Creating the infrastructure to develop quick, new diagnostics was a major achievement of the COVID-19 pandemic. But we need to keep financing innovation to be ready for the next big one.
The COVID-19 pandemic sent shockwaves through the medical diagnostics industry. Overnight, the demand exploded for diagnostics, such as tests, personal protective equipment and ventilators. Diagnostics makers tried to pivot operations to meet the overwhelming demand for COVID-19 tests and treatments, but many had difficulty marshalling the financing and manpower to respond effectively.
The exponential nature of the pandemic meant that firms needed outside support to grow their business quickly. The European Union tried to help firms working on COVID-19 tests and treatment by providing new financial facilities and by expanding the European Investment Bank’s ability to lend to projects. In hindsight, though, companies needed more guidance, intervention and stronger leadership — to show how Europe aimed to address the pandemic.
The age of pandemics is upon us. The next pandemic could hit us in as little as a decade, according to a G-20 panel. The global cooperation, technological advances and financial and political support for health care built up during the current pandemic have strengthened our ability to deal with future virus outbreaks. After a bumpy start, medical diagnostics are advancing at lightning speed. Here’s how it’s happening.
Difficulty ramping up
When the coronavirus pandemic hit, people in many countries simply couldn’t get tested to find out if they had the virus. PCR tests were elusive, and it took days, and sometimes even a week, to get results. Now, many labs have results in 48 hours or less, and pharmacies have pop-up tents offering antigenic tests within 15 minutes. We have a come a long way – but the trip was painful.
Why did it take so long to ramp up? Many diagnostics firms simply didn’t have the capacity to begin testing for a new pathogen like SARS-Cov-2. Tests for new pathogens aren’t created overnight. The complex nature of biotech development means that it can take a year for firms to put in place the baseline technology needed to test for new pathogens, get approval and then begin manufacturing the new tests or other diagnostics. Money for extra resources can help firms speed up the process, but it still takes time.
The firms that were best-positioned to respond to the COVID-19 health crisis were those like European Investment Bank clients Mobidiag, Scope Fluidics and Biosurfit, which had already developed tests for other similar viruses, such as influenza, that also live in the respiratory tract. Those firms were able to quickly adapt their tests to COVID-19.
An explosion of new firms producing tests finally appeared about three to five months after the beginning of the pandemic. But these new firms’ COVID-19 tests – sometimes just copycats of tests that already existed on the market – were often unreliable because they couldn’t accurately detect the level of virus present. This was particularly true of antigenic tests.
The development of COVID-19 diagnostics faced another problem. Firms had difficulty getting the funding they needed to respond to the surge in demand. Loans to the biotech sector are often earmarked for specific development plans. Using funds to develop new projects or test for new pathogens requires the consent of investors. This process of getting investor consent and coming up with new development plans can take several months. In a push, new products can be developed in three or four months, but it usually takes much longer.
Flowing money to development
Money was an issue at the beginning of the pandemic. Diagnostics firms needed cash fast, and Europe had to come up with new financing facilities to provide those funds. That support helped European development, but it lacked the scope and depth of Operation Warp Speed, the $11 billion US programme to fund COVID-19 vaccines, diagnostics and treatment.
Europe could have gone bigger and bolder, but we did reasonably well. BioNTech, the German company that developed the Pfizer vaccine, received €375 million in funding from the German government to accelerate development and production. The European Investment Bank also provided BioNTech with €100 million in financing for vaccine development, having already loaned the company €50 million for cancer research. The Pfizer-BioNTech vaccine never received funding from Operation Warp Speed.
The European Commission also set up new sources of funds for small, innovative firms, such as the European Growth Finance Facility. Guarantees provided by the European Fund for Strategic Investments (EFSI) allowed the European Investment Bank to tap the new facility for riskier projects or start-up firms. The temporary measure put in place during the pandemic enabled the European Investment Bank to increase the amount of money we lent directly to projects to up to 90% of the cost of an eligible project, substantially above the previous cap of 50%. In addition, the European Investment Bank rapidly expanded the amount of additional funds we could lend to existing clients by applying a simplified procedure to top up existing loans by 20% for COVID-19-related activities.
Another positive development to come out of the pandemic is increased investor interest in the European biotech sector, which could spur health innovation. European investors tend to be more risk averse, and they often lack the deep pockets needed to support the long development cycles of new products or treatments. Firms may attract funds for early-stage development projects, but that funding can run out before they get to clinical trials. The result is that European firms often end up looking for money from the United States, or more recently, China.
That dynamic is changing. We are starting to see a number of successful exits from high-risk biotech investments. Hologic, a US firm specialising in women’s health issues, bought Mobidiag, a Finnish developer of molecular diagnostics for infectious diseases and antibiotic resistance, for €668 million this past summer. These kinds of transactions show that European biotech investments can yield strong returns – similar to those found in the United States.
A lead on future outbreaks
Technology has been one of the most important tools in our pandemic arsenal. We are all familiar with the national apps tracking COVID-19 cases, variants and the famous reproduction rate. In Europe, we even have a digital vaccine passport.
These technological advances may seem a little bit Big Brother, but they have provided invaluable information for immunologists and other researchers. Technology has also enabled scientists to share the genome sequencing of different virus variants, helping determine whether the vaccines and treatments we have developed are effective or not. The data collected has allowed scientists to model possible outcomes based on the virus’s spread. Data was also crucial in helping governments navigate the pandemic and make the difficult decision to lock down.
The ability to predict what might happen next will prove instrumental in curbing new pandemics or even regional outbreaks of disease. These advances aren’t limited to the Western world. The technologies are being used in many countries, and their prevalence should grow over time.
At the same time, the pandemic resulted in the strengthening of health systems in many developing countries. Countries have beefed up their ability to address pandemics and the diagnostics needed to test for and treat disease. We need to build on this effort. Many low- and middle-income countries cannot continue to invest in these health efforts without international support.
To that end, the European Investment Bank is working with the Bill and Melinda Gates Foundation on the African Health Diagnostics Platform. The platform aims to improve the quality of and access to diagnostic and laboratory services in parts of Sub-Saharan Africa.
The pandemic also lead to the decentralisation of diagnostics like testing. Self-tests, home tests, and tests in pharmacies or in local clinics are now available. We no longer have to go to the hospital to be properly tested. In future outbreaks, these advances in diagnostics should mean that people can be tested for pathogens more quickly, and they won’t necessarily have to stand in long lines at the laboratory with potentially contagious patients.
The other big development has been how we interact with doctors. Video conferencing and artificial intelligence like chatbots can provide doctors with enough initial information to determine whether someone can be treated at home or at a local health provider – or if that person needs to be hospitalised. Those advances could improve health care efficiency and effectiveness, particularly when resources are stretched.
Technology has also enabled scientists to share the genome sequencing of different virus variants, helping determine whether the vaccines and treatments we have developed are effective or not.
The danger of forgetting
The lessons of the pandemic can be summed up in two words: Be prepared. The coronavirus pandemic will not be the last pandemic or regional epidemic that we face. Look at our recent history: Ebola, Zika, severe respiratory syndrome (SARS) and Middle-East Respiratory Syndrome (MERS). These epidemics were largely isolated to certain geographical regions, but the coronavirus pandemic has taught us that our interlinked, globalised world is susceptible to virus outbreaks and mutations.
We need to think globally. We need to look at countries that are underdeveloped – and therefore possibly the source of rapidly expanding contagion – and support their health infrastructure. Nobody is safe until everyone is safe. We also need to keep investing in biotech and medical innovation, despite the risk. Innovation brought us COVID-19 vaccines in record time. It will be key to fighting future pandemics.
The biggest danger is that we think of this pandemic as an isolated incident and go back to our normal lives. We’ve learned how vulnerable our societies and health systems are – not to the mention the enormous economic cost of a pandemic. We need to learn from that experience and keep developing the tools that will protect us from the next big one.
- Auvo Kaikkonen is a Head of Regional Representation, China and Mongolia at the European Investment Bank
Compliments of the European Investment Bank – a member of the EACCNY.