One Year On: Russia, Ukraine And The Generics Industry

It has now been a year since Russia’s invasion of Ukraine. Since the start of the conflict, the generics industry has been heavily involved in relief efforts in the region, while also continuing to see the impact of the war on local operations and global supply chains. And with no immediate end in sight to hostilities, effects will likely continue to be felt for the foreseeable future.

In the earliest days of the conflict, initial off-patent industry relief efforts focused on securing the supply chain and maintaining access to essential medicines for Ukraine’s 44 million citizens (see sidebar).

Meanwhile, clinical trials and biopharma manufacturing were also disrupted by orders for civilians to remain at home as conflict escalated. (Also see "Fears For Ukraine’s Access To Medicines And Trials As Russian Invasion Continues" - Scrip, 28 Feb, 2022.)

And continuity of supply was threatened manufacturing sites faced uncertainty from bomb threats or power cuts.

European generics industry association Medicines for Europe immediately took a leading role, working with the Ukrainian government – mainly the ministry of health – and member companies operating in Ukraine “to assess what medicines are needed and to what extent,” Generics Bulletin was told by Sergio Napolitano, Medicines for Europe’s general counsel and external relations director.

The association shared requests for donations with members – who mobilized to ensure their medicines reached Ukraine – while also reaching out to non-governmental medical and relief organizations and patient partners to offer support and coordinate requests.

In the weeks that followed, these efforts ramped up, focusing on maintaining access to life-saving generics and biosimilars via humanitarian corridors. (Also see "Efforts Made Across Off-Patent Industry To Secure Ukrainian Medicines Supply" - Generics Bulletin, 11 Mar, 2022.)

At the same time, while relief efforts were necessarily focused on Ukraine, pharma industry representatives such as brand industry association EFPIA underlined the need to exclude medicines, active pharmaceutical ingredients and raw materials required to manufacture diagnostics, treatments and vaccines from any sanctions on Russia.

Addressing the war in Ukraine, Polpharma – based in neighboring Poland – struck a balance by pledging to produce for the Russian market “only pediatric products, products used in acute medical conditions or in the treatment of chronic diseases.”

“These are products that are important for health, therefore their deliveries to Russia will be sustained,” Polpharma stated. “On the other hand, we have discontinued the production of life-style products that only improve the quality of life.”

As donations flowed in from numerous generics companies (Also see "One Month On: Industry Efforts Continue In Ukraine" - Generics Bulletin, 23 Mar, 2022.), UK-based charity International Health Partners also ramped up its response with supplies of essential health packs and efforts to secure viable and safe transport routes into Ukraine. (Also see "IHP Responds To Ukraine Crisis" - Generics Bulletin, 14 Mar, 2022.)

The response saw a united response from the off-patent sector that was comparable to across-the-board efforts seen during the COVID-19 pandemic, with Medicines for Europe president Elizabeth Stampa highlighting that companies were “co-ordinating among them to make those donations possible. Competitors are trying all together to move that forward.” (Also see "Stampa Urges Investment In European Manufacturing" - Generics Bulletin, 22 Mar, 2022.)

War Also Takes Its Toll On Industry

At the same time as the off-patent industry worked to meet the need for essential medicines in Ukraine, it also began to feel the effect of the war on supply chains that were already suffering under the strain of multiple pressures, including surging energy and input costs and the lingering effects of COVID-19.

Given these pressures, Medicines for Europe said, Russia’s invasion of Ukraine only served to exacerbate an already “unsustainable situation for manufacturers.” (Also see "EU Drug Supply In Jeopardy Without Energy Support, Warns Medicines For Europe" - Generics Bulletin, 4 Oct, 2022.)

Teva was one of the leading generics companies to speak out about the additional pressures caused by the war in Ukraine, observing that – along with the COVID-19 pandemic, severe inflation and supply-chain disruptions – the war had been just one of several factors that “have wreaked havoc across the continent” and “will persist if unabated.” (Also see "Teva Urges Europe To Address ‘Essential Medicines Exodus’" - Generics Bulletin, 31 Oct, 2022.)

Another major industry player with particular exposure in the region is Dr Reddy’s. The firm’s CEO Erez Israeli recently told Generics Bulletin that in the wake of the war in Ukraine, the most important aspects for the company had been “taking care of our people in both countries, business continuity in the regions and supplying to patients.”

Meanwhile on the business side, he said, “we have taken measures to ensure cash flow, currency hedging, etc,” noting that “so far we have been ok [and] we hope to see an end to hostilities soon.” (Also see "Dr Reddy’s Is Pushing For Progress On Multiple Fronts" - Generics Bulletin, 30 Jan, 2023.)

Medicines for Europe

Slovenian firm Krka is also a major player in the region, with the firm midway through 2022 slashing profit forecasts to reflect “the resistance of the Russian market to the war in Ukraine.”

“The situation in Ukraine and the Russian Federation requires constant adaptation in many areas,” Krka acknowledged, with the complexity of issues relating to the conflict making it significantly harder for the company to predict its performance. (Also see "Krka’s EBITDA Margin Slumps Despite Record H1 Sales" - Generics Bulletin, 18 Jul, 2022.)

Another firm with substantial operations in the region is Stada, which made significant efforts to maintain local production, including disclosing midway through 2022 that it had restarted operations in a factory near Kiev.

“The approximately 440 employees in Ukraine are safe,” Stada reported at the time, “and pharmaceutical deliveries, albeit very limited, have been able to continue in recent months.” Two Russian production sites were also able to remain operational to maintain supplies to the population despite supply chain issues. (Also see "Stada Enjoys Robust First Half For Generics And Biosimilars" - Generics Bulletin, 2 Sep, 2022.)

And outside of direct impacts on supply chains, less visible effects have also driven up costs for the industry. For example, paper has been made harder to source, affecting packaging and leaflets.

Medicines for Europe director general Adrian van den Hoven recently told Generics Bulletin that “with both countries historically being big producers and suppliers of paper, the cost and lead times for the delivery of paper have been extended.” Therefore “the industry has had to very carefully manage cardboard and paper leaflets,” leading to a renewed emphasis on efforts to make progress on electronic leaflets. (Also see "International Trade Groups Call For Regulators To Protect Off-Patent Industry From Inflation" - Generics Bulletin, 20 Jan, 2023.)

Generics Industry Efforts Continue

As the war in Ukraine continues, the generics industry both continues to play an essential role in relief efforts while also facing the business uncertainty and supply-chain disruption that stem from such a major conflict.

Summarizing the industry’s contribution to the crisis, Lily Jones-Herbst, corporate partnerships manager at International Health Partners, told Generics Bulletin that “Ukraine has been one of IHP’s biggest emergency responses to date and nearly a year on since the conflict began, IHP is continuing to provide essential medicines and medical supplies to our recipient partners.”

“The demand for our Essential Health Packs was extraordinary and our warehouse stock holdings were quickly depleted in those first few months of the response,” she said, noting that there had been “growing concern that we would be unable to continue sending EHPs not only to Ukraine, but also other disasters and crises.”

However, crediting off-patent manufacturers for their rapid contribution to relief efforts, Jones-Herbst said “the generics industry was quick to respond to help IHP” and “the response we received from industry was unprecedented,” with existing donors “quick to step up to the plate and provide IHP with additional stock and expedite already planned deliveries.”

“It goes without saying that IHP would not have been able to have the impact we had without the support of the off-patent industry and their willingness to step up during this time of crisis.”