According to the FDA, 88 percent of active pharmaceutical ingredient (API) manufacturing has shifted offshore over the past decade alone. This is why in recent years, reshoring skills has become a hot topic in the U.S. and abroad. There are more than a dozen bills in the U.S. Congress focused on buy-American and reshoring. Recently, the Biden administration announced the formation of a taskforce to develop a U.S. supply chain for 50-100 critical drugs. While new, the taskforce has already begun to take action, working to increase manufacturing capacity and improve supply chain management.

Reshoring is poised to affect not only the United States, but Mexico as well. Given its proximity to the U.S. market and low labor costs, Mexico will likely absorb some reshoring activity, but there are limiting factors. According to a BCG report, a lack of skilled workers, supplier networks, safety concerns and infrastructure will prevent Mexico from seeing a dramatic increase in production.

A reshoring initiative should not only focus on improving the quality of drug development, but also on developing new technologies for production. In many cases, the pharmaceutical supply chain relies on outdated technology and methods that are incompatible with current global standards. Moreover, it creates an unpredictable environment. To make the pharmaceutical supply chain more competitive, the government should encourage companies to adopt new manufacturing techniques, such as continuous manufacturing (CM). The benefits of continuous manufacturing, along with process analytical technologies (PAT), are expanded manufacturing capacity and lower operating costs, with real-time quality control capabilities.

Currently, reshoring is not a common practice, as it comes with many policy and managerial implications to consider. Due to a variety of complex factors, many companies are reluctant to evaluate pursuing reshoring initiatives. The main reasons that some pharmaceutical companies have shied away from reshoring include the time needed to find and set up new sites — and significant financial investment. The cost of building a new biopharmaceutical facility can easily surpass $2 billion, and timelines for construction and securing regulatory approval can total six or more years. Ideally, firms should consider all factors before making a decision to reshore and continue to keep an eye on managerial implications throughout the process.

While reshoring skills in drug development does not eliminate all the issues associated with the overseas production process, it is one of the few areas in which it can make a big difference. If reshoring becomes a major effort of the U.S. supply chain and pharmaceutical industry, then there will be a continued and heightened need to also invest in training and skilling to ensure the talent needed for this technical field is ready.