The pharmaceutical industry has faced unprecedented challenges in recent years. The global pandemic was, we thought, a ‘once in a hundred years’ event, but that has been followed by a series of global conflicts and multiple geopolitical tensions that have exposed vulnerabilities in drug supply chains, leading to shortages and other disruptions. To ensure a reliable supply of essential therapies for patients worldwide, biopharma companies and their contract development and manufacturing organization (CDMO) partners are actively exploring innovative solutions. One such solution that has gained traction is friendshoring.
What is Friendshoring?
Friendshoring, in the context of the pharmaceutical industry, involves strategically placing supply chain operations – including production, logistics, and sourcing – in countries or regions considered politically and economically aligned with a company’s largest or domestic market, often the United States. This approach is a significant evolution from traditional offshoring and reshoring strategies.
As highlighted in a recent discussion at Bora Pharmaceuticals, friendshoring is seen as a pragmatic response to the increasing complexities of global supply chains. Given the near impossibility of fully reshoring or onshoring all aspects of biopharmaceutical manufacturing, friendshoring offers a viable alternative by prioritizing collaboration with friendly nations that can reliably meet material supply and manufacturing needs.
The Benefits of Friendshoring
- Preventing drug shortages and enhancing supply chain resilience: By diversifying supply chains and establishing partnerships with trusted allies, biopharmaceutical companies and CDMOs can mitigate the risk of disruptions caused by geopolitical instability or other unforeseen events. This ensures a more consistent and reliable supply of critical medicines.
- Strengthening national and economic security: Friendshoring can enhance national security by reducing dependence on potentially adversarial nations for essential medical supplies. It also supports economic growth in allied countries, fostering stronger international relationships.
- Facilitating regulatory alignment and intellectual property protection: Partnering with countries that share similar regulatory frameworks and prioritize intellectual property protection can streamline operations and minimize risks associated with IP theft or regulatory hurdles.
- Improving quality and compliance: Collaborating with trusted partners in friendshored locations can enhance quality control and ensure compliance with stringent manufacturing standards, ultimately benefiting patient safety globally.
Friendshoring in Action
Leading biopharma companies and CDMOs are already reevaluating their supply chain strategies in light of the benefits of friendshoring by conducting thorough analyses to identify potential vulnerabilities and exploring opportunities to shift operations to a diversified mix of friendlier regions. This proactive approach underscores the growing recognition of friendshoring as a critical component of a resilient and secure pharmaceutical supply chain.
Considerations and Challenges
While friendshoring offers numerous advantages, it is essential to acknowledge potential challenges. These may include:
- Identifying and establishing partnerships with suitable allies: Careful due diligence is required to select countries that meet the necessary criteria in terms of political stability, regulatory alignment, and manufacturing capabilities. It’s also imperative to maintain due diligence in an ongoing cycle with built-in flexibility; the necessary criteria can change rapidly in today’s environment.
- Managing increased costs: Friendshoring may involve higher labor costs or other expenses compared to traditional offshoring.
- Evaluating the impact of cultural differences: Some cultural differences can add rather than subtract from a successful partnership, but it is important to understand differences in working arrangements and how working relationships are structured.
- Navigating complex logistics and regulatory requirements: Establishing new operations in different countries can present logistical and regulatory hurdles. Acquiring and maintaining local logistics and regulatory expertise requires upfront and ongoing investment as well as a cultural prioritization of quality and customer service; not always a given even in the CDMO space.
Conclusion
In an increasingly complex and interconnected world, friendshoring represents a strategic imperative for the biopharmaceutical industry. By prioritizing collaboration with trusted allies, biopharma companies can enhance supply chain resilience, ensure access to essential medications, and contribute to global health security. As the industry continues to evolve, friendshoring is poised to play a pivotal role in shaping the future of pharmaceutical manufacturing and distribution.
