Business News - Opportunities - Reviews
As they battle a pandemic that has no regard for borders, the leaders of many of the world’s largest economies are in the thrall of unabashedly nationalist principles, undermining collective efforts to tame the novel coronavirus.
The United States, an unrivaled scientific power, is led by a president who openly scoffs at international cooperation while pursuing a global trade war. India, which produces staggering amounts of drugs, is ruled by a Hindu nationalist who has ratcheted up confrontation with neighbors. China, a dominant source of protective gear and medicines, is bent on a mission to restore its former imperial glory.
Now, just as the world requires collaboration to defeat the coronavirus — scientists joining forces across borders to create vaccines, and manufacturers coordinating to deliver critical supplies — national interests are winning out. This time, the contest is over far more than which countries will make iPads or even advanced jets. This is a battle for supremacy over products that may determine who lives and who dies.
At least 69 countries have banned or restricted the export of protective equipment, medical devices or medicines, according to the Global Trade Alert project at the University of St. Gallen in Switzerland. The World Health Organization is warning that protectionism could limit the global availability of vaccines.
With every country on the planet in need of the same lifesaving tools at once, national rivalries are jeopardizing access for all.
“The parties with the deepest pockets will secure these vaccines and medicines, and essentially, much of the developing world will be entirely out of the picture,” said Simon J. Evenett, an expert on international trade who started the University of St. Gallen project. “We will have rationing by price. It will be brutal.”
Some point to the tragedy playing out around the world as an argument for greater self sufficiency, so that hospitals are less reliant on China and India for medicines and protective gear.
China alone makes the vast majority of the core chemicals used to make raw materials for a range of generic medicines used to treat people now hospitalized with Covid-19, said Rosemary Gibson, a health care expert at the Hastings Center, an independent research institution in New York. These include antibiotics, blood pressure treatments and sedatives. “Everyone is competing for a supply located in a single country,” Ms. Gibson said.
But if the laudable goal of diversification inspires every nation to look inward and dismantle global production, that will leave the world even more vulnerable, said Chad P. Bown, an international trade expert at the Peterson Institute for International Economics in Washington.
President Trump and his leading trade adviser, Peter Navarro, have exploited the pandemic as an opportunity to redouble efforts to force multinational companies to abandon China and shift production to the United States. Mr. Navarro has proposed rules that would force American health care providers to buy protective gear and medicines from U.S. suppliers.
“We just don’t have the production capacity,” Mr. Bown said, noting that Chinese industry is restarting, while American factories remain disrupted. “Just as you don’t want to be too dependent on China, you don’t want to be too dependent on yourself. You have now walled yourself off from the only way you can potentially deal with this, in your time of greatest need, which is relying on the rest of the world.”
For seven decades after World War II, the notion that global trade enhances security and prosperity prevailed across major economies. When people exchange goods across borders, the logic goes, they become less likely to take up arms. Consumers gain better and cheaper products. Competition and collaboration spur innovation.
But in many countries — especially the United States — a stark failure by governments to equitably distribute the bounty has undermined faith in trade, giving way to a protectionist mentality in which goods and resources are viewed as zero-sum.
Now, the zero-sum perspective is a guiding force just as the sum in question is alarmingly limited: Potentially vital supplies of medicine are in short supply, exacerbating antagonism and distrust.
Last week, the Trump administration cited a Korean War-era law to justify banning exports of protective masks made in the United States, while ordering American companies that produce such wares overseas to redirect orders to their home market. One American company, 3M, said halting planned shipments of masks overseas would imperil health workers in Canada and Latin America. On Monday, 3M said it struck a compromise with the government that will send some masks to the United States and some overseas.
In recent weeks, Turkey, Ukraine, Thailand, Taiwan, Indonesia, Bangladesh, Pakistan, South Africa and Ecuador have all banned the export of protective masks. France and Germany imposed bans on masks and other protective gear, lifting them only after the European Union barred exports outside the bloc. India banned exports of respirators and disinfectants.
Britain has prohibited exports of hydroxychloroquine, an anti-malarial drug now being tested for potential benefits against the virus. Hungary has banned exports of the raw material for that drug and medicines that contain it.
“The export bans are not helpful,” said Mariangela Simao, assistant director general for medicines and health products at the World Health Organization in Geneva. “It can disrupt supply chains of some products that are actually needed everywhere.”
President Trump has been especially aggressive in securing an American stockpile of hydroxychloroquine, disregarding the counsel of federal scientists who have warned that testing remains minimal, with scant evidence of benefits.
India is the world’s largest producer of hydroxychloroquine. Last month, the government banned exports of the drug, though it stipulated that shipments could continue under limited circumstances.
“In this situation, each country has to take care of itself,” said Satish Kumar, an adjunct professor at the International Institute of Health Management Research in New Delhi. “If we are not able to take care of our population, it will be a very critical situation.”
After Mr. Trump demanded that India lift the export restrictions on Monday night while threatening retaliation, the government appeared to soften its position.
“In view of the humanitarian aspects of the pandemic,” said India’s foreign ministry spokesman Anurag Srivastava, the government would allow exports “to some nations who have been particularly badly affected” — an apparent nod to the United States.
Arithmetic suggested that a policy of stockpiling for national needs might leave other countries short. India is likely to require 56 metric tons, but now has only 38 metric tons, said Udaya Bhaskar, director general of the Pharmaceuticals Export Promotion Council of India, an industry body set up by the government to promote exports of Indian medicines.
One manufacturer, Watson Pharma, owned by Teva Pharmaceuticals and based in the western Indian state of Goa, was seeking to triple its production of hydroxychloroquine over the next two weeks.
Genomics and Geopolitics
As global pharmaceutical companies explore new forms of treatment for the coronavirus — a complex undertaking even under ideal laboratory conditions — they are having to navigate an additional layer of real-world intricacy: geopolitics.
Companies steeped in genomics and the rigorous demands of manufacturing must find a way to develop new drugs, begin commercial production and also anticipate how the predilections of nationalists running major economies may limit supplies.
One of the most closely watched drugs, remdesivir, is made by Gilead, an American company. Though clinical trials have not yet been completed, the company has been ramping up manufacturing to meet global demand in advance of the drug’s approval.
Like many newer drugs, remdesivir’s formula includes “novel substances with limited global availability,” according to a statement on the company’s website.
Gilead is increasing production in part by expanding beyond its own facilities in the United States, contracting with plants in Europe and Asia, in a move that appeared to hedge its bets against trouble in any one place. “The international nature of the supply chain for remdesivir reminds us that it is essential for countries to work together to create enough supply for the world,” said Daniel O’Day, Gilead’s chairman and chief executive, in an April 4 statement.
Gilead says it has enough of the drug to treat 30,000 patients, while aiming to amass enough to treat one million by the end of the year. But outside experts questioned whether that would be sufficient.
“There is going to be a real fight over the allocation of the remdesivir supply if indeed it proves effective,” said Geoffrey Porges, an analyst for SVB Leerink, an investment bank in Boston.
Another drugmaker, the New York-based Regeneron, is preparing a U.S. plant to produce a cocktail of antibodies developed in genetically engineered mice, with tests planned for hospitalized patients and as a preventative treatment. A similar antibody cocktail proved effective against Ebola.
The company is planning the extraordinary action of shifting the production of some of its most profitable drugs — one that treats eczema, another for eyes — to a factory in Ireland to make room for the experimental treatment.
Regeneron’s chief executive, Dr. Leonard Schleifer, said the decision to make the new drug cocktail in the United States was both geopolitical and practical.
“You want to make it close to where the need is, and we anticipate there will be great need in the United States,” he said.
He acknowledged that making products overseas now posed risks that they could be subject to export bans in that country. In addition, Regeneron is receiving federal funds to expand its manufacturing of the vaccine, which carries the expectation that the company will prioritize the American market.
“It just made good sense to us to do this in the United States,” Dr. Schleifer said.
China has seized on the pandemic as an opportunity to present itself as a responsible world citizen, in contrast to Western democracies that failed to reckon with the threat — not least the United States, now the epicenter of the outbreak.
Ever since President Trump took office, unleashing tariffs on friends and foes alike, China’s paramount leader, Xi Jinping, has sought to exploit the American abdication of global leadership as a chance to crown himself champion of the rules-based trading system.
Given that China is ruled by an unelected Communist Party that subsidizes state-owned companies and tolerates the widespread theft of intellectual property, those claims have strained credulity.
China’s reputation has also suffered as it pursues its Belt and Road Initiative, a $1 trillion collection of infrastructure projects stretching from East Asia to Europe and Africa that has been engineered to spread Beijing’s influence and generate business for Chinese companies. Some recipients of Chinese credit have come to see the terms as predatory, prompting accusations that China is an ascendant colonial power.
China has dispatched doctors and ventilators to Italy while offering aid to France, Germany and Spain. Last month, as the European Union banned exports of protective gear, Serbia’s president, Aleksandar Vucic, embraced China’s largess, even kissing the Chinese flag.
“European solidarity does not exist,” Mr. Vucic declared. “I believe in my brother, my friend, Xi Jinping, and I believe in help from China. The only country that can help us now is China.”
Chinese factories make 80 percent of the world’s antibiotics and the building blocks for a huge range of drugs. Chinese officials have pledged to continue to make these wares available to the world. Such moves may bolster China’s standing, yet appear unlikely to pacify the Trump administration.
“Certainly, it would help in projecting China’s soft power,” said Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations. “But I don’t know whether this would ease concerns in the West, particularly the United States, on the need to diversify the supply of the manufacturing of active pharmaceutical ingredients.”
President Trump has long obsessed over the trade deficit with China as a supposed scorecard of American victimization. But given China’s role as a dominant supplier of hospital gear and medicines, American health effectively depends on being able to buy more from Chinese factories.
“Right now, the brightest shiny hope that we have is imports of this stuff,” said Mr. Bown, the trade expert. “We’d like to run the biggest trade deficit we could possibly find.”
“It’s not that we are buying this stuff from China that’s made us vulnerable,” he added. “It’s that we are buying this stuff from China, and we decided to start a trade war with them.”
The Quest for Vaccines
China aims to become the first nation to crack the code for a vaccine, a milestone that could cement its status as a world superpower, resonating not unlike the United States’ putting a person on the moon.
“Its importance lies in being able to display our scientific and technological prowess to other countries,” said Yang Zhanqiu, a virologist at Wuhan University, in the central Chinese city where the coronavirus first emerged.
About 1,000 Chinese scientists are now engaged in creating vaccines for the virus, with nine potential versions in development, according to the government. The government is considering bypassing some phases of planned clinical trials to rush potential vaccines into emergency use as soon as this month.
But one element appears in conspicuously short supply — international collaboration.
In 2003, when another coronavirus, known as SARS, spread through China with deadly impact, officials from the American Centers for Disease Control and Prevention deployed to Beijing to help the government forge a containment strategy. In the years that followed, Chinese and American authorities collaborated on epidemics in Africa.
But in recent years, American public health authorities have sharply diminished their presence in Beijing at the direction of the Trump administration, said Jennifer Huang Bouey, an epidemiologist and China expert at the RAND Corporation.
“Given the overall sentiment that any scientific research will be helping China, the United States is really trying to reduce any collaboration with China,” said Ms. Bouey. “That really hurts global health.”
“There’s a lack of trust,” said Mr. Huang at the Council on Foreign Relations. “Nationalism remains very strong among the Chinese public.”
Some international collaboration is taking place. Dr. Seth Berkley, the chief executive of the Gavi Alliance, a nonprofit group started by Bill and Melinda Gates that works to get vaccines to the world’s poor, noted that one of the best Ebola vaccines was discovered by a Canadian public health lab that was transferred to an American drug maker and then manufactured in Germany.
“That’s how science is done, and we really ought to follow that paradigm,” he said. “Nothing illustrates the global nature of this problem better than Covid-19, which started off in Wuhan and spread to 180 countries within three months. This is a global challenge that requires a global response.”
But even before a vaccine is confirmed, national governments are already seeking to lock up future supply.
In Belgium, a company called Univercells is preparing to manufacture two vaccines that are under development even before clinical trials are completed, according to its co-founder, José Castillo. Univercells expects to begin production by September, with the eventual aim of making as many as 200 million doses a year at a pair of plants south of Brussels.
One country — Mr. Castillo declined to disclose it — has already ordered half of the supply of vaccines that his company will initially make, a share that would decline to 10 percent as production increases.
Some countries will most likely fail to secure enough vaccine. “It’s really a matter of scarcity,” Mr. Castillo said.
More than overwhelming demand explains the anticipated shortfall. Though the science behind developing vaccines has advanced substantially, making them often involves labor-intensive techniques that are not designed to quickly produce billions of doses.
“The bottleneck is to produce it, to make it in very large quantities,” Mr. Castillo said.
The sense of urgency appears to have inspired President Trump to try to persuade a German company that is developing a possible vaccine to relocate to the United States. The company, CureVac, has denied it was approached by the United States, and said it had no plans to move.
The president has other weapons. He could cite the Defense Production Act to force American companies to give the United States government priority over other buyers for potential vaccines.
A little-known unit within the Department of Health and Human Services, whose mission is to protect American residents from bioterrorism and pandemics, gives grants to companies to speed their vaccine development. It also often comes with the requirement that recipients supply the government with a stockpile, said James Robinson, a vaccine manufacturing expert who sits on the scientific advisory board of the Coalition for Epidemic Preparedness Innovations, an international consortium dedicated to making vaccines available worldwide.
That division, the Biomedical Advanced Research and Development Authority, recently gave nearly $500 million to Johnson & Johnson to help it develop a coronavirus vaccine and set up a U.S. manufacturing facility.
Johnson & Johnson declined to say whether its arrangement with the government would require it to set aside vaccines for American use. It said it currently had the ability to produce as many as 300 million doses a year at its facility in the Netherlands, was preparing to manufacture a similar number in the United States, and was working with outside partners to add capacity elsewhere.
“If the current administration is still in place when the vaccines are available, they are going to be really merciless in terms of privileging the U.S. for supply versus the rest of the world,” said Michel De Wilde, a vaccine research consultant, and a former executive at Sanofi, a French vaccine manufacturer.
Around the world, 50 potential vaccines are now in the early stages of development, according to the W.H.O. If history is any guide, scientists will eventually produce an effective version.
What is less certain is whether the benefits will be shared.
“I’m worried about every country that has the potential to manufacture the vaccine,” said Dr. Richard Hatchett, the chief executive of the vaccine consortium. “They all have the ability to impose export controls. They all have the ability to nationalize their vaccine industry.”
If that is what happens, the dangers proliferate.
“If there are epidemics out of control in parts of the world,” said Dr. Berkley, of the Gavi Alliance, “we will never get control of this because the virus will come back and continue to spread.”
Reporting was contributed by Hari Kumar, Karan Deep Singh, Kai Schultz, Javier Hernandez and Andrew Jacobs.
Business News - Opportunities - Reviews