The Advantages of Bringing Pharmaceutical CMOs Back to the United States

For Metis Consulting Services, Inc. 

By Michael Bronfman

This week in the "Guard Rail," we at Metis are exploring "Reshoring" of CMOs. We can't afford to settle for anything less than a fortified, domestic, and regional pharmaceutical industry. For decades, the lure of international manufacturing offered a path of lower costs, but this road has proven to be full of potholes.

The Benefits of Bringing Pharmaceutical CMOs Back to the United States (Reshoring)

The pharmaceutical industry plays a central and critical role in public health. Every stage in the drug development and manufacturing process impacts the final quality and safety of medicines. Contract Manufacturing Organizations, known as CMOs, are third-party organizations that manufacture drugs for pharmaceutical firms. These organizations handle activities ranging from producing active pharmaceutical ingredients (API) to packaging and labeling.

Over the past several decades, a large number of pharmaceutical manufacturers have moved overseas. Let's talk about why this is happening: cost savings, reduced labor expenses, and relaxed regulatory environments often tempt companies to China and India.

There have been growing discussions lately about the benefits of bringing pharmaceutical CMOs back to the United States. The term for this movement is "reshoring." The trend to shift overseas has come with a set of challenges and risks that directly impact quality, safety, and national security. Although reshoring requires investment of all kinds, including time and workforce development, among others, it also brings a wide range of returns on those investments. These advantages include improved supply chain resilience, increased product quality, strengthened national security, job creation, and a reduction in reliance on foreign manufacturing. And isn't that what we all want?

Here, we will take a bigger look at how reshoring CMOs to the United States offers long-term benefits to both the pharmaceutical industry and the public.

Improved Supply Chain Reliability

Pharmaceutical manufacturing operates most effectively with a stable supply chain. Delays, shortages, and disruptions have serious consequences for patients' access to the drugs they need. The complexity of global supply chains is in itself a challenge that creates multiple points of vulnerability. Drugs may pass through several countries before reaching their final destination. Disruption along this path, at any point, can lead to delays or stockouts. The long, complex chain is vulnerable to myriad forms of delay, including political tensions, natural disasters, or transportation failures.

By relocating CMOs to the United States, pharmaceutical companies can reduce the number of steps involved in the supply chains. As a result, we would expect faster delivery of finished products and improved response times during public health emergencies. A domestic manufacturing base allows for greater control over production scheduling and inventory management.

During the COVID-19 pandemic, global supply chain disruptions exposed the risks of overdependence on foreign manufacturing. Not just for us here in the US, but globally. Shortages of essential medications and active pharmaceutical ingredients were rampant. A more localized supply chain could help prevent similar problems in the future.

Enhanced Quality Control and Regulatory Oversight

The United States Food and Drug Administration enforces strict regulatory standards. The manufacturers must follow detailed guidelines to ensure safety, consistency, and efficacy. When pharmaceutical companies outsource production to overseas CMOs, consistent quality and quality oversight are more challenging. Regulatory agencies often lack the same reach and oversight capabilities in other countries.

If their CMOs are located back here in the United States, companies gain better access to real-time oversight, audits, inspections, and monitoring. Regulatory compliance is easier to enforce, and deviations from quality standards can be addressed more quickly. This results in fewer product recalls, improved batch consistency, and greater confidence in the quality of the medication supply.

Patients should always be the guiding light in pharmaceutical manufacturing. They deserve safe and effective treatments. A return to domestic production would enhance quality assurance. Improving it every step of the way, from raw material sourcing to final packaging.

Stronger National Security

Pharmaceutical products are a cornerstone of national health and security. When production is concentrated overseas, vulnerabilities become more apparent. Whether it is interruptions to supply or trade restrictions, or foreign political instability, we have more challenges to the health and security. In times of crisis, foreign governments may prioritize domestic needs and restrict exports of critical medications.

Now let's look at that risk when considering essential medications such as antibiotics, vaccines, and insulin. The lack of domestic manufacturing capacity limits the nation's ability to respond to emergencies. If there is another pandemic, or there are bioterrorism threats, or a natural disaster, reshoring pharmaceutical CMOs will strengthen national security by reducing dependence on international suppliers. This will allow for faster production of essential drugs in response to urgent needs. We need to mitigate the vulnerability before any of these disasters strike. With a domestic manufacturing infrastructure in place, as a result, the United States, or even the Americas, will be able to better protect its citizens during emergencies and avoid the harmful effects of drug shortages.

Economic Growth and Job Creation

Potential for economic development is another major advantage of bringing CMOs back to the United States. The pharmaceutical industry is a sector that is growing and expanding. This vital industry can provide high-paying jobs in science, engineering, quality control, and logistics.

Local communities are economically stimulated in related industries, including transportation, utilities, and construction. Building new manufacturing facilities or expanding existing ones could create employment opportunities for both skilled and entry-level workers. As more companies invest in domestic production, entire ecosystems develop around pharmaceutical hubs. These ecosystems create long-term economic benefits that go beyond the companies themselves.

In regions facing economic decline, pharmaceutical manufacturing plants have the potential to provide a much-needed economic boost. The jobs that are created tend to have better wages and benefits than many other industries, contributing to a higher standard of living. This, in turn, creates community stability.

Increased Transparency and Accountability

Patients, providers, and regulators must know where medications are produced and under what conditions. Transparency is essential. When production is moved overseas, transparency often decreases.

Domestic manufacturing encourages greater openness. Regulatory agencies have greater ease of access to inspect facilities and review records. Companies can communicate more clearly with the public about sourcing, safety, and compliance. This builds trust between the pharmaceutical industry and the patients it serves.

Consumers are showing interest in where their medications are made. Just as people care about the origin of their food, many want to know whether their medicines are produced safely and ethically. Reshoring supports this desire for greater accountability and corporate responsibility.

Technological Advancements and Innovation

When pharmaceutical manufacturing is brought back to the United States, there is a greater opportunity for innovation. Continuous manufacturing, advanced automation, and improved quality control systems are all more likely with a chain of domestic facilities. They are more likely to adopt cutting-edge technologies. These technologies increase efficiency, reduce costs over time, and enhance product consistency.

In contrast, many overseas facilities are slower to modernize due to limited capital investment or regulatory restrictions. Reshoring CMOs allows American firms to lead in pharmaceutical technology and manufacturing science.

Collaboration is strengthened: manufacturers, research institutions, and universities work together more naturally. The exchange of knowledge and technology accelerates innovation and shortens the time needed to bring new treatments to market.

Resilience in Times of Crisis

We have seen how vulnerable the global pharmaceutical supply chain can be. Recent events have led to delays, shortages, and rising prices. When companies rely too heavily on foreign suppliers, they lose the ability to adapt quickly to changing circumstances.

Creating a network of CMOs domestically increases resilience. Manufacturers will be able to launch emergency initiatives in a timely manner. They can adjust production levels or shift resources without waiting for overseas partners. This flexibility is essential during times of national crisis.

By investing in domestic capacity now, pharmaceutical companies can ensure they are prepared for the challenges of tomorrow. Reshoring is a long-term strategy that increases preparedness and stability.

Ethical and Environmental Considerations

Ethical labor practices and environmental standards can vary widely across different countries. CMOs may or may not operate under conditions that do not align with US values. There might be extremely low wages, unsafe working conditions, or limited environmental protections.

Bringing pharmaceutical manufacturing back to the US ensures compliance with fair labor laws and environmental regulations. Companies are required to provide safer working conditions and reduce their environmental impact. And consumers, in this case, patients, are increasingly interested in how products are made. These efforts support sustainability goals and improve corporate reputation.

Ethical sourcing and responsible production practices are no longer optional. Reshoring aligns with public expectations and supports the broader goal of corporate social responsibility.

I hope that after reading this, we all can agree that the decision to bring pharmaceutical CMOs back to the United States is both strategic and responsible. Offshore manufacturing has seemed to offer short-term cost savings. At the same time, it has created long-term risks related to quality, supply chain stability, and national security.

By investing in domestic production, the pharmaceutical industry can strengthen its foundation. Advantages include more reliable supply chains, enhanced quality control, stronger national security, economic growth, technological leadership, and ethical transparency.

Reshoring is certainly not without its challenges; it requires capital investment, workforce development, and regulatory planning. The long-term benefits do outweigh the initial costs. We can deliver safer, more reliable treatments to the people who need them most by producing more of our medications closer to home. And our industry will do all of that with a smaller footprint.

As the pharmaceutical industry faces growing complexity and rising public expectations, reshoring CMOs is a powerful step toward a more secure, transparent, and innovative future. The time has come to rebuild U.S. pharmaceutical manufacturing, for both economic reasons and the health and well-being of the nation.

If you are in a position to contract your organization's CMO and would like to discuss how to reshore manufacturing, please contact us at

hello@metisconsultingservices.com

Or for more information, see our website at:

https://www.metisconsultingservices.com/

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