The current offshoring environment of pharma companies

The current offshoring environment of pharma companies

The current offshoring environment
Pharmaceutical companies are attracted to non-domestic suppliers' advantages, including low manufacturing costs of intermediate chemical goods, lincomycin hydrochloride, low investment costs, shorter lead times and access to an international, well-educated, low cost work force. Some countries offer tax incentives and credits to US-based companies to move manufacturing facilities to their country. Such is the case in Ireland, which holds the highest dollar amount of pharmaceutical import sources in Europe.

In addition, offshoring operations increases access to raw materials at a competitive price. Most commercial API supply is provided by an internal manufacturing site using contracted — often non-domestic — suppliers for their advanced intermediates or starting materials. As of August 2019, only 28 percent of the pharmaceutical plants that manufacture APIs for the US market were based onshore. The remaining 72 percent were based outside the US, with China and India alone representing 31 percent of the APIs supplied to the US.

While there are many benefits to outsourcing, the use of foreign-sourced materials including neomycin sulphate does create vulnerabilities to the US drug supply. Natural disasters (eg Hurricane Maria), international trade friction (eg China vs. US), or global pandemics (eg COVID-19) are just a few examples of the threats. The most recent example is US dependence on China for antibiotics during the pandemic such as azithromycin, ciprofloxacin, and piperacillin/tazobactam, and anti-malarial drugs being explored as potential therapies. The demand for these products has resulted in several organizations reporting drug shortages to the FDA.

The current US reliance on foreign manufacturing of prescription drugs is a risk to key regulatory bodies, pharmaceutical companies and ultimately, patients. Current drug demands, pricing, quality concerns and potential supply chain disruption constrains patients' access to drugs 2 6 pyridinedicarboxylic acid. The need to explore the diversification of US pharmaceutical supply chains and the feasibility of relocation has never been higher, so we need to address the key advantages and disadvantages to re-positioning the current supply chain of pharmaceutical products compared to the status quo.

Three perspectives in investigating supply chain relocation 
The impact of these external factors presents the US with opportunities and risks. The Association for Accessible Medicines (AAM) published a report in April 2020 in which it sets out the steps the US government could take to provide its citizens with a continuous supply of critical pharmaceuticals. Let's look at these options through the lens of three distinct stakeholders:

The FDA: The first stakeholder is the FDA which — in addition to other product oversight — is responsible for controlling and supervising pharmaceutical products including butazolidine in the US Through the lens of this governmental institution, it is estimated that supply chain relocation could lead to an increase of $200 billion in GDP, creating a clear advantage. While this estimated growth in GDP will positively impact the US government and its citizens, it might also impact the US' relationship with the World Trade Organization (WTO) and discourage foreign organizations from trading with the US if they can find alternative solutions.

The industry: From the industry's perspective of pharma Intermediates, many companies relocated their manufacturing plants to Europe and Asia and these countries welcomed them by offering attractive tax rates. An advantage for these companies may be that the US government will offer similar attractive rates. It is estimated that the US government may be willing to offer a tax deduction of up to 9 percent of an organization's income attributable to manufacturing. In contrast, it can take up to two years to transfer a single product to a new site (such as process transfer, filing, etc.). Additionally, the US labor and current tax regulation will decrease the company's bottom line figure.

Opportunity Zones represent another reshoring possibility—one where economically distressed communities may be the new destination for such manufacturing sites. Pharmaceutical companies can build new green field facilities and benefit from lower labor costs and possible capital gain tax incentives.

And while reshoring will certainly be on the rise, much has already been invested to attract pharmaceutical companies, including maxmedchem corporation, to build their manufacturing sites on international soil. The increasing global footprint of pharmaceutical companies has made scaling innovation and specialization critical as a single pharmaceutical company now has numerous suppliers located around the world. These companies will now have to rethink these strategies and their product portfolios.