SWITZERLAND: An Introduction to Life Sciences
PRACTICE AREA OVERVIEW
Switzerland: Life Sciences
Dr. Claudia Götz Staehelin
Dr. Oliver M. Brupbacher
Dr. Nicolas Mosimann
Prof. Dr. Jean-Luc Chenaux
Claudio Helmle
Dr. Thomas Eichenberger
The life sciences are as fascinating as they are complex: They deal with people's most immediate and pressing needs while, at the same time, working with development and investment in the horizons of ten or more years. They are driven by the most advanced and daring research and technology, and still they move within a narrow regulatory corset, shaped by concerns for public health and strict efficacy and safety requirements. They are truly universal and yet they are governed by a plethora of national, and often disparate, regulations.
We have listened to our clients in the life sciences sector, from the most established global enterprises to the smallest start-ups. Here are five current trends that keep them up at night.
Acceleration and Access
While the time it takes to bring innovation to market has traditionally been critical for patients with urgent needs, in particular those with life-threatening or debilitating diseases, the Covid-19 crisis has brought the topic of early or managed access to medicines to the forefront of a wider public’s attention in Switzerland.
The astonishing and unprecedented achievements in bringing respective vaccines and therapeutics to combat Covid-19 to market, in some cases in less than one year from the outbreak of the disease, demonstrate the not yet fully exploited potential in this respect. A look at the status of respective authorisations demonstrates that in most cases, Swissmedic has been, and is, working with rolling reviews and temporary authorisations. At the same time, platform technologies such as mRNA challenge the ways medicines are discovered, developed and manufactured, and how their safety, efficacy and quality is being assessed across disease areas by both the industry and the regulators.
Nevertheless, we continue to see significant challenges for our clients, starting with a lack of alignment between early access and reimbursement, in particular as there is no equivalent to the temporary and simplified marketing authorisations in the reimbursement field. Challenges to the supply chain design, too, can stand in the way of early access as delays in obtaining requisite establishment licences may lead to subsequent delays in obtaining marketing authorisation. Finally, globally operating companies are subjected to a range of varying country-specific early access and reimbursement procedures, which binds significant management resources and may lead to local unavailability.
Biotech Under Performance Pressure
While the success of players like Pfizer and Moderna was broadcasted daily, biotech became under heavy pressure in the second quarter of 2021 which led to one of the worst years ever for the industry. While our C-level executive clients and venture capital investors from small and midsized biotech companies reported that biotech has proven to be very resilient during early times of the global Covid-19 crisis, the S&P Biotechnology Select Industry Index has seen a drop of about 18% in 2021 with continued decline in early 2022. The reasons for the poor performance remain unclear. Some mention the slow M&A deal activity in recent times and the valuation mania at the beginning of 2021 whereas others point to general risk factors, such as new tariffs and trade barriers, inflation, the expected increase of central bank rates and political conflicts, including between the United States, Russia and China. Such risk factors may have an even bigger impact on the high-risk world of biotech.
After years of rapid growth, the number of financing rounds involving Swiss biotech start-ups and the total amount invested consolidated at a high level in 2021 with 37 rounds (i.e., 5 less than in 2020) and a total of 767 million invested (53 million less than in 2020). By contrast, healthcare venture capital deal activity has spiked both at global and Swiss levels. In Switzerland, the number of financing rounds increased by 44.4 % to a record of 26 with a slight increase of the total amount invested to CHF168.9 million. According to our sources, main drivers were the healthcare industry’s pressure to reduce cost, innovation in the field of mobile devices, apps and the Internet of Things, and increased clinical trial activity as a result of the Covid-19 crisis. Also, the pandemic has shown an urgent need of the healthcare sector to catch up when it comes to digitalisation.
Challenges to Globalisation
Many of our clients have recently been facing disputes due to partial bottlenecks and quality concerns on the part of their suppliers, or even financial failures of their contract manufacturers, which challenge the robustness of numerous supply chains across the globe. Again, accentuated by the Covid-19 crisis, many of our international life sciences clients have therefore been re-thinking their global supply chain design.
In the face of the pandemic, certain jurisdictions such as the EU have been quick in implementing export controls for vaccines. This is in addition to restrictions on international distribution models out of Switzerland that have come into play in the last years. For example, certain “Swiss invoicing” distribution models that take advantage of favourable tax conditions in Switzerland have come under scrutiny by German courts that ordered companies to apply for separate wholesale or manufacturing licences in the EU.
More recently, technical barriers to trade – long thought to have been overcome – have also started playing an important role again. Despite the harmonisation of Swiss medical device law to European law, in particular to the Medical Devices Regulation and the In Vitro Diagnostic Medical Devices Regulation, the European Commission claims that the Mutual Recognition Agreement in relation to conformity assessments also needs to be updated in order to maintain facilitated reciprocal market access between Switzerland and the EU. However, the European Commission is linking the update of the Mutual Recognition Agreement to further progress in the negotiations on the Institutional Framework Agreement between the EU and Switzerland which are currently at a standstill. Despite the European Commission’s position, Germany recently decided to continue its bilateral recognition of existing certificates of conformity issued by notified bodies in Switzerland, thereby adding further to an increasingly fragmented and complex cross-border landscape.
Digitalisation
Digitalisation has put the entire life sciences value chain from research and development through to the engagement of patients and healthcare professionals under pressure to innovate. Digital engagement can take many forms, such as big data, personalised and precision medicine, patient-generated health data, wearables, apps and devices, pharma-as-a-service, marketing and communication to raise disease and brand awareness, patient community-building on social media, patient education and training, as well as support for treatment adherence and monitoring.
In our practice, we are observing a tendency of our clients towards fully integrated digital customer relationship solutions that span across channels and functions and include clinical, medical, technical operations, supply chain, marketing, and sales or even include insurance coverage. However, current national legislation and case law do not yet adequately or consistently reflect this trend. This poses significant challenges for life sciences actors in a wide range of areas such as clinical trials regulations, data analytics, blockchain, data privacy and advertising rules. Accordingly, global standardisation and simplification processes are at the heart of many of our clients’ efforts.
Political and Regulatory Scrutiny
The life sciences industry continues to be shaped by the increase in healthcare compliance, as well as political and regulatory scrutiny. On the legislative side, this is reflected, among other things, in the recent amendment of the Swiss Therapeutic Products Act and the enactment of the Ordinance on Integrity and Transparency in the Therapeutic Products Sector. While the existing integrity provisions are for the time being limited to prescription medicines, efforts are underway to extend them to medical devices. Against this backdrop, we see both the industry and healthcare providers scaling up their compliance programmes.
In line with these developments, our clients experience an increase in healthcare compliance and regulatory investigations, as well as a general trend towards disclosure and transparency, as exemplified by the inspection of the Control Committee of the National Council that was launched in May 2020 regarding the handling of the Covid-19 pandemic by the Federal Authorities. The desire for transparency is also reflected by an increase in the number of Freedom of Information Act inquiries faced by our clients.
The tightening regulatory scrutiny is also reflected by the reimbursement procedure for medicinal products. The premiums for statutory health insurance have been rising for years, leading to increasing pressure from politicians for service providers and the pharmaceutical industry to reduce cost. At the same time, reimbursement procedures by regulatory authorities remain lengthy, and the regulatory authorities continue to apply pricing criteria rigorously. Against this, speed and timely availability remain an issue for life sciences and patients alike.