Covid-19 hastens French push to bring home medicines manufacture

Shortly after France emerged from its coronavirus lockdown in June, President Emmanuel Macron donned a surgical gown and mask to visit a Sanofi research centre near Lyon.

The trip was not only intended to laud a French pharmaceuticals champion, but to unveil what the president cast as a much-needed initiative to bring production of critical medicines back to Europe.

First would be painkiller paracetamol, with France aiming to reshore production within three years, said Mr Macron. Although the drug did not run out at the peak of the Covid-19 crisis, sales in France and elsewhere were rationed, while across Europe there were fears supplies of intensive care drugs would dry up. 

In France, critics said the pandemic exposed the weakness of its healthcare system after masks, tests and drugs ran short, leaving it with far more deaths than neighbouring Germany.

“Everyone saw during this crisis that certain drugs were no longer manufactured in France or even in Europe,” Mr Macron said in a speech at Sanofi. “We must draw lessons from that . . . and the state is ready to invest in such reshoring projects.”

Even before Covid-19, France struggled with increasing shortages of medicines. There were 44 incidents reported to regulators in 2008, rising sharply to 868 in 2018, according to a government report. Experts blame multiple causes, including fragmented supply chains and pressure to keep costs low. 

Manufacturing of the active pharmaceutical ingredients (APIs) for many drugs has shifted to lower cost Asian countries in the past 20 years. A paper prepared for the EU’s pharmaceutical committee in March suggested as much as 90 per cent of the APIs for so-called small molecule drugs (traditional not biotech drugs) were sourced from India and China, although that was based on 2008 data. Industry groups put the current figure at 50 to 80 per cent. 

In June, Mr Macron was one of six EU leaders who wrote to Ursula von der Leyen, the European Commission president, to ask Brussels to give incentives to develop production capacity in the bloc for critical ingredients and medicines. 

Commission officials have stepped up pre-pandemic work on drug supply security and have been in discussions with pharmaceutical companies on how supply chains could be strengthened with Brussels’ help. Stella Kyriakides, EU health commissioner, told bloc health ministers earlier this month that there was an “urgent need to tackle structural weaknesses in our supply chains of medicinal products”.

Chart showing number of drug shortages per year in France

France chose paracetamol as the emblem for the reshoring push because it is the country’s top-selling medicine and, with only a few companies in the country involved in its manufacture, it seemed a relatively straightforward problem to solve, a government official said.

The main hurdle will be convincing companies to manufacture the drug’s API in France. Sanofi and UPSA, which sell about 90 per cent of the paracetamol in the country, source their API from the US, China and India. The last European factory manufacturing it was in Roussillon, southern France, but it closed in 2008.

However, some industry experts question the wisdom of reshoring and say politicians are reaching in haste for faulty solutions to complicated problems. 

Hichem Jouaber, managing director and pharmaceutical industry consultant at AlixPartners, said it would be possible to reshore paracetamol production with adequate government subsidies but questioned the point of doing so given that it was a commodity that could be produced more cheaply in Asia. “This seems to me more like a political response to the Covid-19 crisis. I would not be surprised if the project gets discreetly buried,” he said.

Other industry executives say reshoring would make little economic sense unless there was significant government support to cushion the outlay required to build factories in Europe.

The three companies Paris has asked to work on paracetamol — Sanofi, UPSA and Seqens, a French chemical company that makes APIs — have not committed publicly to the project. However, they held talks with the government before Mr Macron’s announcement.

The idea under discussion was that Seqens, which makes the API for paracetamol at its China factory, would build a production line in France and Sanofi and UPSA would commit to buy certain volumes of its output. 

The government suggested it was open to raising the price health services paid for paracetamol to improve the economics and could provide loans or other financial support to Seqens, according to a government adviser working on the plan.

Much will depend on whether Seqens decides the project is feasible. “We are a private company so we can’t go ahead if there is no business case,” said Pierre Luzeau, chief executive. “Without the support of states, such reshoring will not happen.”

Sanofi’s vaccine unit near Lyon. The French government also wants to domestically produce 30 generic drugs used to fight Covid-19 Sanofi’s vaccine unit near Lyon. The French government also wants to domestically produce 30 generic drugs used to fight Covid-19 © Laurent Cipriani/POOL/AFP/Getty

François Duplaix, chief executive of UPSA, commended the government’s initiative. UPSA sources 15 per cent of the API for its paracetamol from China and the rest from the US, he said, adding: “It would be good to have a more diverse supply base.”

Sanofi declined to comment specifically, saying it was too early in the process.

As well as paracetamol, France in June issued a call for companies to indicate interest in bringing back production of 30 generic drugs used to fight Covid-19, including medicines used for patients on ventilators, painkillers such as fentanyl and morphine and antibiotics.

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Last year, the government asked Jacques Biot, former head of France’s Ecole Polytechnique engineering school, to examine the issue of drug shortages and recommend solutions.

In May, Mr Biot presented five ideas, including that the French medical safety agency should create an IT system to analyse the supply chains behind medicines so as to be able to predict and prevent shortages — an approach he likened to an “air traffic control but for medicines”.

The government should take a more systematic approach, he added. “It should not be up to the state to decree that companies bring back manufacturing of this or that drug. If it does its job correctly,” he said, “it should identify the drugs that are most at risk of shortages and create a coherent long-term procurement strategy to counteract that.”