With the COVID-19 pandemic perhaps entering its final phase as the first wave of vaccines approaches the market, one question left unanswered is the future of "onshoring" drug manufacturing—an initiative that reached fever pitch in 2019 as nationwide lockdowns and geopolitical tension cast a spotlight on the global supply chain.
In 2019, congressional leaders across the aisle picked up steam on a suite of bills aimed at incentivizing and driving manufacturing redundancy in the U.S. to combat China and India's dominance in generic medicines and active pharmaceutical ingredients (APIs).
Those bills have ultimately come to nothing, but, with the help of the Trump administration and its Warp Speed initiative, the U.S. government has dumped billions of dollars into companies—some of them little known or brand-new—dedicated to producing medicines stateside during this pandemic and in the future.
Those investments jibed with the Trump team's "America First" economic policy and effort to repatriate manufacturing on U.S. soil, but a Joe Biden White House could be a return to normal, even with the pandemic continuing to rage.
Regardless of the occupant of the Oval Office, the drug industry, particularly manufacturers, are touting the need for redundant supply chains, which could mean even more investment in the U.S.
In October, Fujifilm Diosynth Biotechnologies CEO Martin Meeson predicted "a slightly more local focus" on drug manufacturing as the industry learns lessons from COVID-19 and prepares for the next pandemic. Fujifilm should know: The South Korean drugmaker operates its own global distribution network and is working with two players in the race for a coronavirus vaccine.
“I think there might be a slightly more local focus as we move forward, maybe just a little bit of a lengthening of some those supply chains, but I think that the whole of the sector has worked really well to make sure that those medicines are continuing to flow to the people and the patients that need them,” Meeson told CNBC's "Squawk Box." "It's a very collaborative industry, and we've worked really, really hard to make sure there's no delay."
During the pandemic, the Trump administration has made a point of driving investment in manufacturing, particularly for companies working on hospital generics and vaccines. But those investments haven't always gone over well with market watchers.
In May, the administration floated a four-year, $354 million contract with a fledgling company, Phlow Corporation, to build a generic medicine and API plant in Richmond, Virginia, and supply COVID-19 treatments produced there. Little known before the administration's interest, Phlow landed a deal that can be expanded up to 10 years and to a total of $812 million.
The government's investment arm, the U.S. International Development Finance Corporation (DFC), then announced a $765 million loan in May to camera maker Kodak to fuel its entry into generic pharmaceuticals. A series of questionable stock moves around that loan spurred an investigation by House Democrats and the Securities and Exchange Commission, but Kodak cleared itself of those allegations in September, and a government investigation did the same earlier this month.
The DFC halted the loan after the investigations were announced and has not indicated whether it is still pursuing the deal.
Meanwhile, the government has also put big down payments on more established pharmaceutical brands.
In June, Maryland's Emergent BioSolutions won a $628 million deal with the Department of Health and Human Services' Biomedical Advanced Research and Development Authority (BARDA) to scale production of targeted COVID-19 vaccine candidates to make "tens to hundreds of millions" of doses available through 2021.
As part of the agreement, the government agreed to dole out $542.7 million to reserve bulk manufacturing capacity at Emergent's Baltimore Bayview facility, which was constructed as part of a BARDA pandemic preparedness contract signed in 2012. The remaining $85.5 million will be spent expanding fill/finish capacity at two Emergent plants in Baltimore's Camden area and in Rockville, Maryland.
Emergent, meanwhile, signed on as a contract manufacturing partner with AstraZeneca and others to help create bulk drug substance for their COVID-19 vaccines.
Even small players have joined the "onshoring" rush, plopping down big investments to meet the demand for American-made pharmaceuticals.
In June, Michigan-based GRAM completed a $60 million expansion to install a "large-scale" fill-finish injectables facility that it will market primarily to U.S drugmakers.
The new 60,000-square-foot facility in downtown Grand Rapids will triple GRAM's manufacturing footprint to more than 100,000 square feet of production space and help level up the company's sterile injectables offerings, according to a release.
Paratek, maker of antibiotic Nuzyra, unveiled in May its three-year plan to build a U.S.-based supply chain to mirror its existing infrastructure in Europe. BARDA plugged $285 million into helping build the redundant supply chain, which will direct 10,000 Nuzyra treatment courses to the Strategic National Stockpile.
Meanwhile, generics makers like South Carolina's Nephron also joined the wave, pledging $215.8 million to expand its vaccine fill-finish capacity and warehousing space as part of an expansion effort in the state. The drugmaker will aim to employ 380 new workers at the Saxe-Gotha Industrial Park site in Lexington County by 2024, Nephron said in a release.
Editor's note: This story was updated to clarify that Emergent BioSolutions is not working with Moderna on its COVID-19 vaccine.