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At DCAT, firms sought to capitalize on WuXi woes

Some contract developers see opportunities amid talks of sanctions on Chinese companies

by Aayushi Pratap
March 28, 2024 | A version of this story appeared in Volume 102, Issue 10


An aerial view of a pharmaceutical chemical plant.
Credit: Noramco
Noramco says its US facilities can be easily visited by pharmaceutical executives.

It was business as usual at the recent Drug, Chemical, and Associated Technologies Association’s DCAT Week, an annual affair in New York City at which pharmaceutical services companies meet and strike deals.

At the various midtown hotels hosting the conference, companies pitched their services and showcased their latest investments and acquisitions. But the elephant in the room was that US lawmakers’ calls for sanctions on the Chinese services firm WuXi AppTec could mean business for North American and European companies.

WuXi AppTec, a top drug services provider and one of the world’s largest employers of chemists, and WuXi Biologics, a separate company that WuXi AppTec spun off in 2017, have been on the US government’s radar because of national security concerns. In January, a House committee introduced a bill seeking to restrict federally funded medical providers from using the services of several Chinese firms, including the two WuXi companies. Similar legislation has been introduced in the Senate.

Executives from non-Chinese firms were quick to point out that the bill, even if it doesn’t become law, is making drug companies think twice about outsourcing to China.

“It is very well known that there were huge supply chain issues during COVID. We now have supply chain concerns for companies sourcing from countries hit by the new legislation,” saidBill Grubb, vice president of business development and innovation at Noramco, a Wilmington, Delaware–based pharmaceutical services firm.

Noramco makes drug ingredients for controlled substances and other medicines, mostly at facilities in North America, which is a huge advantage, Grubb said. “Our clients can just hop on a train, visit our plants, and talk to Noramco employees who actually make the active substances in our plants.”

Executives from Eurofins CDMO Alphora, a contract development and manufacturing organization (CDMO) based in Ontario, said they are seeing rising client interest in a localized supply chain.

“Over the last 2 or 3 years, we have seen more and more projects being repatriated back to North America,” said Geoff Evans, president of Alphora. “We have had several projects transferred back into our facility that were earlier done in Asia.” He added that this trend will only accelerate if the bill becomes law.

Despite the push for a local supply chain, meeting the global demand for pharmaceutical chemicals without companies like WuXi will be difficult, said Ken Drew, a vice president at the Italian CDMO Flamma.

Drug companies have historically used Chinese companies for their production needs to save money. “While the difference in prices between Chinese and European or American CDMOs is not a lot these days, drugmaking is still a very global industry, and China has the affordable manpower to get the job done,” Drew said.



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