Industry solutions and green financing: DCAT Sustainability Summit day 2

On the second day of the inaugural DCAT Sustainability Summit held in Lugano, Switzerland, a series of presentations in the form of industry solutions were given from a range of experts in different areas. The day also closed with a Keynote speech from Nili Gilbert. 

The first part of the day was based around industry solutions, where representatives from pharma companies provided case studies on some of the work they have been doing on sustainability, sharing their learnings and best practices. 

Industry solutions part 1 

First in the series of cases were MSD and Thermo Fisher, explaining how they have formed a partnership to work better. The speakers, Olivier Roland and Matthew Yamatin (from MSD and Thermo Fisher respectively) stated that their companies quickly realised that they cannot achieve bigger goals alone, so they formed a partnership to pool knowledge and resources.

The speakers provide examples of how a great partnership can expedite collective progress. It’s a symbiotic relationship where they rely on each other, Thermo Fisher is integral to MSD achieving their goals, and visa versa. 

Thermo Fisher has signed two new agreements in Europe, which will help to achieve MSD goals relating to use of renewable energy across their systems. One agreement is with solar developer ib vogt in Spain. 

MSD was one of the founding partners of the Energize initiative, again pushing towards renewable energy.

A number of other initiatives are being built out across the conglomerates, including increased harmonisation of supplier engagement strategies to reduce Scope 3 emissions. Yamatin stated that communicating with suppliers and external stakeholder groups can be just as important as communicating with each other. 

The pair both drove home the message that operating responsibly requires a culture shift. By integrating sustainability into the core of the business, into normal processes, into regular decision making and making it second nature, it makes it more effective. Execute, monitor and improve was their recommendation, at every level of the company. 

Digital Solutions from Arcondis 

Christian Hebich, CEO of Arcondis, the Life Sciences Consulting company, gave an overview of how to utilise digital solutions across the whole value chain in healthcare. 

Hebich highlighted three main ways this can be incorporated: 
-    Digitalisation of the internal value chain – automation, quality and excellence 
-    Digital products – increasing digital assets, breakthrough potential
-    Digital customer engagement – increased reach and customer satisfaction though better communication. 

He went on to say that new technologies are emerging, further than machine learning and artificial intelligence. New sensors and remote monitoring devices, block chain technologies, the list goes on. 

Even some of the biggest roadblocks companies face, shortages in the system, labour, patient access, digital solutions can be used to help to overcome these challenges. Hebich points out that digitalisation can help the environment through the one health concept, with examples of digital manufacturing in healthcare such as digital labs, they’re adaptive, self-optimising, incidentals are reduced, and intelligent systems.

Another initiative is for digital or smart factories. This all plays into the sustainability business case, presenting numerous opportunities to drive change and be transformative. 

This presentation triggered several questions from the audience: 

How could AI help the sustainability agenda? 
To which Hebich responded: “It’s a particular challenge, it’s a hot topic and lots of companies are looking to invest there. To use generative AI, you need to have data available, this is where many companies fail. You need to have the right data architecture to apply ML or AI. It’s a valuable tool, but to really make an impact, you have to address some of the other issues first.” 

In a question from Grohl: “Where are you seeing the intelligence and the minds driving innovation in tech?”
Hebich: “It’s a very specific skillset, sometimes IT has the intelligence, but it’s a different business model. We have started to approach universities and hackathons, because they know the systems to find talent and ideas. But it’s a big shift in operating models. How to collaborate with partners, sometimes it’s better to outsource some expertise.” 

The next podium presentation was from Nick Hutchinson, Head of Market Development and Global Sustainability, Evotec

Hutchinson’s industry solution was in using biologics for better access to tomorrow. 

He highlighted how PD-1 antibodies are not readily available to people in Africa, South America, and across areas of Asia. To increase access he suggests aiming to reduce the manufacturing and development costs of these biologics. This can be done by using a highly intensified process to maximise efficiency, investing in single use technology, and he caveats here that you wouldn’t think this was sustainable but it actually reduces emissions and water waste, counteracting the single use aspect.  

By using intellectual property in the process, this reduces the cost, which again expands access around the world. 
Evotec believes they can reduce the cost from US$200 per gramme, to US$50 per gramme. 

A perceptive question from the audience centred around challenges in different regions when introducing continuous manufacturing facilities, from a regulatory perspective. 

Hutchinson answered that their only concerns would be around delays, considering details and filing for BLA submissions, but that in general Evotec weren’t unduly worried about this being a big challenge. 

After a short breather for coffee and pastries and taking in a little sun we dove back in with more Industry Solutions. 

Nicole Schumacher, Sustainability & Compliance, Lead, Global Procurement, F. Hoffman-La Roche Ltd, gave an informative and positive presentation about the decarbonisation of Roche’s supply chain. Roche’s decarbonisation targets include striving to use 100% renewable energy by 2050. 

They are starting with a strong approach to supplier engagement – aiming to achieve overall Scope 3 reduction in the value chain, starting by engaging suppliers to set science-based targets. To achieve this Schumacher describes the partnership engagement plan Roche have instated, where they categorise their partners through monitor, lighthouse, basic engagement, and active partnership stages – to determine how much engagement is needed to incentivise change. They work with their partners on a path to change using a Scope 3 calculator, access to the Energize programme, and SBTi as a service. 

However, Schumacher doesn’t deny that there are challenges. Roche has a massive supplier base, so it is hard to narrow it down, but generally they focus on the fourth level. She states that they are aware that they can’t get to everyone, the suppliers are too diverse to reach out to at the same time with the same approach. There are also conflicting priorities so a convincing business case needs to be developed, and sustainability needs to be a meaningful add on. 

Schumacher receives a questions about the costs of these action plans.  
Schumacher: “Sustainability can reduce costs long term, we try to show people that if you reduce waste, you reduce emissions, so selling sustainability as an add on. This does work quite well.”

Another question from the congregation on transparency: How can the strategy increase transparency? 
Schumacher: “We have a new head of sustainability who is working with stakeholders, in a top-down approach now rather than a bottom-up approach, which is what we did before. We are having one on ones with the CEOs where we walk them through the whole programme, what does it mean for pharma programmes, for diagnostics, for distribution, etc, so they can be involved right from the beginning. But it’s something you need to start years in advance, so it means we are speaking with people now pushing for targets in a few years.” 

Oliver Viehmann, Principal from TWS Partners AG on pricing in pharmaceuticals

Viehmann starts their presentation by asking by how much do think drug and vaccines net prices differ across countries of comparable GDP? 

There are many cases where they are comparable across the financial markets, but the prices differ by over 200%. This is due to different market mechanisms in place in each country. 

Viehmann states that if we can incentivise and steer behaviour by affecting pricing, we can do the same thing with sustainability behaviour, we can incentivise and use mechanisms to achieve sustainability goals. Mechanism design can be leveraged to optimise up- and downstream markets, from supplier to pharma to customer. Working on cost saving, innovation, process optimisation and efficiency – this again comes back to business cases.  

After lunch the summit held a roundtable on sustainability and product development in which industry experts provided practical ways to overcome the challenge of upstream product development while meeting sustainability requirement. The roundtable consisted of Samantha Gordine, Sustainability Solutions Lead, Arcondis, Arne Kloke, President, Alliance To Zero & Head of Sustainability,  SCHOTT Pharma, Dora Rio, Global Head of Sustainability, SHL Medical AG, and moderated by Maria Skinner, Head of Sales, Arcondis. 

The final panel of the conference was a ‘CEOs unplugged’ panel.

Sitting on the panel was: 
Christian Hebich, CEO, Arcondis
Paolo Tubertini, CEO, Olon SpA
Piero Poli, CEO, Rivopharm SA
Pierfrancesco Morosini, CEO, ICROM SRL, and DCAT Director
Luca Sartorello, Chief Sustainability Officer, ICE S.p.a.
Sucheth Davuluri, Vice Chairman and CEO, Neuland Laboratories
Waldo Mossi, CEO, HAS Healthcare Advanced Synthesis
Moderator: Paolo Magri, CEO, BioSeutica and Past DCAT President

They were first asked what makes their companies stand out in how they are tackling the sustainability issue, to which most highlighted Scope 3 emissions as their main focal point, with various tactics.

The panel discusses how there has been a shift in how companies discuss sustainability and the environment, saying it has become more built into the foundations of their practices, and where this hasn’t been, it needs to be. 
Piero Poli comments on how he thought of it as a daunting task at first, until he realised it could be woven into the smaller aspects, changing their water systems, reducing water waste, changing the air system to a recycling system, reducing energy consumption, to name a few. He said that many of these were also tactics just to reduce costs. 

“Every little helps, not all investment has to be a huge investment to make a difference in sustainability.” 

Tubertini agreed that there was a different trade off with affordability and CO₂. 

Magri asked whether regulatory agencies were a help or hinderance? 

Tubertini said that it depends on the country, countries where industrial development is set as one of the first goals, often sustainability is not included in that.

Davuluri suggests that agencies need to work with consortiums, initiatives such as with EcoVadis, and governments, ensuring equal representation and actions across that whole framework.

Mossi is keen to involve the new generation in the green strategy, impressing that this is where the most outside the box thinking will come from, along with a passion for change. 

Closing the event, in a much anticipated Keynote was Nili Gilbert, Vice Chairwoman of Carbon Direct. 

Throughout her work, Gilbert became fascinated by the scale of change needed to address climate change in such a short period of time. 

She encourages the industry to think about not what we are going to leave behind but what we are working towards, don’t think about things we would lose, but what are we building? 

Gilbert sees a future fuelled by competitive clean energy, in abundance, bringing cleaner air and better health, through collaboration across communities and regions, and she impresses the need for citizen engagement here. The returns are energy security and energy independence, which could revolutionise the lives of many. 
She further adds her voice to a topic that has been present throughout the summit: financing the green programme. Investing in renewable energy, and in zero carbon technologies. She states that economists predict that 80% of the total finance needed to fund the green transition will come from the private sector, more than double what it currently stands at. 

Gilbert highlights four key categories to consider when financing the road ahead: 
1.    Scaling green activities 
2.    Transitioning things are not yet net zero but you just need to invest to get there 
3.    Assets that will not be able to be net zero so will need to be phased out, cannot be forgotten about or risk becoming a liability 
4.    Assets that are climate solutions. 

“A just transition in society, labour in our own economies and between countries, thinking about where and how we grow.”

“Working together, we can achieve the results that the world wants and needs”

To see more about what CPHI has to say about sustainability in the industry, and how we are aiming to reduce the environmental impact of pharmaceuticals, download your copy of the 2024 Sustainability Report here.