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The DNA of A Science Startup: Betting on the Right Horse

science

The DNA of A Science Startup: Betting on the Right Horse

There is no doubt we are living through atypical times. A confluence of factors have introduced, in an unprecedented way, the one thing that businesses and investors abhor: uncertainty. Now more than ever, the investor community needs to evaluate, which startups and newly launched businesses are likely to weather the storm, particularly businesses commercializing a science-based idea.

We’ve identified three kinds of science-based startups that are likely to weather the storm, and three that may succumb, beginning with three that will succeed:

1. Startups that add value (beware of “complete reinvention”): Many startups, given their energy and momentum, may seek to “completely reinvent” the ecosystem. These startups underestimate the inertia of not only consumers but also established players, supply chains and practices within the industry. One good example is the diagnostics sector; a startup that aims to improve efficiency for large players (E.g. such as Quest Diagnostics) by offering, say, a new kit that greatly reduces testing expenses, is more likely to thrive, even if it does not have unicorn potential. Conversely, a startup that offers new technology that will require a large player to completely replace or revamp an existing pipeline will not be easily adopted.

2. Startups in evergreen sectors within biotech/pharma: Science-based startups are almost immediately equated with biotech. This is understandable, as the biotech sector attracts the most attention and most capital. While all of medicine is always up for improvement, within biotech/pharma, certain disease areas such as Oncology and Neurobiology remain evergreen. This is not to say that a strategy similar to Gilead’s in developing some antivirals (best-in-class) will not succeed, it is just that such strategies need to be executed very carefully. In contrast, the drastic unmet need in some sectors means a less than perfect drug stands a good chance of gaining market share. In fact, over the next 10-15 years, Neurobiology appears poised to experience leaps similar to Oncology when biologics took the stage by storm. As the population ages, neurodegenerative diseases are likely to increase, creating potential for a large market. The same demographic trend also hints at one as yet untapped area, that of aging biology. Although there are big players, for instance, Calico, the path forward remains unclear given the complicated science.

3.  Startups that address fundamental needs: Startups that address fundamental needs and deficiencies in any sector are most likely to survive and thrive. This is not by any means a new thought or message, but one that needs to be highlighted and should remain a guiding principle. While they may not be apparent, deficiencies exist in all sectors, be they automation, manufacturing, or even something as distinct as textiles and apparel. One straightforward example here is biotech/pharma: economic downturn or not, new medicines are always needed. Another example is food-tech, nobody is going to stop eating; in fact, disruption of supply chains is expected to create new opportunities. It is not surprising that a number of startups are developing plant-based substitutes for animal products, and demand for these is expected to remain strong. From a high-level perspective, startups emerging from materials science, nanotechnology, and of course computer science, especially AI, are particularly attractive, as they appear poised to provide solutions to long-standing environmental problems. On the other hand, areas such as biofuels, which attracted considerable attention a decade ago, no longer appear viable given the shift toward electric and hybrid vehicles.

Conversely, there are three types of ventures that may not weather the storm:

1. Startups that pivot without having a core strategy: A pivot by itself is not bad, and many businesses do indeed change directions to take advantage of an opportunity or rebuild their revenue streams. But there is an important distinction: businesses that lack a core strategy will rarely survive even with a pivot, especially in a fickle investment environment. Many companies and even well-funded startups may venture into new areas such as infectious diseases, but this does not change their original business model. A COVID-specific solution will melt away the minute a good drug/vaccine is announced. The diagnostics sector here provides good case studies. A newly developed scientific method or protocol may be able to detect the SARS-Cov2 virus within minutes or seconds, which is a great achievement, but will this solution supplant existing medical pipelines and setups? If a startup’s pivot is purely opportunistic, rather than being part of a larger strategy, it may indicate inability to survive over the long term.

2. Startups that address trends: This overlaps with the previous point, but it is important in its own right. Ideas are dime-a-dozen, and many startups are born during times of distress and social upheaval when deficiencies in our societies and industry come to fore. It is important to distinguish if the startup is addressing a need-of-the-hour or a trend that has the potential to stick.  With regard to science-based startups, there is less of a trend following, although it is quite common for startups to mushroom every time new technology is developed. One example of this is AI, which represents a trend that is cyclically in vogue. Established computer scientists can attest to multiple periods when AI was supposed to solve all of the world’s problems, only for scientists and entrepreneurs to realize that the real world was too complex and you could never really leave decision making to machines for many crucial tasks.

3. Startups that fall prey to shifting regulation and circumstance. This is unfortunately beyond a startup team’s control, but investors should be careful when funding startups in such sectors. Two interesting examples here are businesses that provided services to the oil and natural gas industry, and the development of biotechs around CRISPR-Cas9 genome editing technology. In case of oil, it would have been very difficult to predict that petrochemicals and related sectors would plunge overnight, wiping billions of dollars’ worth of value from some of the biggest companies in the world. A strange confluence of geopolitical contests, coupled with uncertainty due to a pandemic and shifting consumer habits, probably a once-in-a-lifetime event, may spell doom for many players. Any startups connected to this sector may likely suffer significantly in the coming months, and their long-term survival is uncertain. In the case of CRISPR, the potential for rogue actors to misuse the technology means that many governments in the world will proceed extremely cautiously, and indeed, initial miss-steps may lead to stringent regulation. While there is plenty of potential, CRISPR-based startups should be evaluated carefully.

This brings us to the big question: where are the real returns? Can we break out of COVID play? Real returns are where startups and ideas address fundamental questions and needs that are apparent but overlooked. Overall, even though investor interest these turbulent times still appears to be strong, with many new startups being funded, the next few quarters will be the ones to watch, as the downturn reduces both investor appetite and revenue. Investors must continue to be discerning with their dollars, especially when it comes to science-based startups.

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Dr. Shailesh Date is the founder and CEO of LRC Systems, which uniquely combines advances in natural and quantitative sciences with cutting-edge technology to help solve fundamental health, economic and social problems for public and private organizations. LRC serves as an ideas hub for high-level transdisciplinary research that is bigger, faster and more impactful, to propel innovations that can change the world.  Dr. Date obtained his Ph.D. in Molecular Biology (computational focus) and completed his postdoctoral research at the University of Pennsylvania’s School of Medicine, focusing on apicomplexan parasites, including Plasmodium falciparum, the causal agent of malaria. His current research covers topics in both public health and complexity science). He also serves as Associate Adjunct Professor in the Dept. of Epidemiology & Biostatistics at UCSF and Adjunct Professor of Biology at SF State.  

COUNTERFEIT

TRADE IN COUNTERFEIT MEDICAL AND PROTECTIVE HEALTH GOODS SPIKING DURING PANDEMIC

Making matters worse

As the coronavirus pandemic continues to alter lives around the world, predators have seen opportunities to exploit the global health crisis by marketing and shipping counterfeit medical equipment, devices, and pharmaceuticals. In the few months since the beginning of the pandemic, illicit trade in counterfeit medical goods is both widespread and global in nature.

Authorities in the UAE shut down two factories, finding 40,000 fake sanitizers that were actually body sprays. In Cambodia, authorities seized three tons of fake sanitizer and nearly 17,000 gallons of fake alcohol. Australia’s Border Force intercepted shipments of counterfeit and otherwise faulty personal protective equipment.

Playing whack-a-mole with counterfeit goods

EUROPOL has cautioned that fake blood-screening tests, sanitizers, and pharmaceutical products are increasing in volume in the EU as criminals take advantage of shortages of genuine medical products. EUROPOL is monitoring the trade in counterfeit and substandard products by “listening” to social media platforms, following conversations that mention fake products. The agency reports many new online platforms have cropped up in response to coronavirus to profit illegally from illicit trade in fake medical goods.

Enforcement activity has also ramped up in the United States in response to the significant increase in criminals attempting to capitalize on the pandemic. In mid-April, Immigration and Customs Enforcement (ICE) announced Operation Stolen Promise, a joint effort by experts in global trade, financial fraud and cyber investigations to combat smuggling of counterfeit safety equipment and test kits. The operation quickly shut down over 11,000 COVID-19 domain names for illicit websites. After seizing test kits at an Indianapolis express consignment facility, Customs and Border Protection (CBP) announced it is “targeting imports and exports — mainly in the international mail and express consignment cargo environments — that may contain counterfeit or illicit goods”.

More data, better enforcement?

In early May, ICE’s Homeland Security Investigations announced an unprecedented partnership with private sector companies including Amazon and Alibaba to combat price gougers and scammers online. But will the effort be sufficient? The pandemic has exposed how vulnerable consumers are and how difficult the challenges are for law enforcement, prompting new discussion of potential changes to data collection practices that will better safeguard consumers while aiding law enforcement. Policymakers are also considering ways to shift more burden to the private sector engaged in online sales and trade.

The Country of Origin Labeling (COOL) Online Act was introduced in the U.S. Senate on May 13. The sponsors noted that with the pandemic causing Americans to stay home, online commercial activity has increased, but that products sold online are not sufficiently transparent. The COOL Online Act would require that buyers of products sold online be told the country where the product was manufactured and where the seller is located.

CBP is currently conducting the 321 E-Commerce Data Pilot which requires private sector participants in the pilot program to transmit a significant amount of data to CBP regarding products shipped to the United States. What is yet unclear is whether companies in the supply chain and e-commerce ecosystems will be required to verify that the information submitted to CBP is accurate and whether they will be required to take the step of rejecting products or packages before facilitating shipment to the United States.

Such a requirement obligates private sector entities to take some measure to screen and prevent the export of non-compliant or suspect goods before they leave the country of export. Absent such an obligation, most, if not all, of the burden will remain on CBP – and its counterparts around the world – to protect public safety.

Countering the counterfeiters

Medical communities around the world are still grappling with a virus that has no known cure while law enforcement agencies work to combat the growing volume of counterfeit and substandard medical equipment and pharmaceutical goods marketed by criminals. Meanwhile, international crime watchdog INTERPOL has ominously issued a warning that it expects global markets to be flooded with fake pharmaceuticals as soon as a vaccine does become available.

The policy landscape continues to shift in various ways in the wake of this health crisis. Governments are actively engaging with the private sector regarding potential changes to the collection and sharing of data — and, how both should act on that data — to more effectively prevent counterfeit and illicit goods from even leaving the country of origin in the first place.

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Tim Trainer

Tim Trainer was an attorney-advisor at the U.S. Customs Service and U.S. Patent & Trademark Office. He is a past president of the International AntiCounterfeiting Coalition. Tim is now the principal at Global Intellectual Property Strategy Center, P.C., and Galaxy Systems, Inc.

This article originally appeared on TradeVistas.org. Republished with permission.
vaccine

FLU VACCINES RESULT FROM GLOBAL COLLABORATION: A COVID-19 VACCINE WILL TOO

A COVID-19 vaccine will follow flu footsteps

The global coronavirus outbreak has upended the lives of billions around the world. As anxiety levels remain high and the economy is in free-fall, it remains unclear how we will return to “normal life” in the short term.

In the long term, vaccine development is our best bet for a future free of COVID-19. Several companies around the world have already launched vaccine discovery with unprecedented speed. Some were able to begin small clinical trials as soon as mid-March, though expectations should be calibrated as the clinical trials process to test safety and immune response is a lengthy one.

The race to a coronavirus vaccine is emblematic of the balance between competition and collaboration, both routine and natural for the global health community. After all, experts around the world collaborate each year to develop, produce and deliver the influenza vaccine, also known as the flu vaccine, to billions of people. They have been working together this way for decades.

The first flu vaccine

According to an article published in the Journal of Preventive Medicine and Hygiene, the earliest confirmed flu pandemic on record first appeared in 1580 in Asia and Russia. It spread from there to Europe and northwest Africa.

Yet it wasn’t until the 1940s when the University of Michigan researchers developed the first inactivated flu vaccine using fertilized chicken eggs, still the primary method for making commercial vaccines today.

Phases in Drug Development TradeVistas

Tracking global strains for drug development

The flu virus changes annually, making it unpredictable. Developing an annual vaccine is the product of a globally-educated guess.

Members of the World Health Organization (WHO) established a surveillance system in 1952 to monitor the emergence of different strains of influenza that have the potential to become a pandemic. The Global Influenza Surveillance and Response System (GISRS) comprises an international network of national laboratories in more than 100 countries. These labs conduct surveillance and share information (including representative viruses) with five WHO centers located in the United States, UK, Australia, Japan and China.

Twice a year, in preparation for the flu season in the northern and southern hemispheres, the GISRS centers convene with representatives from public health bodies, leading research institutions and private sector experts to evaluate and recommend strains to include in the seasonal vaccine. Ultimately, each country decides for itself which viruses will be included in the flu vaccine they license that year.

A network for pandemic preparedness

The WHO also maintains a Pandemic Influenza Preparedness Framework, known as PIP, which includes member governments, vaccine manufacturers, and other stakeholders.

The PIP Framework governs the sharing of virus strains and PIP-related biological materials across organizations and borders, which is critical for determining which virus strains manufacturers should target in the seasonal vaccine. The Framework also coordinates access by the world’s most vulnerable populations to vaccines and treatments and manages agreements on intellectual property and licensing of the vaccine.

PIP’s industry partners receive access to the virus strains they need to make the vaccine. In exchange, they agree to provide benefits to the WHO and to developing countries in the form of vaccine donations, royalty-free licensing to manufacturers in low-income markets to make the vaccine, or a guarantee of a specified quantity of vaccine supply at lower prices, among other arrangements.

Flu Surveillance System

Vaccine production and distribution

Once the most dangerous virus strains for the upcoming seasonal flu have been selected, manufacturers turn to producing the vaccine. According to Sanofi Pasteur, the top global producer of the seasonal influenza shot, it takes between 6 and 36 months to manufacture, package and deliver high-quality vaccines to those who need them.

The viruses are first grown in a lab setting, after which the antigens are extracted from the viruses and purified to eliminate any raw material traces. Next, the virus goes through an in-activation process that retains the properties that will elicit an immune response in the body. Next, the active substances are combined into a single chemical component. These chemical components can be combined with others to form a single shot, like the MMR vaccine that includes compounds inoculating against measles, mumps and rubella. The vaccines are then filled into a vial or syringe, packaged and shipped all around the world.

Vaccine makers have to produce several different vaccines to meet the strain selection of each country. For example: CSL, another leading influenza vaccine maker, produced seven different influenza vaccines for the last flu season.

Moon shot against any flu virus

The laborious process of monitoring, surveilling, selecting, and then inoculating against specific flu virus strains, still leaves the possibility that an unexpected strain will emerge and result in a pandemic. Some seasonal flu vaccines are not an effective match against the strain that emerges. These lingering uncertainties have motivated the public health community to work towards making a universal flu vaccine – one that could provide long-lasting protection for multiple strains of influenza in one shot.

The potential for such a shot has captured the imagination of world leaders and influencers, including Bill Gates who committed millions in grants to this research. President Trump signed an Executive Order on September 19, 2019 that directs the U.S. Department of Health and Human Services to promote new vaccine manufacturing technologies and advance the development of vaccines that provide longer-lasting coverage against a broad range of flu viruses.

Researchers have seen some success. One example: early trials focused on proteins in the flu virus that remain stable and activate an immune response to stop and destroy the infection. While we are still years away from having access to such a vaccine, there is some momentum building behind this approach.

The here and now vaccine

We don’t know how soon we could have a vaccine against COVID-19. But we do know that COVID-19 vaccine development is benefiting from years of global collaboration on seasonal flu vaccine pandemic preparedness. This includes sharing biological resources, disseminating data and research, and coordinating manufacturing rights and distribution.

Is it a perfect system? No – but doctors, scientists, labs, drug companies and national health institutions have experience in what it takes to bring the world’s knowledge to bear in a well-coordinated framework, which could speed up the discovery of a COVID-19 vaccine.

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Ayelet Haran is a contributor to TradeVistas. She is a government affairs and policy executive in the life sciences industry. She holds a Master’s of Public Administration degree in International Economic Policy from Columbia University.

This article originally appeared on TradeVistas.org. Republished with permission.

supplies

FREE TRADE IN MEDICINES AND SUPPLIES IS THE HEALTHIEST APPROACH

What Does Trade Have to Do with the Pandemic?

pandemic is a type of epidemic, wherein an outbreak of a disease not only affects a high proportion of the population at the same time, but also spreads quickly over a wide geographic area.

As the novel coronavirus jumped continents, governments in countries yet unaffected or with low incidence rates moved to prevent “importing” the virus through individual travel. Simultaneously, governments acted to create diagnostic kits and treatments for those with the virus – all praise our frontline healthcare workers.

Unfortunately, what could worsen the situation is a policy practice that seems to be infectious. More than 20 governments are banning the export of needed supplies, a prescription for shortages and higher prices. What the crisis also lays bare is that key countries and many important healthcare products remain outside a WTO agreement that would otherwise enable duty-free trade in the medicines and supplies we need on a regular basis.

Pandemic Proportions

In the history of pandemics, there has been none more deadly than the infamous Bubonic Plague which took 200 million lives in the mid-14th century, wiping out half the population on the European Continent. The pathogen spread through infected fleas carried by rodents, frequent travelers on trading ships. The practice of quarantine began in the seaport of Venice, which required any ships arriving from infected ports to sit at anchor for 40 days — quaranta giorni — before landing. Two centuries later, Small Pox took 56 million lives. In the modern era, some 40 to 50 million succumbed to the Spanish Flu of 1918 and HIV/AIDS has claimed 25-35 million lives since 1981.

For perspective, and not to minimize its severe toll, the number of fatalities from novel coronavirus will likely exceed 10,000 by the time of this writing. COVID-19, as it is currently known, is a reminder that we live with the ongoing threat from many types of both known infectious diseases like cholera, Zika and Avian flu, as well as diseases yet unknown to us. Although we can more rapidly detect, contain and treat epidemics, diseases now travel at the speed of a person on board an international flight. Our cities are bigger and denser, further enabling rapid transmission.

Pandemic Prepping Includes Trade

Because we are interconnected, we share the health risks, but we can also problem-solve as a global community. Scientists in international labs share insights to identify viruses, swap guidance on how to conduct confirmatory tests, and quickly communicate best practices for containment.

Outside times of crisis, global trade in health-related products and services has laid the foundation for faster medical breakthroughs through international research and development projects, and by diversifying the capability to produce medical supplies, devices, diagnostics and pharmaceuticals.

Innovation thrives in the United States like nowhere else. Yet, no single country, not even the United States, can discover, produce and distribute diagnostics, vaccines and cures for everything that ails us — or invent every medical intervention that improves the productivity and quality of our lives.

One Quarter of medicines have tariffs

A Dose of Foresight

As the Uruguay Round of multilateral trade negotiations were drawing to a close in 1994, a group of countries representing (at the time) 90 percent of total pharmaceutical production came to an agreement. Each government would eliminate customs duties on pharmaceutical products and avoid trade-restrictive or trade-distorting measures that would otherwise frustrate the objective of duty-free trade in medicines.

The WTO’s Pharmaceutical Tariff Elimination Agreement, which entered into force on January 1, 1995, is known as a “zero-for-zero initiative” to eliminate duties reciprocally in a particular industrial sector. Signed onto over subsequent years by the United States, Europe’s 28 member states, Japan, Canada, Norway, Switzerland, Australia and handful of others, the agreement initially covered approximately 7,000 items that included formulated or dosed medicines, medicines traded in bulk, active pharmaceutical ingredients (APIs) and other chemical intermediaries in finished pharmaceuticals.

Signatories agreed to expand the list in 1996, 1998, 2006 and 2010 so it now covers more than 10,000 products. Tariffs were eliminated on a most-favored-nation basis, meaning it was extended to imports from all WTO members, not just parties to the agreement.

Maintenance Drugs

Though an important start, the agreement has not been updated in a decade. Trade in products covered by the WTO agreement has risen from $1.3 trillion in 2009 to $1.9 trillion in 2018. Yet, some 1,000 finished products and 700 ingredients are not covered under the agreement, leaving pharmaceutical trade subject to hundreds of millions in customs duties. With China and India increasing manufacturing over the last decade, the value of global trade included in duty-free treatment decreased from 90 percent in 1995 to 81 percent in 2009 to 78 percent in 2018.

It is challenging to chart trade statistics and tariffs on health-related products, particularly since many chemical ingredients have both medical and non-medical uses. Here we have attempted to reproduce tables developed by the WTO in 2010, but we do not include a large number of chemicals that have general use whose tariff lines were not enumerated in the WTO’s analysis.

Health Product Import Shares

In 2010, the European Union and the United States together accounted for almost half of all world imports of health-related products. Europe has become a much larger importer while U.S. imports have decreased slightly as a percentage of global imports. Imports by many big emerging markets including Brazil, Mexico, China, India and Turkey, have increased along with their purchasing power. These countries benefit from zero duties when importing from countries that signed on to the WTO Pharmaceutical Trade Agreement.

Health Product Export Shares

On the export side, Europe dramatically increased its share of global exports while the United States dropped across the board compared to 2010, particularly in medical products and supplies. China shows significant growth in exports of inputs specific to the pharmaceutical industry – including antibiotics, hormones and vitamins – as well as medical equipment including diagnostic reagents, gloves, syringes and medical devices. India also increased its exports of all types of pharmaceuticals, particularly ingredients, but did not drive up its share across all types of exported health-related products. China and India would benefit from zero duties without having to reciprocate for exports from countries that signed on to the WTO agreement.

That said, according to the trade data, China and India still only account for 5.4 percent of global exports in health-related products covered by the agreement. Therefore, simply expanding membership to include these countries is not sufficient to enlarge duty-free trade – the number of tariff lines covered by the agreement would also need to expand to capture a significant portion of traded healthcare products.

Emerging Market Pharm Trade

Tariffs as a Symptom

The final price of a pharmaceutical is determined by many factors that differ by country. Costs and markups occur along the distribution chain from port charges to warehousing, to local government taxes, distribution charges, and hospital or retailer markups. Tariffs may seem a relatively small component of the final price, but the effect is compounded as all of these “internal” costs accumulate and they are symptomatic of complex regulatory systems.

A 2017 study by the European Centre for International Political Economy determined that tariffs on final prices add an annual burden of up to $6.2 billion in China. In Brazil and India, tariffs on medicines may increase the final price by up to 80 percent of the ex-factory sales price. Imported pharmaceuticals are at a clear disadvantage and patients bear the burden in cost and diminished availability.

Side Effects

According to the U.S. International Trade Commission, the U.S. pharmaceutical industry historically shipped bulk APIs from foreign production sites to the United States before formulating into dosed products. After the WTO agreement, it became viable to import more finished products duty-free. Over the years, a failure to add more APIs to the duty-free list reinforced this trend. The U.S. Food and Drug Administration also allows firms to import formulated products prior to receiving marketing approval to prepare for a new product launch but does not allow bulk API importation before market approval.

The urgency to accrue adequate supplies and treatments for COVID-19 has reignited a debate on U.S. over-reliance on China and India for antibiotics, among other medicines. What if factories must close? What if China and India withhold supplies? If raw materials and ingredients are derived in those countries, would the United States be able to ramp up domestic production? The White House is considering incentives and Buy America government procurement requirements to stimulate demand for U.S. production and in the meanwhile has temporarily reduced tariffs on medical supplies such as disposable gloves, face masks and other common hospital items from China.

20 Countries Ban Medical Exports

A Cure Worse Than the Disease

Removing barriers to trade in essential products is a healthier approach than imposing restrictions that could exacerbate potential shortages.

Nonetheless, some 20 countries have announced a ban on the export of medical gear – masks, gloves, and protective suits worn by medical professionals. They include Germany, France, Turkey, Russia, South Korea, India, Taiwan, Thailand and Kazakhstan.

Governments generally do maintain national stocks of critical items to enable manufacturers to ramp up production in cases of health emergencies or address unexpected gaps in their supply chains. But when major producers withhold global supply, importing countries face shortages and higher prices. Dangerously, India’s trade restrictions go beyond medical gear to restrict export of 26 pharmaceutical ingredients. India, however, relies heavily on APIs imported from China for their medicines, much of it originating from factories in Hubei province where the outbreak emerged.

Bans tend to beget more bans, potentially wreaking havoc on pharmaceutical and medical product supply chains, making it more difficult for healthcare workers to stem spread of the virus. Poorer countries with already fragile and underfunded healthcare systems are left in an even more vulnerable position.

A Test for Public-Private Collaboration

Instead of export restrictions, governments can expedite purchase orders and otherwise support industry efforts to ramp up production for domestic and global use. Most global manufacturers are operating at several times their usual capacity since the initial outbreak in China. Private labs are utilizing high-throughput platforms to conduct more tests faster but require trade in the chemical reagents needed to start up and run the tests.

Biopharmaceutical firms are applying their scientific expertise to accelerate the development of a vaccine and treatments for COVID-19. They are reviewing their research portfolios, investigating previously approved medicines that have potential to treat the virus, and donating approved investigational medicines to the global research effort. Internationally, scientists are collaborating through a Norway-based nonprofit called the Coalition for Epidemic Preparedness Innovations on COVID-19 vaccine development. They know that the more options, the better – most drug candidates will not get through all three phases of clinical trials.

Recovery

Epidemic diseases evolve and they do not respect borders. Treating them, as well as the myriad chronic diseases and other ailments that affect us more routinely, requires new and adapted medical technologies arising from innovation made widely available through trade.

While there’s nothing inherently wrong with providing incentives to encourage domestic production, it should not come at the expense of free trade in health-related products. Tariffs should be eliminated on life-saving medicines and their ingredients. Governments must impose restrictions on exports temporarily and only when absolutely necessary. In this way, openness in trade will help promote the recovery of both our health and our economies.

Many thanks to economist and contributor Alice Calder for running all the trade numbers in this article. Full data tables may be accessed here.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fifteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

Alice Calder

Alice Calder received her MA in Applied Economics at GMU. Originally from the UK, where she received her BA in Philosophy and Political Economy from the University of Exeter, living and working internationally sparked her interest in trade issues as well as the intersection of economics and culture.

This article originally appeared on TradeVistas.org. Republished with permission.

vaccines

Report: Global Vaccines Market

The U.S. vaccine market is anticipated to experience growth of 8.9% CAGR during the forecast timeframe. The high adoption rate of vaccines to reduce the incidence of infectious diseases along with several initiatives undertaken by government by increasing immunization rates and recommendations should stimulate business growth.

Japan’s vaccine market will grow significantly over the coming years to reach over USD 6.0 billion by 2025. Introduction of the routine vaccination program in October 2016 leading to the introduction of numerous important and routine vaccines having a higher rate of administration as compared to voluntary vaccines should drive the Japan vaccine market.

Increasing demand for preventive vaccines, the rising number of people suffering from infectious as well as non-infectious diseases globally will drive the vaccine market over the forecast timeframe. Increasing government funding for vaccine development will further boost industry growth.

Widespread routine vaccination programs and numerous initiatives undertaken by governments to encourage vaccine administration especially in developing and underdeveloped countries will positively impact industry growth. Growing awareness about reduced mortality due to immunization should propel vaccines industry growth over the forecast period.

High adoption of new vaccines coupled with technological advancements should stimulate business growth. Moreover, a strong product pipeline of leading companies such as Merck, Novavax, Emergent BioSolutions will lead to industry expansion over the coming years. However, high costs associated with transportation and storage of vaccines will limit the vaccines market growth to a certain extent over the foreseeable future.

Each time a nation is hit by an epidemic wave, children are one of the groups that take the deadliest hit. According to the Centers for Disease Control and Prevention, 1 or 2 of every 1,000 children who are diagnosed with measles die. During the nation’s recently witnessed measles outbreak, around 92 percent of children received a combination vaccine that prevents measles, rubella, and mumps. Immunization programs prevent and protect toddlers and infants from dangerous complications and failing to vaccinate may certainly put them at risk for fatal diseases. This has escalated the demand for vaccines for kids, which has subsequently influenced the growth curve of the vaccines market from the pediatric populace.

As per estimates, vaccines industry size from the pediatric age group is set to witness a CAGR of 9.1% over 2019-2025, given the high vulnerability of kids to infectious diseases along with the increasing implementation of pediatric immunization programs.

Driven by the ongoing pace of urbanization and the rising awareness regarding the potential dangers a pandemic can inculcate, the global vaccines industry is gaining increased attention. According to a new research report by Global Market Insights, Inc., the overall vaccines market size is anticipated to surpass $70 billion by 2025.

Some of the major market players involved in the global vaccines market are Merck, AstraZeneca, Johnson & Johnson, Novartis, Bristol-Myers Squibb, Abbott, Sanofi Pasteur, GlaxoSmithKline, Pfizer, Emergent BioSolutions, CSL, Astellas Pharma and Novavax. Firms are focusing on product launch to fortify their product base and market reach over the coming years.

Source: Global Market Insights, Inc.

ups flight forward

UPS Flight Forward Boasts First-Ever Part 135 Standard Certification

Drones continue to make news headlines with the latest announcement from UPS Flight Forward, Inc. confirming the first-ever government-approved Part 135 Standard certification awarded by the FAA earlier this week. This certification – which is known as the highest level, supports the UPS subsidiary to further opportunities in drone deliveries including operating drones beyond the visual line of sight (BVLOS).

“This is history in the making, and we aren’t done yet,” said David Abney, UPS chief executive officer. “Our technology is opening doors for UPS and solving problems in unique ways for our customers. We will soon announce other steps to build out our infrastructure, expand services for healthcare customers and put drones to new uses in the future.”

UPS Flight Forward deployed the first BVLOS drone delivery to WakeMed’s hospital in Raleigh, North Carolina shortly after receiving the certification. The government-exempted BVLOS flight was carried out by Matternet’s M2 quadcopter. UPS partnered with drone creator Matternet earlier this year to expand supporting healthcare delivery operations specifically for WakeMed’s hospital campus. These operations further reiterate the demand for efficient, speedy deliveries for the medical industry and its patients.

“UPS Flight Forward is benefitting from our knowledge as one of the world’s leading airlines. The Flight Forward organization is building a full-scale drone operation based on the rigorous reliability, safety, and control requirements of the FAA,” Abney said.

The Part 135 Standard certification carries significant advantages with minimal restrictions to UPS, such as no limits on the scale of operations, unlimited numbers of drones and remote operators, cargo weights exceeding 55 pounds, and more. By obtaining this certification, common barriers associated with drone deliveries are eliminated.

“This is a big step forward in safely integrating unmanned aircraft systems into our airspace, expanding access to healthcare in North Carolina and building on the success of the national UAS Integration Pilot Program to maintain American leadership in unmanned aviation,” said U.S. Secretary of Transportation Elaine L. Chao.

BREAKING BAD TRADE: FENTANYL FROM CHINA

The Real Poison Pill in U.S.-China Trade

Following a historic dinner between President Trump and President Xi last December in Argentina on the margins of the G20 Summit, many of us awaited news on tariffs. We were surprised when, as part of a trade announcement, President Trump hailed a commitment from China to step up its regulatory oversight of fentanyl, the opioid that the Centers for Disease Control says has caused a “third wave” of drug-related overdose deaths in the United States.

It seems the seedy underbelly of e-commerce involves a steady stream of online purchases of deadly variants of the drug fentanyl, made in China and shipped to American doorsteps through the U.S. postal service.

Deadly Parcels from China

Fatal drug overdoses have doubled over the last decade, rising from 36,010 in 2007 to 70,237 in 2017. Synthetic opioids other than methadone – mainly fentanyl – now account for 40 percent of all drug overdose deaths and 60 percent of opioid overdose deaths.

China is the primary source of illicit fentanyl, fentanyl analogues, and fentanyl precursor chemicals in the United States. According to U.S. Customs and Border Protection, almost 80 percent of fentanyl seized in 2017 was interdicted at U.S. Postal Service and express consignment carrier facilities, having been shipped in small quantities from China.

Fentanyl precursors are also shipped from China to Mexico, and to a lesser degree Canada, before being synthesized, often mixed with heroin or cocaine, repackaged, and then trafficked over U.S. land borders in the southwest.

Fentanyl third wave of overdoses

STOP

Last March, the White House stepped up its campaign against opioid abuse, seeking to address factors driving both demand and supply. The Initiative to Stop Opioid Abuse (referred to as STOP) includes education programs, measures to curb over-prescription, expanded access to treatment and recovery, and – a focus on cutting off the flow of illicit drugs from China.

According to Homeland Security, more fentanyl in larger volumes is seized at land crossings, but the fentanyl seized from mail and express consignment carrier facilities is far more potent with purities of over 90 percent versus Mexico-sourced fentanyl that is often diluted to less than 10 percent.

The president’s initiative would require the postal service to provide advance electronic data for 90 percent of all international mail shipments within the next two years, offering data that will help law enforcement identify and seize illegal substances shipped through mail. Private shippers such as UPS and FedEx routinely require such electronic data.

The administration is also scaling up the Department of Justice’s “darknet” enforcement efforts. Fentanyl in its various forms is relatively cheap and easy to buy from China online paying with cryptocurrencies, or even credit cards or money transfers.

fentanyl shipments from China

Over One Million Pills a Day – In One Factory in China

China has grown to become the largest mass producer of generic drugs and pharmaceutical ingredients in the world with over 5,000 pharmaceutical manufacturers. Upwards of 90 percent of the active pharmaceutical ingredients used in U.S. production of finished dosage forms of medical pharmaceuticals is imported from just two countries: India and China.

In addition, China has over 160,000 chemical producers and hundreds of thousands of pharmaceutical and chemicals distributors. The explosion in volume and number of producers has far outstripped China’s FDA (CFDA) from adequately regulating and monitoring them.

Faster Than Can Be Regulated

Unlike opioids derived from the poppy plant, fentanyl is a synthetic painkiller produced in a laboratory. It is 50 times more potent than heroine and 50-100 times more potent than morphine. Inhaling just two milligrams of pure fentanyl can be lethal.

In the United States, most fentanyl products are classified either as Schedule I chemicals, those that have no accepted medical use and high potential for abuse, or as Schedule II chemicals, those with medical use but only available through a non-refillable prescription.

Fentanyl’s molecular structure can be easily modified to create new derivatives, putting regulators constantly behind in evaluating and classifying each new variant one-by-one. From furanyl fentanyl, acetyl fentanyl, acryl fentanyl, to carfentanil — to name just a few — fentanyl has hundreds of analogues that differ slightly from the original, enabling criminal producers to operate in a gray territory while regulators struggle to ban the new substances. Legislation passed in 2017 now allows U.S. FDA to schedule fentanyl analogues immediately on a temporary basis while the agency conducts its investigations.

President Trump has urged President Xi to implement a similar approach. China currently controls around 25 types of fentanyl-related products. President Trump wants China to establish fentanyl as its own class of controlled substances, restricting all fentanyl analogues, including future fentanyl-like substances. Doing so would be a start.

Busting Drug Trade

Such a commitment by China is not, however, likely to put a dent in its fentanyl exports to the United States absent real enforcement. In recent years, CFDA has imposed stricter licensing requirements for pharmaceutical and chemical producers, but diversion, adulteration, and clandestine production remain significant problems.

“Chinese chemical manufacturers export a range of fentanyl products to the United States, including raw fentanyl, fentanyl precursors, fentanyl analogues, fentanyl-laced counterfeit prescription drugs like oxycodone, and pill presses and other machinery necessary for fentanyl production.” — U.S China Economic and Security Review Commission Staff Research Report

CFDA has undergone several reorganizations in the last few years. In the most recent, some of its regulatory responsibilities have devolved to provinces and counties with little accountability. Pre-marketing approvals will be managed separately from post-market inspections and surveillance. With just a little over 2,000 inspectors, authorities have little hope of effectively overseeing legal compliance, let alone spotting even a fraction of criminal activity.

The central government has assisted U.S. drug and law enforcement agencies, sharing information and intelligence that helps U.S. agencies target Chinese nationals trafficking illicit drugs in the United States. To alleviate the free flow of fentanyl from China, the Chinese government should also prosecute transnational criminals operating in China in high-profile cases with severe penalties.

Soybeans, Tech Transfer, and Fentanyl

Trade talks over soybeans and intellectual property protections for American technologies seem an unlikely setting for addressing illicit trade in deadly fentanyl.

There are some in the United States who are frustrated with this administration’s willingness to toss out the traditional trade policy playbook, but this is one case where it can welcomed by everyone.

 

 

Interested to read about fentanyl trade in more detail?

See two key reports produced by U.S.-China Economic and Security Review Commission analyst Sean O’Connor: Fentanyl: China’s Deadly Export to the United States, February 2017 and Fentanyl Flows from China: An Update, November 2018

Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

How Drones Could Transform Biopharmaceutical Supply Chain Innovation

Drones have made the news once again. This time, to aid in swift and reliable delivery of life-saving temperature-controlled medications required in emergency situations. A collaboration between Direct Relief, Merck (MSD outside the U.S. and Canada), Softbox, AT&T and Volans-i is pushing the boundaries and capabilities of UAVs- also known as drones, and confirmed a successful fourth pilot proof-of-concept mission was conducted in the Bahamas last week.

“This successful pilot demonstrates the potential of innovative UAV technology to aid in delivery of temperature-dependent medicines and vaccines to people who critically need them,” said Craig Kennedy, senior vice president, Supply Chain, at Merck. “The potential of UAV technology is just one of the many areas in which we are innovating across our business and our supply chain to maximize our ability to save and improve lives around the world.”

As the partners focus on biopharmaceutical supply chain innovation and strengthening humanitarian efforts,  concerns on how to  overcome challenges in global regulations are considered in order to solidify official application in various global markets. Previous test flights were conducted in Switzerland and Puerto Rico.

“Experience and research consistently show that those most at risk of health crisis in disasters live in communities which are likely to be cut off from essential health care due to disruption of transportation and communications,” said Andrew Schroeder, who, among other responsibilities, leads analytics programs, data visualization, and geospatial analytics for Direct Relief.

“Drone delivery is one of the most promising answers to this problem. More remains to be done to operationalize medical cargo drones in emergencies. But successful tests like this one demonstrate that remarkable new humanitarian capabilities are emerging quickly.”

Real-time data analysis and collection in conjunction with fully autonomous controlling enabled test flight success. Additionally, the cold-chain technology ensured temperatures as low as -70 degrees Celsius were maintained, all while providing accurate temperature tracking and reporting.

Photo credit: Direct Relief

“Our goal is to revolutionize the way goods and people move in the world,” said Hannan Parvizian, CEO and Co-Founder of Volans-i, in San Francisco. “Successfully demonstrating our ability to make temperature-controlled drone deliveries in various climate and terrain conditions across these pilots is a first step towards realizing our vision for a world in which no one should be deprived of access to life-saving medical supplies and vaccination due to lack of infrastructure and responsiveness of the transportation ecosystem.”

“This most recent proof-of-concept test has once again demonstrated the capabilities of the Softbox SKYPOD for the transportation of life saving medicines, this time at ultra-low temperatures,” added Richard Wood, Director, Digital Connected Technologies at Softbox. “To ensure full track and trace throughout the test flight Softbox utilized Internet of Things (IoT) technologies and data dashboard services provided by AT&T. The data collected during the successful flights has shown everybody involved the power of IoT to provide full visibility of the Cold Chain, even in the most extreme environments while using innovative transportation modes.”

“Through close collaboration with Direct Relief, Merck, Volans-I and AT&T, we have successfully proven the capabilities of this unique and ground-breaking combination of cutting-edge technologies and now will focus our efforts on completing subsequent pilot projects,” Wood concluded.

United Cargo Earns “Best Air Cargo Carrier – North America” Award

During this year’s annual Asian Freight, Logistics and Supply Chain (AFLAS) Awards in Hong Kong, United Cargo was recognized as the “Best Air Cargo Carrier” for the North American region.

Hosted annually by Asia Cargo News, selected nominees and winners are determined through a different approach with the help of more than 15,000 reader and e-subscriber votes. Consistency in service, innovation, customer relations, and management are all taken into consideration when vetting winners for the annual awards.

“United Cargo’s primary goal is to build and sustain long-term relationships of mutual benefit with our customer partners,” said United Cargo President Jan Krems. “Our team is especially proud to again receive this award representing the voice of our customers, because it confirms we are delivering a consistently excellent level of service worldwide and enhancing our partners’ success. I salute United Cargo team members in more than 300 locations around the globe for their commitment to quality.”

This news follows an announcement made earlier this month confirming the carrier will begin transporting and leasing Swiss-based temperature-controlled containers provided by SkyCell. United Cargo will be the first U.S. carrier of SkyCell’s containers, enabling safe and effective logistics for biopharmaceuticals and temperature-sensitive items.

“TempControl’s transport of vaccines and other high-value biopharmaceutical shipments is increasing rapidly,” said Jan Krems, President of United Cargo. “Extremely precise, long-duration temperature control is required for the safe transport of these highly-sensitive shipments. 

“SkyCell is excited to partner with United to increase the availability of SkyCell containers for the U.S. pharma industry,” said Richard Ettl, CEO of SkyCell. “United and SkyCell share the goal of eliminating temperature excursions and reducing the CO2 footprint in global pharma transportation.” 

Source: United Cargo

SkyCell & Air France KLM Martinair Cargo Extend Collaboration for Pharma Logistics

In an effort to extend improved and innovative services for clients, SkyCell – known as the fourth largest pharma airfreight container provider, and
Air France KLM Martinair Cargo, confirmed they will extend their collaboration globally with plans to present it to the global AF KLM network. Air France KLM Martinair Cargo boasts one of the largest and densest global networks.

“Air France KLM Martinair Cargo values of Transparency, Innovation and Care match the values of SkyCell: we are both committed to provide the highest quality standards to our clients in the most transparent and innovative way. SkyCell is driven by technological innovation in pharma transport technology and that is why we want to work very close together,” said Enrica Calonghi, Global Head of Pharmaceutical Logistics at Air France KLM Martinair Cargo.

In a recent evaluation from one of the Big Four international audit companies, SkyCell’s shipments from the last 12 months showed a
0.1 percent of the transports involved a temperature excursion with their containers. The companies share a common theme in transparency in addition to customer-driven services.

“Air France KLM Martinair Cargo is a pioneer in pharma airfreight services and has an extensive network. With a shared vision of innovation in the supply chain of temperature-sensitive products, our collaboration will ensure that consumers are guaranteed a safe and sustainable service. We will also further improve our services through SkyCell’s data-driven approach,” said Richard Ettl, CEO of SkyCell.