Some local firms hope to bring bigger portion of pharma manufacturing back to U.S. — and N.J.

The innovative cancer therapies that Rafael Pharmaceuticals is testing were developed in the U.S., they were discovered in the U.S. and the researcher — perhaps — first screamed, “Eureka,” there, too.

Sanjeev Luther of Rafael Pharmaceuticals.

That’s why, according to the CEO and president of the Cranbury-based company, Sanjeev Luther, its finished pharma product will never be manufactured outside the U.S..

The decision wasn’t exactly a nod to U.S. legislators’ and the White House’s ongoing efforts to bring pharmaceutical manufacturing stateside. Rather, Luther said the company wanted a reliable local supply chain — even if it costs more — that recognizes the local work that went into developing these essential medicines, which target highly aggressive cancers of the blood such as Burkitt lymphoma and acute myeloid leukemia, as well as pancreatic cancer.

But, there’s a trade secret that belies how reliant even U.S.-made pharma products like Rafael’s are on overseas manufacturing.

“The thing is — a lot of the raw materials, the chemicals, still come from China,” Luther said.

Congressional leaders have aspired to “onshore” more of the pharma manufacturing process. Exact figures on how much of that supply chain lies offshore are difficult to find, but it’s been reported by the U.S. Government Accountability Office that about 80% of ingredients in pharmaceutical products are manufactured abroad.

But, multifaceted as the pharma manufacturing process is, some wonder if the country will ever have all the right ingredients to say it’s home to most of it.

Eugene R. Diaz, whose development firm Prism Capital Partners took on the major project of turning the former Hoffmann-La Roche campus into the life science hub known as ON3, said that, from what he’s seen, that manufacturing is gone — and it isn’t coming back.

“A majority of biopharma companies, especially the larger ones, moved their manufacturing offshore years ago due to operating cost issues,” he said. “I don’t think that’s going to change, considering other countries are still cheaper and require less capital to do this manufacturing.”

NJIT’s Life Sciences & Engineering Center will host the BioCentriq facility.

The cost concern is precisely why the industry’s biggest lobbying group, the Pharmaceutical Research and Manufacturers of America, hasn’t supported all aspects of legislation that would reabsorb the global pharma supply chain.

With how much the U.S. base of manufacturing has dwindled in the past several decades due to labor costs, the global pandemic ignited fears that the increased demand for life-saving medicines would lead to a domestic shortage.

And Luther said he’s seen some supply chain disruption already for competitors. Even if his company relies on raw materials from overseas markets, he said the company was lucky to have enough of those components stored away to continue its local manufacturing uninterrupted.

There are many components involved in making medicine, as well as some examples of materials made locally. The demand across the board for those components has never been higher.

As an example of that, Tom Spina, CEO and president of Lakewood-based Luminer, said his pharmaceutical label manufacturing firm has experienced a surge of orders related to COVID-19 clinical-stage treatments.

“On the clinical trial side, these COVID-19-related trials went to the top of the heap,” he said. “And these trials are in great demand, and require materials that have to be delivered very quickly.”

Spina’s company makes extended-content labels that are packaged with medicines. Drugs, particularly those in development, require sometimes 60 pages of instructions, often in different languages.

Luminer also manufactures labels for over-the-counter medicines such as Tylenol. Spina said demand increased dramatically for these drugs as a result of consumer stockpiling during the first few months of the pandemic.

“There’s been a rush, but I believe that’ll slow,” he said. “After you’ve got six bottles of Tylenol, you probably don’t need any more.”

Everyone’s expecting the next big manufacturing rush will be any direct treatment for COVID-19 that’s discovered, or any vaccine. And, although certain components might come from the global market, there’s bound to be some highly local manufacturing going on, too.

Haro Hartounian of New Jersey Innovation Institute.

Haro Hartounian, senior executive director of New Jersey Innovation Institute‘s Biopharmaceutical iLab, said that, even with no vaccine products yet approved, big pharma companies are already penning agreements with large contract development and manufacturing organizations, or CDMOs, to prepare for manufacturing.

Hartounian said his organization reached out to the FDA to offer its capabilities at the Biopharmaceutical iLab, which typically provides early-stage pharma startups with manufacturing solutions.

“We let them know to put our name on the list,” he said. “We’re a small entity, but we want to help as much as we’re able to in order to manufacture vaccines.”

At the same time, the organization is also working on the state’s only academic manufacturing facility for cell and gene therapies. The facility, BioCentriq, will be located at New Jersey Institute of Technology’s Life Sciences & Engineering Center in Newark.

Even with the delay of COVID-19, Hartounian is optimistic BioCentriq will up and running in late September — adding a specialized manufacturing facility in New Jersey and perhaps moving one small step closer to making local manufacturing more attractive for life science companies.

“This is really a place to help smaller startup firms,” he said. “CDMOs focus on big pharma companies, with deep pockets. This will be there for smaller companies that have been underserved. And the hope is that this will not only generate a workforce locally, but will bring companies to New Jersey from other states …  to work together to address cell and gene manufacturing challenges of today.”

Highly specialized real estate

An invisible threat in most settings, researchers know where to find the novel coronavirus at the ON3 campus in Nutley.

The live virus sits in a biosafety level 3, or BSL-3, lab located on the former Hoffmann-La Roche campus. This type of heightened-precautions lab is what researchers need when they’re working with microbes that can cause serious diseases.

Eugene Diaz of Prism Capital Partners.

Given how critical that work will be to learning more about the virus and the serious respiratory illness it causes, one might assume there will be a new injection of demand in the local real estate market for labs like those built on Prism Capital Partners’ ON3 campus.

But you’ll have to trust Eugene R. Diaz, one of Prism’s founders, when he says there are more than a few barriers to entry for real estate firms building these spaces.

“The cost and expense to build them is so great that you don’t often see the type of rampant speculative development you do with other real estate,” he said. “That’s why there’s never really been a run on this sort of lab space.”

Not just any building can be transformed into a hermetically sealed, modern lab environment. These spaces call for special (and expensive) air conditioning systems, high ceilings and backup energy infrastructure.

The cost of getting it wrong is massive, Diaz said.

“If you’re researching CAR T-cell therapies, you’re talking about spending (thousands of dollars) for every small slide,” he said. “And, if your temperature changes by 6 degrees, your cells are no longer good and, I’m sorry, you might have just lost half a million dollars.”

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