coming year.