00:00When you look at geopolitics, Europe relies a lot on China for certain, I guess, ingredients that they're needed in
00:07the drug development.
00:08Does geopolitics throw everything up in the air?
00:11How exposed are you, for example, to energy prices or also just the Middle East in general?
00:16Yeah, good morning, Francine, and great to be on your show.
00:20Look, your question already at the very beginning is hitting the decisive point,
00:25and the dependency in the pharmaceutical industry, especially when it comes to active pharmaceutical ingredients
00:32and even materials which go in before, there is a high dependency.
00:37I just call it vulnerability in terms of being dependent from China and India, but particularly in China.
00:45So geopolitics today have to have a vital role in the boardroom.
00:51Actually, our company is now well-positioned to navigate this new geopolitical evolution of a new world order
01:02because what you see is that it's highly transactional-based.
01:06National interests are put at the priority.
01:10And when I look at the state of play between the U.S., Europe, and China, I see different speeds.
01:17In the U.S., you see health care and the access to essential medicine is top of priority
01:25and not only a matter of public health, but national security.
01:29But if Europe were to do the same, right, we put health care at the top of security and sovereignty,
01:36what does that look like?
01:37Is it more subsidies?
01:39Is it stockpiling?
01:41What does that mean in terms of national strategy?
01:43What should it mean?
01:44You see different approaches, and this fits with our strategy as a business entity
01:51where we have been doubling down on a local-to-local strategy
01:55when it comes to local manufacturing and even building up an entire supply chain.
02:00So in the U.S., you see it's moving away only from public health,
02:04but it has a vital role in the national interest in the national security strategy,
02:10and that's why it is accompanied by industrial policy.
02:14And that is also with the international trade policies.
02:18That's why you see we are a number one player in IV generics,
02:21that the generics are exempted from the tariffs in the U.S.
02:26because you have a systemic drug shortage,
02:28and they want to ensure, actually reshore, restore an entire manufacturing base in the U.S.
02:36whilst Europe, I would say, has the headline with the Critical Medicine Act.
02:42They've got to tighten their belt on actions,
02:44and also China is very much banking on what it can do in national interest.
02:49But, Michael, I mean, given everything that's going on,
02:52again, with the Strait of Hormuz, energy prices going up,
02:55I think, you know, gas prices in Europe is up 34%.
02:58What's the most complicated thing that you'll have to deal with in the next six months?
03:02Do prices go up from here?
03:04Yeah.
03:04Well, if I look at our company, our direct exposure in the region,
03:09I've got to say the well-being and safety of our people in the region
03:13and the continuity of patient care is top priority,
03:16but the direct business exposure is limited.
03:20It depends on the scale, scope, and duration of the conflict.
03:25Yes, of course, especially in Europe, depending on energy, prices have been spiking.
03:31We have been pretty much hedged for the remainder of the year,
03:35but we need to see what are secondary effects, if it is lasting.
03:39But again, the bigger picture of geopolitics means that we're doubling down
03:45of, you know, building up the supply chain in the U.S.
03:48We already manufacture 70% of what we cater in the U.S. for the U.S.
03:54And last week, we announced a partnership with Flow Corp to have a fully vertically integrated
04:00supply chain on a drug which is very essential.
04:03Is it difficult to move things from, you know, because of potential closures in hormones and otherwise?
04:11No, currently for us, it is not, because after COVID, we have learned that we took different routes.
04:18This is less so on the ingredient part, but more, let's say, for the medical technology business
04:23on power electronics.
04:25So we go around South Africa, if you so wish, and took precautionary action.
Comments