During COVID-19, the shortage of basic drugs in key EU countries led to growing calls to push local drug manufacturing to ensure a smooth supply and to minimize shortages. Following the pandemic, the war in Ukraine, and the Russian gas supply issue, several countries have called for bringing back pharma production (including finished dosages and active pharmaceutical ingredients) to locations within national borders to mitigate costs, supply issues, and concerns regarding bilateral relations. This is also known as onshoring or reshoring.
The Critical Medicine’s Act
A group of 19 EU countries, including Italy, Spain, France, and Germany — representing 90% of the EU population — recently proposed the creation of a “Critical Medicines Act” to encourage the production of critical medicines, pharmaceutical ingredients and basic chemical inputs within Europe, reducing dependence on countries outside of the EU.
Their proposal suggests the creation of a voluntary EU solidarity mechanism to exchange stocks of medicines during shortages, and a European list of critical medicines for special monitoring.
The proposal does not mention any specific funding details. However, it’s possible that future funding for the “Critical Medicines Act” could come from existing EU budgets or from new funding streams. Additionally, the EU may encourage private investment in pharmaceutical manufacturing by offering incentives such as tax breaks or subsidies.
France as a use case
If we use France as an example, we can already see what the authorities have in mind. While there is no set, solid plan yet, the country is not only open and willing to “reshore” but also making solid steps to actualize this ambition.
President Macron recently made some public statements together with the Ministry of Health about 7 sites they will support for the relocation of both finished dosage and API industries in France. They issued two lists – first a list of approximately 40 critical products, and then a further list of around 250 products – that are important to the French health system.
The government plans to offer subsidies and special grants to companies that are able and willing to reshore the manufacturing of these products to French soil. Teams from within the government that have been set up specifically to address this issue have been having conversations with many companies, including Teva, about if and how to partner together to support the state and its patients, but in a way that aligns with company strategy.
The manufacturing of APIs
While the debate primarily deals with the location of the inventory of finished dosages and where they are manufactured, hot on the heels of this is also the debate about the manufacturing of active pharmaceutical ingredients.
In the case of another pandemic arising, and the world coming to another standstill, it would be little use if the finished drug was being manufactured in say, France, if there would be problems accessing and getting hold of the API. However, if we work on reshoring also the active ingredient, the supply will automatically become a lot safer and more secure.
The case of Teva api & Europe
In the case of Teva api, 50% of our APIs are already being manufactured in our sites across Europe. We’ve established state of the art manufacturing sites and centers of excellence in producing APIs across the continent, including Croatia, Hungary, Italy, and the Czech Republic.
We are consistent with both our manufacturing and operations, and our resilience during Covid-19 proved this. Our global network enabled us to be able to move goods across Europe despite borders being congested and ports being shut down. Together with our Governmental Affairs department and our forwarders, we implemented the European guidelines for transportation of medicines and APIs.
We also monitored daily, and even sometimes hourly, the waiting time of our trucks at different borders or changing to a longer route to avoid border congestion. We did our utmost to ensure business continuity.
Teva api’s commitment to ESG – a must for Europe
Having our manufacturing in Europe also has the added positive impact of having to be compliant with European laws on the environment.
Teva recently published the 2022 ESG Progress report, detailing many of the company’s environmental, social and governance (ESG) achievements over the past year. Of course, Teva api’s efforts in these areas significantly contributed to these achievements.
For example, targets include reducing scope 1 and 2 greenhouse gas (GHG) emissions by 46% by 2030 (vs. 2019) and reducing absolute scope 3 GHG emissions by 25% by 2030 (vs. 2020). To achieve these targets, Teva established a decarbonization plan, which is overseen by the Sustainability Taskforce and includes efforts related to energy and process efficiencies, renewable electricity generation and sourcing and network optimization.
In 2023, Teva Global Operations sites plan to develop actionable roadmaps for implementation, with a detailed cost and feasibility analysis. For our scope 3 target, Teva is engaging suppliers to reduce GHG emissions through various initiatives, including supporting them in procuring renewable electricity.
While global interdependence will never disappear, at Teva api we’re safe in the knowledge that our stronghold is in Europe and we, and our customers, can rely on the safety and security this provides us.