Reshoring the UK pharmaceutical supply chain for future resilience

reshoring pharma supply chain

Questions of supply chain security and resiliency have been growing in recent years.

Sparked initially by the COVID-19 pandemic, the debate has been fuelled by the turbulent geopolitical landscape of recent times, which has created further disruption and uncertainty around access to raw materials and the global transportation of goods.

It’s no surprise to see reshoring being seriously considered or adopted by industries around the world, including pharmaceuticals.

“A generational shift in sourcing strategies” is what a joint whitepaper by Reuters and Maersk have called it and it’s thought more than half of UK manufacturers are now reshoring, according to one study at the start of this year.

Reorientating the pharmaceutical supply chain has many benefits, but it doesn’t come without its challenges either. So, could reshoring offer the UK the promise of long-term health security or is it a pipedream in today’s complex globalised market?

Understanding the concept of reshoring

For the health sector, supply chain resilience can be a matter of life and death. All public health activities and operations depend on an effective supply chain, making resilience and capacity-building vital for health outcomes.

With pharmaceutical supply chains becoming increasingly fragile, global public health stakeholders have acknowledged the need to rethink traditional supply chain management approaches.

As a concept, reshoring is counter to globalisation, which has been the dominant approach to trade in recent times, prioritising the free flow of goods, services, capital, and ideas across borders.

Reshoring, on the other hand, is the strategic decision to reverse this and reorient the supply chain to the domestic market, away from overseas locations. It aims to bring back manufacturing and production activities (or both) to national soil.

The motives for this shift are complex and varied, but are often driven by three main factors - economics, risk, and politics.

The benefits of reshoring for businesses and public health

Strategic reshoring can help pharmaceutical businesses address many of the challenges they are facing in today’s market and, in turn, protect medicine supply for better public health outcomes.

Here is an overview of some of the key benefits reshoring pharma manufacturing and production services can provide:

Medicine safety and quality control

According to the Pharmaceutical Security Institute, counterfeit medicines are on the rise. Almost 6,000 pharmaceutical crimes were recorded in 2021 - the highest since records began.

As supply chains grow more complex and cross more borders, there are more vulnerabilities for criminals to exploit.

That’s why efforts to eliminate fraudulent activity are largely focused on increasing visibility across the supply chain – offering bird’s-eye and granular views of product journeys and reducing the opacity that surrounds each stage of the process.

Within this context, reshoring can help pharma companies to better understand and control their supply chains to prevent illicit activity affecting their products and customers. It can also protect product quality and therefore brand reputation.

Agile production

Delays are costly and can have serious consequences if they lead to drug shortages.

Transportation delays, such as what we have witnessed recently in the Red Sea and Suez Canal, have led to longer lead times, shortages, and higher costs for imports.

Against this backdrop, domestic production can allow for quicker turnaround times and more agile supply chains that meet rises and falls in demand. It can also support a “just in time” model, where goods are only received at the exact time they are needed, cutting waste and inventory costs.

Supply chain resilience

Security is a large concern for pharmaceutical companies in today’s uncertain geopolitical landscape and at a time of increasing trade disputes and natural disasters.

As a result, companies are prioritising supply chain resilience and their ability to deliver products reliably and on time.

A less fragmented supplier base can limit the impact of these insecurities and reduce exposure to risk across the board. This, in turn, supports healthcare sovereignty and bolsters national security by ensuring uninterrupted access to vital drugs.

Economic growth

Instead of being a financial hindrance, future supply chain logistics need to be perceived as a business enabler and potential source of competitive advantage.

Beyond ensuring a stable drug supply, reshoring pharmaceutical manufacturing can stimulate economic growth. It creates job opportunities, fosters innovation, and supports local businesses, thus contributing to the overall prosperity of the UK economy.

Domestic reshoring can also create greater potential for collaboration between manufacturers, researchers, and academic institutions on home soil, helping to spur innovation, accelerate drug development, and advance medical science.

Cutting carbon emissions

Carbon reduction and reshoring go hand in hand.

Transporting materials and products thousands of miles before they reach the end consumer creates large carbon footprints. Domestic production can help companies achieve their environmental goals by reducing emissions within their supply chain.

The primary barriers to reshoring

Reshoring inevitably requires sourcing new partners and familiarity can be the biggest enemy to making changes.

According to a recent study, 29% of businesses are finding it difficult to reduce existing partnerships and a further 25% are facing stakeholder resistance.

As a result, a gradual pace of change is more likely, instead of a fast industry shift to reshore the supply chain.

Of course, higher initial costs of moving to domestic suppliers also forms a short-term barrier, according to 47% of retailers and manufacturers. But greater security, transparency, and quality assurances means reshoring strategies are likely to pay off in the long run.

Another barrier to transferring more manufacturing and production processes back to the UK is talent availability. Reshoring parts of the pharmaceutical supply chain necessitates a workforce equipped with highly specialised skills which, after decades of outsourcing internationally, may not be readily available.

A report indicates over half of manufacturers in the UK feel they lack the necessary skills to drive reshoring initiatives effectively.

The existence of a skills gap poses a significant challenge for pharmaceutical companies looking to reshore manufacturing operations, as they struggle to find qualified personnel to meet their production needs.

Attracting top pharma talent remains challenging, due to fierce competition both domestically and internationally and limited candidate pools, particularly when hiring specialist skill sets.

Addressing this barrier requires strategic investments in education, training programmes, and initiatives to attract and retain skilled workers, thereby fostering a robust talent pool to support the reshoring efforts in the pharmaceutical sector.

Expanding hiring remits internationally and sponsoring candidates where necessary can also help the sector widen its talent pool and benefit from the best talent, no matter where they reside.

As reshoring initiatives gain further traction, diversity in supplier choice and the skills base within the UK will strengthen. Those trailblazing companies driving the movement from the front are set to reap the rewards first of a more stable and high-performing supply chain.

Steve Brownett-Gale
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Steve Brownett-Gale
17 April, 2024