Astra to Split Drug Production Along China-US Fault Lines
(Bloomberg) -- AstraZeneca Plc is fleshing out plans for a manufacturing network that will independently supply drugs to major markets as the US pushes to reduce the pharma industry’s reliance on China.
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The UK drugmaker will make the same medicine at different facilities to serve various markets separately, Chief Executive Officer Pascal Soriot said in an interview from the sidelines of the Bo’ao Forum for Asia.
“We’re organizing ourselves so we can supply the US and Europe independently,” he said Wednesday from the tropical island Hainan in southern China, where the event is held. “We also are building a presence here in China so we can actually supply Chinese patients independently.”
The stakes are high as tension between the US and China — Astra’s two biggest markets — roil the global supply chain for everything from chips to electric vehicles to prescription medicines.
Astra’s Segments
Astra shares were little changed in early London trading, rising less than 1%. The stock has dropped 6.5% over the past 12 months.
The individualized approach will take place regardless of where a drug originated, according to Soriot.
“Those will be very segmented activities,” he said. “The issues of invention, development and manufacturing are disconnected.”
US lawmakers are considering banning companies from getting federal contracts if they work with Chinese biotechs “of concern,” on alleged national security grounds.
Read more: Astra, Pfizer Boost China Bets Despite US Drive to Decouple
The proposed US bill names WuXi AppTec Co., one of the biggest research, development and manufacturing companies in the world, making it a major casualty in the effort to cut Chinese companies out of drug supply chains. The Biosecure Act is expected to impact the broader pharmaceutical industry as well, as WuXi provides essential services for most of the world’s top drugmakers.
Changing Landscape
Many are now looking for alternatives to handle the changing landscape.
Astra recently announced a $475 million new production facility in the eastern city of Wuxi, saying it will make innovative medicines for China and other markets. Construction is also underway for a $700 million manufacturing site in the coastal city Qingdao for respiratory medicines.
Soriot also announced a partnership with a subsidiary of Chinese vaccine maker Shenzhen Kangtai Biological Products Co. in Beijing on Tuesday. The initiative is targeted at developing and manufacturing vaccines for the local population, he said.
Separating manufacturing along geopolitical fault lines hasn’t stopped Astra from scouting for promising drug candidates in China. The company inked seven deals worth as much as $6 billion with local companies last year to jointly develop drug candidates for diseases from obesity to cancer.
The acquisition of Shanghai-based Gracell Biotechnologies Inc will play an important role in how the company develops new cell therapies in the future, Soriot said. At the same time, Astra also invested in a manufacturing site in Maryland to make cell therapies.
--With assistance from Lulu Shen.
(Updates with Astra shares in fifth parahraph)
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