Positive Steps for Bio-Tech, Pharma & CMO’s

As with any effective policy, unless and until the U.S. Congress enacts comprehensive, bipartisan, fair, balanced, transparent, and equitable healthcare legislation and regulatory framework, the task of dealing with reducing the costs of prescription and generic drugs will be left solely to the private sector and competing market forces of globalization as in the past. The U.S. currently is a global leader in CMO’s which have been developed solely with private sector partnership. Some of these CMO’s have technologies and manufacturing facilities which are still in early stages, some in proof-of-concept stages, some in pilot plant stages and some entering scale-up / commercialization, respectively. Most of the private sector parties involved in CMO technologies and manufacturing are small businesses and are presently starved for capital, with weak balance sheets, minimum collateral and / or security for securing debt, but have highly competent technical and management skillset with intellectual property. With the currently fragile investment scenario for equity, working capital and debt, it is vital to leverage a “Private-Public-Partnership” model wherein the U.S. government will provide grants, loans, and loan guarantees via agencies such as the Small Business Administration (SBA), the Food & Drug Administration (FDA), and / or the Department of Health & Human Services (HHS). This can be matched with equity from CMO promoters and owners, private equity groups and venture capitalists. In addition, the U.S. federal and state government(s) must also seriously consider providing income tax credits, production tax credits and other job creation incentives in order to spur active private sector involvement.

The U.S. can become a net exporter of CMO products and services thereby increasing U.S. exports and improving the current economic scenario. The U.S. small business sector continues to remain as the major engine for economic growth and can truly accelerate jobs growth in order to meet job creation objectives. However, unless and until business and market oriented policy and investment work hand-in-hand, the commitment to increasing CMO’s market share as articulated above, will just remain as one more “concept” and “business-as-usual” only as in the previous decades. The pharmaceutical industry is undergoing significant M&A activity. By leveraging the utilization of CMO’s, the industry can supply cost effective generic drugs for the global market. In addition, pharmaceutical companies can take advantage of innovative technologies developed by CMO’s and enhance job creation during the current global recession.