Big Pharma faces a cliff edge with the ongoing crisis in Ukraine

Russia’s invasion of Ukraine has triggered catastrophic human suffering and consequently the most widespread economic boycott of a belligerent nation in modern history. The fallout will have major consequences for the biotech and pharmaceutical industries, and the medical innovations they drive forward. 

Prior to the war, Ukraine occupied a sizable footprint in the research services sector which supports both drug development start-ups and ‘Big Pharma’. 

According to the US Food and Drug Administration’s clinical trial database, Ukraine contributed to the testing of hundreds of clinical trials each year. More importantly, Ukraine has been a significant supplier of medicinal chemistry services, which include the synthesis and optimisation of biologically active drug compounds, off-the-shelf reagents containing drug building blocks and chemical libraries (of drug-like compounds that serve as starting points in the discovery of new medicines). 

In our company, the Ukrainian research services we utilise relate to the synthesis of novel medicinal compounds that we design and utilisation of their chemical building blocks to generate new drug molecules.  

Ukraine offers an economical but competent cadre of scientists that have access to sophisticated infrastructure, something that is not always present in developing nations when outsourcing comes to mind. 

This has in turn spurred a sub-industry of agile, semi-virtual drug discovery and drug development companies over the last two decades in the West that have relied heavily on Ukrainian chemists to provide drug libraries and large scale, complex synthesis capabilities.

Since the beginning of the hostilities, we have seen over 80 per cent of commercially available drug-like compounds disappear from global vendor catalogues, most of which originate in Ukraine. Russia also has a reasonable presence in this area and the trade sanctions have also eliminated suppliers of Russian medicinal chemistry servicers. 

Moreover, the war has also taken down billions of other theoretically synthesizable drug-like compounds that are used in computer aided drug design campaigns to generate the first crude medicinal starting points. While the public is mostly aware of drugs once they reach clinical trials, the preclinical discovery and design phase requires years of extensive interdisciplinary collaborations and breakthroughs at this stage determine later success in clinical trials. In some ways, preclinical development is more important since it can limit failure in clinical trials. 

The effect of this war on the innovation output of drug discovery teams across the world may not be visible months or years down the line as it takes years for preclinical stage programs to reach clinical development and pass regulatory approvals 

Alternative options for the Biotech and Pharma industry rooted in the West are to rely more heavily on Indian and Chinese contract research organisations. However, they have limited capacity and service offerings, leading to time-delays and price hikes adding to the time and cost of drug development. It also takes time to build project-specific know-how, momentum and rhythm when working with external R&D teams. 

In the long term, the war will erode decades worth of sector-specific resources including expensive R&D infrastructure, databases, displacing high-tech teams that enabled Ukraine to offer rapid discovery output that enabled therapeutic advances the world over. Restoring this business capability and recovering its standing will be both costly and lengthy for Ukraine. 

In a world seeing the first major geopolitical realignment after the Cold War, where trade and business are exceedingly used as weapons, the uneasy balance between US-China relations adds another layer of uncertainty in addition to the Ukraine-Russia crisis. 

In February of this year, the US Commerce dept added stricter controls for over 30 Chinese companies due to compliance concerns – including Wuxi Biologics, a major supplier of research services to Biotech and Pharma companies worldwide including ingredients for the AstraZeneca vaccine. China hit back stating the restrictions were disrupting cooperation and global economic recovery. 

Laying these events on top of the ongoing Covid-19 pandemic, which has itself exposed supply chain cracks worldwide, has challenged drug discovery and development teams all over the globe. 

Globalisation has made it possible to outsource certain research services enabling cost-effective R&D solutions, obviating the need to invest in in-house Medicinal Chemistry synthesis infrastructure. The recent world events expose the vulnerabilities associated with this model. 

However, the industry is perhaps better positioned to weather this storm than previously. The last two years have seen a record volume of private investment in the Biotech and life sciences sectors. 

These events underscore an opportunity to cultivate more local talent and establish an innovative research services sector closer to home. This also provides prospects for innovations in methodology and automation to lower the cost barrier for Western teams to service some of the needs associated with Medicinal Chemistry synthesis for instance. 

While the industry is known for innovative technical solutions, we now see companies adapt and innovate their R&D and business models. Concurrently. we can expect investors to support more home-grown solutions that are not only competitive but also resilient to world events.

• Ali Munawar, Ph.D. is CEO of Pledge Therapeutics, a US and EU based drug discovery engine that is developing lifesaving drugs.

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