Manufacturing Opportunity in COVID-19 Treatments
Going on year 3 of COVID-19, new variants continue to ravage the world and disrupt manufacturing. Last year, we covered how the virus affected manufacturing operations across the world in 2020 (year 1). In 2021 (year 2), leading pharmaceutical companies developed new COVID vaccines and treatments and started to scale manufacturing to meet the demand. I suspect manufacturing capacity will continue to constrain the widespread availability of COVID treatments. The pharmaceutical companies that can get the required approvals and deliver on scaling manufacturing have a great opportunity ahead.
NOTE: You can revisit the breakthroughs in how manufacturers responded to the COVID-19 pandemic thus far by browsing the topic archive for COVID-19.
Let’s take a look at a few COVID treatments and their planned production ramp and financial impact as judged by revenues.
Gilead’s VEKLURY (Remdesivir) Early Lead
According to documents, manufacturing of Remdesivir takes roughly 180 days from raw materials to finished goods. The bulk of that time is to go from raw materials to ‘active pharmaceutical ingredients’ which takes about 150 days. The raw materials are sourced from at least 10 countries around the world and the production of these materials was the biggest bottleneck to ramping production. By early 2021, Gilead projected to have produced over 1 million treatment courses (11 doses per course) up from an inventory of only 5,000 in January 2020.
Being the first approved treatment, some of the financial impact is known. So far, I count about $7 Billion in revenue.
| Quarter | Revenue ($B) of VEKLURY |
|---|---|
| 2020 Q3 | $0.873 |
| 2020 Q4 | $1.9 |
| 2021 Q1 | $1.46 |
| 2021 Q2 | $0.829 |
| 2021 Q3 | $1.9 |
Reference Links
- 2020-04-07 - Gilead’s Efforts to Increase Supply of Remdesivir (Washington State Hospital Association)
- 2020-10-28 - Gilead’s revenue rises 17% driven by sales of coronavirus treatment remdesivir (CNBC)
- 2021-04-12 - 3-month production dip behind Remdesivir supply chain issues (The Indian Express)
- 2021-04-30 - Gilead’s $1.5B in remdesivir sales help buoy worse-than-expected declines for mainstay HIV, hepatitis C drugs (Fierce Pharma)
- 2021-10-28 - Gilead Sciences Announces Third Quarter 2021 Financial Results **(Gilead Press Release)
Regeneron’s REGEN-COV (casirivimab and imdevimab) Monoclonal Antibody Cocktail
Monoclonal antibodies are used to treat a variety of diseases including COVID-19. Supply limitations are hampering the availability of this treatment. It appears to be manufactured outside New York City in Tarrytown, New York with the help of over $1.5 billion in funding from the US federal government. Little else is known on the production plans or scaling difficulties for REGEN-COV.
After receiving the emergency use authorization in August of 2020, Regeneron sold about $185 million. As for 2021, sales exceeded $4 billion worldwide (including partner Roche).
Reference Links
- FACT SHEET FOR HEALTH CARE PROVIDERS EMERGENCY USE AUTHORIZATION (EUA) OF REGEN-COV (Regeneron)
- Regeneron 2020 Annual Report (Regeneron)
Pfizer’s PAXLOVID - The First Pill
Building off the success of its COVID vaccine (COMIRNATY), Pfizer developed an oral antiviral (PAXLOVID) with a treatment course that consists of two daily 150-mg doses for five days. They pledge to invest up to approximately $1 billion to scale manufacturing and distribution. Just this week Pfizer raised its production projections by 50% from 80 million to 120 million treatment courses by the end of 2022. I could not find much data on the planned ramp, but it appears their plants in Ringaskiddy (Cork), Ireland and Ascoli, Italy are set to produce the pills.
Some financial analysts estimate Paxlovid could contribute $24.2 billion to Pfizer’s 2022 revenue.
Reference Links
- 2021-11-05 - Pfizer’s Novel COVID-19 Oral Antiviral Treatment Candidate Reduced Risk of Hospitalization or Death by 89% in Interim Analysis of Phase 2/3 EPIC-HR Study (Pfizer Press Release)
- 2021-11-05 - Pfizer to produce coronavirus pill at Ringaskiddy plant (Irish Times)
- 2021-12-21 - This anti-Covid pill changes everything. So why won’t it be available for all? (The Guardian)
- 2022-01-04 Pfizer to Provide U.S. Government with an Additional 10 Million Treatment Courses of its Oral Therapy to Help Combat COVID-19 (Pfizer Press Release)
Summary of Opportunity in COVID-19 Treatments
Being first to market with a vaccine or treatment during a pandemic can dramatically change the trajectory of a company and their suppliers. Two capabilities are needed: product research and development and manufacturing and distribution. The treatment products that have been first to market have made the most money, but have been constrained by manufacturing. As more companies get authorization for their products and the ones that are able to ramp production have the greatest opportunity ahead.
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“When the model is certain of the best package type for a given product, we allow it to auto-certify it for that pack type,” says Bales. “When the model is less certain, it flags a product and its packaging for testing by a human.” The technology is currently being applied to product lines across North America and Europe, automatically reducing waste at a growing scale.
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The big difference with this new technology is that drivers will now be able to set-and-forget some aspects of their self-driving tractors. The company’s autonomy kit includes six pairs of stereo cameras that capture a 360-degree view around the tractor. This input is then analyzed by machine vision algorithms, which spot unexpected obstacles.
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Real-world data paired with digital simulations of products—digital twins—are providing valuable insights that are helping companies identify and resolve problems before prototypes go into production and manage products in the field, says Alberto Ferrari, senior director of the Model-Based Digital Thread Process Capability Center at Raytheon.
The concept has started to take off, with the market for digital-twin technology and tools growing by 58% annually to reach $48 billion by 2026, up from $3.1 billion in 2020. Using the technology to create digital prototypes saves resources, money, and time. Yet the technology is also being used to simulate far more, from urban populations to energy systems to the deployment of new services.
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“Tesla, born in Silicon Valley, never outsourced their software — they write their own code,” said Morris Cohen, a professor emeritus at the Wharton School of the University of Pennsylvania who specializes in manufacturing and logistics. “They rewrote the software so they could replace chips in short supply with chips not in short supply. The other carmakers were not able to do that.”
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