The Ukraine Conflict – The challenge for Pharma    

James Tyrrell, Chair, Global Health, APCO Worldwide, assesses the pharmaceutical industry’s response to the Russian invasion of Ukraine and its ramifications on the sector.  

With no quick end to Russia’s invasion of Ukraine, life sciences companies are increasingly being challenged to navigate this complex geopolitical crisis. Pharma and medtech companies’ products are not bound by the sanctions imposed by the US, Europe, Britain and Canada in the same way as other ‘essential products’, such as telecoms and banking products. But we are starting to witness a divergence of opinion between large and small actors in the space, while the tightening regime of sanctions restricting foreign investment in Russia continues.  

Most life science companies have publicly condemned Russia’s invasion of Ukraine and pledged aid to respond to urgent medical requests from the Ukrainian Ministry of Health. Some pharma companies would undoubtedly like to play their part in using the leverage their products have to assert pressure on the Putin regime to end the crisis. But the reality for the life science industry is that their hands are somewhat tied, given they must act as responsible corporate citizens true to their core humanitarian purpose. 

While the likes of Ikea, McDonalds and more than 300 other well-known Western companies were quick to shut up shop in Russia following the invasion of Ukraine, some companies, including a significant number of pharma and medtech companies, have yet to take action. 

International pharmaceutical and medical companies, many of which have operated in Russia for decades, find themselves in a unique position. They do not sell burgers, sneakers or pine closets. They provide cancer medicines, inhalers and insulin, and are undertaking clinical trials to find new cures for patients with life threatening conditions, no matter where they live. This is not forgetting that the pharma and life science industry has a responsibility under international humanitarian law to continue supplying their medicines and devices to the patients that need them on a daily basis.   

But the reluctance of some international drugmakers to pause operations in Russia is being met with a growing chorus of criticism – and some of it is coming from their own camp. Biotech leaders and pharma investors continue to sign on to an open pledge supporting ‘the strongest possible disengagement’ from the Russian economy, with 882 signatories as of March 15. 

However, moderates counter this by saying that unless the US, EU or NATO enters directly into a war with Russia, companies that make essential medicines and healthcare products should continue to operate in Russia. Although many pharma companies point to their humanitarian responsibility to deliver essential medicines, the ability for them to follow-up this pledge with action is becoming increasingly difficult day-by-day. Supply chains have been particularly disrupted by the imposition of no-fly zones as well as the ongoing military assault on Ukraine. And when products do arrive, the collapse of the Russian economy – and the removal of Russian banks from the SWIFT international payment system – is making it increasingly difficult for companies to be paid for these essential goods.  

In the short-term, these international companies will likely take the hit financially. Reputationally, those pharma companies continuing to operate may be more insulated than other household name companies, where inaction could be perceived as being out-of-touch by customers and activist ethical investors which could prove to be costly to their brands as the conflict potentially drags on for months. 

With no end in sight to the conflict, the impact of the need to drive forward with harder-hitting sanctions could start to build pressure on the industry and further limit access to their products. As in most armed conflicts, the unintended victims will continue to be civilians, already struggling to access even the most basic medicines. For patients who are unable to access life-saving medicine, whether in Ukraine or Russia, this could have long-term consequences for the future health of both nations. 

We can also see further impacts in other areas of the pharmaceutical eco system. This week, the US told the EU that China had ‘signalled a willingness’ to help Russia, while China pushed their own conspiracy theories about the US operating ‘dangerous’ biolabs in Ukraine.  

The fall-out from this could prompt a new front in this geopolitical escalation with possible sanctions rippling out to other regions and supporters of Russia – far away from Ukraine. This may speed up the drive towards more protectionist policies that favour domestic innovation and production, which gained momentum during the Covid pandemic. Time will tell if the US seeks to ramp up pressure using some of the indirect tools at their disposal, such as slowing down the process of FDA approvals for dozens of new medications by Chinese pharma companies and the implementation of the Holding Foreign Companies Accountable Act (HFCAA), which could see three Chinese biotech firms delisted from Wall Street if they fail to comply with new audit orders from the US Securities and Exchange Commission (SEC).   

Three weeks into this crisis, the complexity for pharma and life sciences companies escalates daily. As such, they will need to continue monitoring the situation closely; take an agile approach to their corporate positioning and ultimately stay true to their central purpose. This, above all, is what patient centricity is all about – at a time when the world needs it most. 

APCO will continue to monitor actions and responses in the pharmaceutical sector to the ongoing crisis in Ukraine. 

Pharma’s response so far   

  • On March 4, Pfizer released a press statement1 through the company’s charitable organisation in support of Ukraine. In addition to its recently launched Ukraine Humanitarian Disaster Campaign that grants Pfizer employees the opportunity to donate to key charitable organisations, Pfizer distributed $1 million in grants to American Red Cross, International Medical Corps and International Rescue Committee.   
  • Johnson & Johnson voiced support for Ukraine in a statement2 on March 4 wherein, among promises to ensure employee health and financial security, the company pledged $5 million to aid the International Rescue Committee (IRC) and International Federation Red Cross and Red Crescent in their work with refugees. Johnson & Johnson’s pledge came on the heels of a March 2 3 from Roche that the company will donate 150,000 packages of Rocephin and other essential antibacterial medicines to Ukraine. They also confirmed that new site activation and new patient enrollment is currently on hold in Russia. 

 

  • Like many of its peers in the pharmaceutical sector, AstraZeneca will match employee donations to key organisations such as UNICEF and British Red Cross, while pledging $1 million to Project HOPE and International Medical Corps to bolster humanitarian relief efforts. In addition to establishing a €3 million Disaster Relief Fund to support Ukraine, Bayer suspended 4</sup/span> all non-essential spending in Russia and Belarus. That said, Bayer will continue to provide cancer, cardiovascular and other essential treatments to Russians in need.  
  • As companies figure out how to provide for their employees in the region, and those directly affected by the Russian invasion, GSK stopped its business operations in Ukraine and pledged5 £3.25million to the Red Cross and Save the Children, among other donations. While GSK products are still available, the company pledged to halt all advertising in Russia and will not enter into contracts that support the Russian administration or military.  

 

  • Merck updated its response6 to the Ukrainian crisis on March 7. According to the company’s press statement, Merck has already delivered 135,000 courses of molnupiravir through a supply and purchase agreement with the government and donated 100,000 courses of molnupiravir to Direct Relief. They confirmed that they “will not make further investments in Russia” and have also stopped planning for new studies. This comes as Bristol Myers Squibb has so far contributed more than $200,000 to Save the Children and International Rescue Committee to alleviate the health and refugee crisis in Ukraine. They too have suspended new clinical trial activations in Ukraine, Belarus and Russia. 
  • On March 15 Novartis confirmed it’s taking a two-fold response: an initial $3 million donation to multiple NGOs, and they “have decided to suspend any investments in Russia and stop all commercial marketing activities, as well as all scientific events, organised by us or by external parties.” 

 

  • This comes as the Novo Nordisk Foundation committed necessary funds to Ukrainian employees in need while pledging $8.2 million to provide support and protection for efforts to support refugees forced to flee Ukraine.  
  • AbbVie said in a statement that the pharma “has temporarily suspended operations for all our aesthetics products in Russia,” adding that the company has no manufacturing plants in the region and will continue to monitor their employees in Ukraine and the surrounding area. 

 

  • Eli Lilly’s response is two-fold: stopping the company’s export of non-essential medicines into Russia and donating profits from Russian sales to humanitarian relief organisations. They also clarified that the suspension will target certain drugs like Cialis. 
  • As pharmaceutical companies voice their support for Ukraine, biotech leaders and investors continue to sign on to a pledge7 to disengage from the Russian industry, with 882 signatories as of March 15. Leading pharmaceutical companies including Daiichi Sankyo, Otsuka, Astellas and Chugai have yet to issue formal statements. 

References 

  1. https://www.pfizer.co.uk/news-and-featured-stories/our-humanitarian-response-to-the-ukraine-conflict 
  2. https://www.jnj.com/johnson-johnson-statement-on-conflict-in-ukraine  
  3. https://www.roche.com/media/releases/med-cor-2022-03-02 
  4. https://www.bayer.com/en/ukraine 
  5. https://www.gsk.com/en-gb/media/resource-centre/our-response-to-the-situation-in-ukraine/ 
  6. https://www.merck.com/news/update-on-our-support-for-ukraine/ 
  7. https://medium.com/@BusinessLeadersForUkraine/call-for-business-leaders-to-economically-disengage-from-russian-industry-5e0352f89f5a  

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