PharmaceuticalOutsourcingQ42020 - 44


Balancing Cost, Efficiency
and Resilience:
Reshoring Life Science Supply
Chains is Easier Said Than Done
Adam Lohr
Partner and Life Sciences Senior Analyst
As another wave of the COVID-19 pandemic surges across the
globe, patients are flooding into hospitals, economies are returning
to lockdown and supply chains again face restrictions. This second
wave has renewed fears of drug and medical device shortages, and
given new life to conversations in the United States about national
security and overreliance on manufacturing in other countries. While
our current environment amid the pandemic may spur politicians and
companies to examine reshoring supply chains, the reality is that our
supply chains and manufacturing capabilities have been intentionally
offshored over the last few decades for one reason: cost.
As much as we may want to believe in the altruistic motives of reshoring
(namely domestic job creation and economic self-sufficiency), it
will take government regulation and monetary incentives to drive
substantive change. Due to complexity and cost structures, there
is limited reason to expect widespread supply chain reorganization
in the immediate future. In the long term, however, there is a valid
argument for reexamining the domestic approach to manufacturing
and identifying ways to increase supply chain resiliency and manage
exogenous exposure.
There is limited political risk in emphasizing reshoring as a means to
create jobs and decrease reliance on foreign entities, while ignoring
the reasons behind the status quo. Manufacturing in America can be
orders of magnitude more expensive and complicated due to our
strong currency, tax structures, cost of labor and robust regulatory
structures, and tackling such topics requires significant political effort.
What likely makes more sense are policies that incentivize companies
to increase targeted portions of their supply chain domestically in the
near term, while evaluating long-term structural changes.
Nearshoring, and more generally outsourcing, have favorable
outcomes compared to a pure reshoring strategy, mainly that supply
and production risk can be diversified, partners with specialized skills
and knowledge can be selected to complement existing capabilities,
and companies can take advantage of more favorable tax and
Pharmaceutical Outsourcing |


regulatory structures until further clarity is achieved in the U.S. Many
companies will find that a combination of nearshoring, outsourcing,
and domestic support for R&D and manufacturing is a more balanced
and sustainable solution.

Reality of Perceived Risks
The pandemic has intensified supply chain pressures throughout
the broader economy, but the life sciences ecosystem has received a
particularly high level of scrutiny because this recession was brought
on by a crisis to public health and safety. While the life science industry
has been applauded for its efforts in combating the pandemic, it has
also come under intense pressure to ensure a consistent supply of
therapies, medical equipment and supplies. Overall public perception
and understanding of the industry has benefited in 2020, but life
sciences companies have also been an easy target for politicians and
the media to focus on how much some elements of the life sciences
supply chain have been outsourced and where vulnerabilities exist.
While there were major shortages of ventilators and personal
protective equipment, those were driven by an unprecedented
demand shock and limited capacity of national stockpiles. The
U.S. manufacturing sector, supported by processes that have
become more nimble and automated, was able to quickly pivot
to fill these needs.
The pandemic has been a lesson in how to do more with less in the
face of unprecedented adversity. That is one reason why, in the life
sciences industry, we have seen a surge in investment in technology
and outsourcing to parties with specialized skills and knowledge.
Even the biotech and pharmaceutical industries - which have far
outpaced global market performance - pale in comparison to the life
science outsourcing and technology sector.
Still, there was concern about drug shortages as shipping routes
were closed and countries froze the sale of certain products to secure
| October/November/December 2020



Table of Contents for the Digital Edition of PharmaceuticalOutsourcingQ42020

Editor's Message
Editorial Advisory Board
CN Perspectives
Social Media Connections
Insider Insight - Price
Insider Insight - Ventura
Contract Manufacturing
Supply Chain
Contract Manufacturing
Interview with Yourway
Supply Chain
Clinical Trials
Supply Chain
Analytical Testing
Supply Chain
Clinical Trials
Analytical Testing
Horizon Lines
Industry News
Advertiser's Index
PharmaceuticalOutsourcingQ42020 - Cover1
PharmaceuticalOutsourcingQ42020 - Cover2
PharmaceuticalOutsourcingQ42020 - 1
PharmaceuticalOutsourcingQ42020 - Editor's Message
PharmaceuticalOutsourcingQ42020 - 3
PharmaceuticalOutsourcingQ42020 - 4
PharmaceuticalOutsourcingQ42020 - 5
PharmaceuticalOutsourcingQ42020 - Editorial Advisory Board
PharmaceuticalOutsourcingQ42020 - 7
PharmaceuticalOutsourcingQ42020 - CN Perspectives
PharmaceuticalOutsourcingQ42020 - Social Media Connections
PharmaceuticalOutsourcingQ42020 - Insider Insight - Price
PharmaceuticalOutsourcingQ42020 - 11
PharmaceuticalOutsourcingQ42020 - Insider Insight - Ventura
PharmaceuticalOutsourcingQ42020 - 13
PharmaceuticalOutsourcingQ42020 - Contract Manufacturing
PharmaceuticalOutsourcingQ42020 - 15
PharmaceuticalOutsourcingQ42020 - 16
PharmaceuticalOutsourcingQ42020 - 17
PharmaceuticalOutsourcingQ42020 - Supply Chain
PharmaceuticalOutsourcingQ42020 - 19
PharmaceuticalOutsourcingQ42020 - Contract Manufacturing
PharmaceuticalOutsourcingQ42020 - 21
PharmaceuticalOutsourcingQ42020 - Interview with Yourway
PharmaceuticalOutsourcingQ42020 - 23
PharmaceuticalOutsourcingQ42020 - Supply Chain
PharmaceuticalOutsourcingQ42020 - 25
PharmaceuticalOutsourcingQ42020 - 26
PharmaceuticalOutsourcingQ42020 - 27
PharmaceuticalOutsourcingQ42020 - 28
PharmaceuticalOutsourcingQ42020 - 29
PharmaceuticalOutsourcingQ42020 - Clinical Trials
PharmaceuticalOutsourcingQ42020 - 31
PharmaceuticalOutsourcingQ42020 - 32
PharmaceuticalOutsourcingQ42020 - Roundtable
PharmaceuticalOutsourcingQ42020 - 34
PharmaceuticalOutsourcingQ42020 - 35
PharmaceuticalOutsourcingQ42020 - Supply Chain
PharmaceuticalOutsourcingQ42020 - 37
PharmaceuticalOutsourcingQ42020 - 38
PharmaceuticalOutsourcingQ42020 - 39
PharmaceuticalOutsourcingQ42020 - Analytical Testing
PharmaceuticalOutsourcingQ42020 - 41
PharmaceuticalOutsourcingQ42020 - 42
PharmaceuticalOutsourcingQ42020 - 43
PharmaceuticalOutsourcingQ42020 - Supply Chain
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PharmaceuticalOutsourcingQ42020 - 46
PharmaceuticalOutsourcingQ42020 - 47
PharmaceuticalOutsourcingQ42020 - Clinical Trials
PharmaceuticalOutsourcingQ42020 - 49
PharmaceuticalOutsourcingQ42020 - 50
PharmaceuticalOutsourcingQ42020 - Analytical Testing
PharmaceuticalOutsourcingQ42020 - 52
PharmaceuticalOutsourcingQ42020 - 53
PharmaceuticalOutsourcingQ42020 - Horizon Lines
PharmaceuticalOutsourcingQ42020 - 55
PharmaceuticalOutsourcingQ42020 - 56
PharmaceuticalOutsourcingQ42020 - 57
PharmaceuticalOutsourcingQ42020 - Industry News
PharmaceuticalOutsourcingQ42020 - 59
PharmaceuticalOutsourcingQ42020 - 60
PharmaceuticalOutsourcingQ42020 - 61
PharmaceuticalOutsourcingQ42020 - 62
PharmaceuticalOutsourcingQ42020 - 63
PharmaceuticalOutsourcingQ42020 - Advertiser's Index
PharmaceuticalOutsourcingQ42020 - Cover3
PharmaceuticalOutsourcingQ42020 - Cover4