Russia -Ukraine War: Possible Endgame & Opportunities for Life Sciences Players

Health systems are responsible for paying the price for the Russia-Ukraine conflicts, which are destabilizing healthcare supply chains and driving up medical supply prices. The industry's only option is to reconsider how to reduce these risks in the future through supply chain-strengthening strategies.  Several ways the conflict between Russia and Ukraine affected healthcare, such as delays in clinical trials and interruptions to the medical supply chain, and vulnerable Health IT. 

Impact of Conflict on the Pharma Industry

Russia’s invasion of Ukraine has increasingly challenged life sciences companies to navigate into complex geopolitical crisis

Delay in Clinical Trials 

Millions of people are affected by Russia's invasion of Ukraine and countries around the world as pharma companies had delays in their clinical studies in Russia and Ukraine

• Karuna Therapeutics stopped its second phase 3 study in schizophrenia, dubbed EMERGENT-3, which were uncertain because 10 of the 19 trial sites are in Ukraine
• The war affected the 11 of 195 study locations for Merck's phase 3 trial of Keytruda in combination with Lenvima in patients with endometrial carcinoma
• 6 study locations of Regeneron in Ukraine were affected during the testing of Libtayo in combination with doublet chemotherapy in a phase 3 study in patients with non-small cell lung cancer
• GlaxoSmithKline’s 27 Ukrainian sites, out of 235 were affected in its phase 3 study of otilimab in patients with rheumatoid arthritis
• AstraZeneca clinical trials were delayed as they established a special team that ensured continued supply of their medicines to patients which were affected in their 20 active trials in Ukraine
• Sanofi, which had at least two studies underway in Ukraine for the Regeneron-partnered med Dupixent was affected as all of their employees based in Ukraine were asked to stay home during the war

Current Scenario of Clinical Trials 

28 foreign-sponsored, multinational studies affected by the Russia-Ukraine conflict

• Focusing on the clinical trials landscape, 28 foreign-sponsored, multi-country studies were publicly acknowledged by sponsors as being impacted by the war, of these, almost half have sites in both Ukraine and Russia
• Infectious disease, central nervous system, and oncology trials with Ukraine and/or Russia sites were most interrupted
• Currently there are 22 foreign-sponsored, multi-country clinical trials with a site in Ukraine that are disrupted or potentially disrupted by the war
• Out of these studies, 19 are still listed as ongoing. For context, there are 678 ongoing foreign-sponsored, multi-country clinical trials listed with at least one site in Ukraine
• Of the 22 studies, 12 are in Phase III, eight are in Phase II, and two are in Phase II/III, six of these studies are in infectious disease, and there are three trials each in the central nervous system, oncology, and respiratory disease.

Top 10 companies with maximum ongoing trials in Ukraine

Disruption in Supply Chain

• Much of the world’s supplies of raw materials to make hospital equipment come from Russia and Ukraine’s crude oil, natural gas, and certain metals 
• As healthcare organizations depend on common raw materials, there is a rise in prices for medical supplies
• Russia produces 12% of the world’s oil and 17% of its natural gas supply, disruptions to production are anticipated, which may directly strike the global supply chain and pricing of plastics

Vulnerable Health IT

• The defense against cyber attacks is important for the Electronic Health Record (EHR) vendors and government Health IT infrastructure since small organizations are particularly vulnerable to attack
• The attacks include distributed denial-of-service (DDoS), malware, ransomware, and website defacements containing vital health information
• Consequently, these attacks had affected healthcare systems and suppliers

Delayed Drug Production

• Ports were seeing a large amount of congestion, meaning medical supplies were trapped and there was an increase in container backlogs
• As there was an anticipation of delays, worldwide factories had halted or delayed production, Drugs such as biseprolol, nystatin, acyclovir, and ambrobene are almost impossible to obtain due to delayed production
• With other European countries dependent on medical supply imports, the conflicts reveal long-term structural issues

Response of Big Pharma Players

As Ukraine holds the line against the Russian invasion, pharma majors are making a renewed push to adjust operations in the region and supply the besieged country with critical meds and tools

• Eli Lilly suspended the exportation of “non-essential medicines” to Russia, leaving its local operations in the country focused solely on cancer and diabetes. Lilly donated the profits from Russia to organizations dedicated to humanitarian relief and cut all investments, promotional activities, and new clinical trials in Russia.
   
• Novo Nordisk suspended further marketing and clinical investments in Russia and focused on their efforts to help local employees ensure that more than 650,000 patients continue their treatment with their essential medication. The company paused starting new clinical trials and halted active enrollment of new patients in Russia, where there are currently more than 3,000 patients enrolled in studies.
   
• Bayer stopped all spending in Russia and Belarus not related to essential healthcare products. It also suspended advertising, promotional activities, investment projects, and new-business development but continues to deliver essential products including contraceptives, hemophilia treatments, cancer drugs, and stroke prevention pills.
   
• Pfizer now doesn’t own or operate any manufacturing sites in Russia and ceased all planned investments with local suppliers intended to build manufacturing capacity in the country. However, Pfizer is maintaining the humanitarian supply of medicines to Russians and donating all proceeds to providing direct humanitarian support to the people of Ukraine.

Future Outlook for Pharma Companies

Pharma companies must anticipate, and prepare for, a possible rise in supply chain disruptions and price hikes

• Gaining Full Visibility into the Supply Chain

​One definite way for pharma companies to mitigate the risk of further supply chain disruptions is to transition to a digital supply chain, given their poor data visibility and disconnected processes

• Cost Management

With a unified supply chain platform, pharma organizations can mitigate some of the impacts of Active Pharmaceutical Ingredient (API) and raw material costs as well as price and availability through demand sensing capabilities, live market indices, and forecasts to spot and leverage prices and cost-reduction opportunities

• Effective Risk Mitigation and Building Resiliency

​This can be achieved by gaining access to key production and supply chain data in a timely and precise manner and detailed visibility across supply relationships and across the product life cycle from order/forecast to final product delivery

​The Indirect Impact of Sanctions levied by Foreign Countries

• Imported medical products, including equipment, as well as consumables from distributors have increased in price by 20-70% since the start of a ‘special military operation’ in Ukraine and the introduction of economic sanctions against Russia
• Sanctions levied by Britain, Europe, and Canada, against Russia, do not apply to medicine and medical equipment, and the industry has a responsibility under international humanitarian law to continue supplying these products
• But sanctions that had cut off Russian banks from the international financial system, as well as decisions by major shipping companies to suspend service to the country, hindered the delivery of the raw materials for the drug production
• The production of many drugs prescribed in Russia have foreign components or production, and this is preventing them from being supplied to Russian pharmacies, also the cost of blood pressure monitors, thermometers, and inhalers had increased by 20%
• European Union supplied Russia with USD 7.23 billion of pharmaceutical products in 2020, about 8.4% of the region's total exports to Russia, but these numbers were greatly hampered due to the conflict

Impact of Conflict on the Global Pharma Industry

India 

• India’s drug exports to Russia amount to 2.4% of total pharmaceutical exports, while exports to Ukraine have a share of 0.74%
• The ongoing Russia-Ukraine war has hit the India’s pharmaceutical industry, with trade at least declining by 50% as many manufacturers who export drugs to Russia are claiming that they are yet to receive their payments

Europe 

• European companies such as Roche and Novartis earned more than USD 732 million from Russian sales from March to June 2022
• Exports of medicines to Ukraine have declined in the first half of 2022, over 40% fewer medicines were exported to the war zone compared with the same period in 2021
• Total export sales to Ukraine, at around USD 93 million, were also 20% lowered in 2022

US

• In 2021, pharmaceuticals and medical equipment represented about 8% of all US goods exported to Russia
• It sent USD 355 million worth of medicines and USD 157 million worth of medical equipment to Russia in 2021
• 48 tons of medical aid is provided to Ukraine since the start of the conflict