Brookings panel of experts lays out case for onshoring manufacturing

As the US and Europe continue to consider onshoring pharma manufacturing to shore up the international supply chain, a panel of experts, hosted by the Brookings Institution, addressed how to shore up supplies and resiliency as drug shortages and other supply issues persist after the pandemic’s initial impact.

Speaking on lessons learned from the pandemic, Tom Bollyky, director of the Global Health Program and Senior Fellow for Global Health, Economics and Development at the Council on Foreign Relation, said that while there was general success in moving billions of doses of the Covid-19 vaccine once it became more widely available, there were still some difficulties. More than two-thirds of countries had export restrictions on essential medical products during the pandemic, Bollyky said.

Tom Bollyky

“The vast majority of them were longer than three months in duration. Many of them over a year. Relatively few of them were notified to the WTO according to WTO rules and in many cases that slowed the production by discouraging investment in cross border supply chains,” he said.

Bollyky added that one of the major lessons of the pandemic is around export restrictions acting as a “hurdle” to resiliency and responding to the pandemic, as the production depends on the cross-border movement of goods and investment, and any barriers to that flow may prevent a wider ability to respond to a serious pandemic.

However, Bollyky noted that while there have been more conversations, and investments, about onshoring the production of essential medical supplies, a “robust” effort to diversify global supplies to create more resilience has not been put in place.

Bollyky said:

This is hugely important because cross-border movement is fundamental there’s no future diversification of manufacturing globally without the cross-border movement of goods. Even a country like the US, even a storied company like Pfizer, can’t produce everything domestically. We have to rely on international sources for that. That’s only going to be more so for small pharmaceutical markets, where they’re going to have to rely on cross-border production. And this failure to act in a way that we can create some predictable rules of what’s going to apply in a crisis so that people can make those investments and assure those goods in the future is going to be a real problem.

Tanya Alcorn

Tanya Alcorn, the SVP for sterile injectables and biotech operations at Pfizer, said to produce the vaccine, Pfizer needed hundreds of materials from over 80 suppliers in 20 different countries. The possible onshoring of materials is not necessarily the only answer, she said, and a more viable option is more open trading for better supply chain resiliency.

However, Liz Jurinka, the senior policy fellow at the Yale Tobin Center and the operating director for healthcare policy at The Vistria Group, said that onshoring could be helpful in the context of the Covid pandemic and needing a multinational response. With supply chains disrupted by the pandemic, onshoring could be helpful to mitigate that. The US is already trying to jump into action, pledging millions of dollars to bring the manufacturing of pharmaceutical ingredients back to the US.

Yet this may come with challenges as well. In boosting active pharmaceutical ingredient (API) manufacturing in the US, Alcorn pointed out the production of those materials is very different from more traditional drug production. More environmental management and control around the chemicals in the APIs, plus ensuring the proper health and safety controls, adds to the costs of onshoring API production. She also added that onshoring production may not solve the entire problem, as there are hundreds of materials that go into API production, so it’s not possible to insource all the starting materials.

“We have many suppliers that we sourced raw materials from and starting materials from around the world. So we don’t put our eggs all in one basket in one country. We diversify across different suppliers. We have redundancy and suppliers, and we’d rather create that trustful partnership with suppliers versus trying to do everything ourselves. We can’t do everything ourselves. Just not it’s not feasible. It’s not practical,” Alcorn said.

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