White Paper

Reshoring A Nation's API And Pharmaceutical Production

By Matt Hicks, Federal Equipment Company

Pharmaceutical Factory sterile tanks

The pharmaceutical industry has embraced a global supply chain model for decades, seeking cost advantages made available by offshore manufacturing of starting materials, intermediates, and active pharmaceutical ingredients (APIs), particularly in Asia. However, a variety of concerns –– notably underscored by supply chain disruptions driven by the COVID-19 pandemic –– are pushing companies to redraw their global supply chains to resume more domestic manufacturing, aided by new technologies and equipment that can reduce costs.

Over the past few decades, many pharmaceutical companies have moved finished-dose pharmaceutical production and API production overseas. The movement of API production offshore, in particular, has been driven primarily by the opportunities for lower manufacturing costs and access to growing markets, including India and China. However, there is an implicit risk in relying on elaborate global supply chains in which the supply of many essential and critical drugs is dependent on overseas suppliers — this multiplies the risks of disruptions stemming from vulnerable points in the supply chain. The COVID-19 pandemic has elevated awareness about this supply chain issue and fueled a sense of urgency within the industry as well as the government to address the risks including legislation. A wave of new projects has initiated the goal of re-building –– or reshoring –– API and drug manufacturing. The key to reshoring success will use a combination of new and existing batch-style production facilities and equipment and development and integration of new continuous manufacturing techniques (i.e., flow chemistry) that require all new manufacturing equipment that may not exist yet.  In either case, new and refurbished GMP manufacturing space and equipment are very expensive.

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