The United States pharmaceutical sector is experiencing a notable shift as manufacturers increasingly return production operations to American soil after decades of dependence on overseas facilities. According to biotechnology leader Leen Kawas, this reshoring movement represents a critical response to concerning levels of foreign dependence for essential medications and their components.
“The vulnerabilities within our pharmaceutical manufacturing and supply chains were starkly exposed during recent global disruptions,” explains Leen Kawas, Managing General Partner at Propel Bio Partners. “Reshoring pharmaceutical production isn’t just economically beneficial—it’s a matter of national security that ensures Americans have reliable access to essential medications.”
Industry data from the Elangham Group reveals the extent of America’s pharmaceutical dependence: approximately 72% of active pharmaceutical ingredient (API) manufacturers supplying the U.S. market are based overseas, with China and India accounting for a substantial portion of this production. This concentration of critical manufacturing capacity in specific regions creates significant vulnerabilities to geopolitical tensions, natural disasters, and public health emergencies.
The U.S. pharmaceutical import market has grown exponentially, reaching nearly $213 billion in 2024—more than two and a half times the total from just a decade earlier, as reported by CNBC. This rapid growth in imports reflects a decades-long trend of pharmaceutical companies seeking cost advantages through offshore production, often at the expense of supply chain resilience.
Recent global events have brought these vulnerabilities into sharp focus. “When critical medications come predominantly from overseas, we’re exposed to supply chain disruptions from geopolitical tensions, transportation delays, and quality control issues,” notes Leen Kawas. “The COVID-19 pandemic demonstrated how quickly these vulnerabilities can escalate into healthcare crises.”
Several major pharmaceutical companies have announced significant investments in domestic manufacturing facilities in response to these concerns. Eli Lilly recently unveiled plans to construct four manufacturing sites in the United States at a cost of at least $27 billion, with three focused on producing active pharmaceutical ingredients. According to Pharmaceutical Technology, this initiative would effectively bring their small-molecule API production back to American soil.
Similarly, Johnson & Johnson announced a $55 billion investment in U.S. manufacturing, research and development, and technology over the next four years. These substantial commitments from industry leaders signal a fundamental reassessment of pharmaceutical manufacturing strategy.
The administration’s recent trade policies have added new momentum to reshoring efforts. While pharmaceuticals were initially exempted from the initial “Liberation Day” tariffs, the President has continued to signal that pharmaceutical-specific tariffs of “25% or higher” could be implemented shortly, according to Fierce Pharma.
“The current administration’s tariff policies are accelerating decisions that many pharmaceutical companies were already considering,” says Leen Kawas. “While tariffs create immediate challenges for companies with global supply chains, they also create powerful incentives to invest in domestic manufacturing infrastructure.”
Despite the compelling case for reshoring, significant challenges remain. The pharmaceutical reshoring process is complex and multifaceted, typically requiring five to ten years for full implementation, as noted by Medicine to Market. Companies must navigate regulatory requirements, secure adequate funding, develop specialized workforce capabilities, and establish local supply chains for raw materials and intermediate components.
According to Reuters, the Pharmaceutical Research and Manufacturers of America (PhRMA) has indicated it can take 5-10 years and $2 billion to bring on a new production facility in the U.S., partly due to stringent regulatory requirements. This timeline underscores the long-term commitment required for meaningful reshoring initiatives.
“Companies that proactively invest in domestic manufacturing capabilities will be better positioned to navigate an increasingly unpredictable global environment,” concludes Leen Kawas. “By building resilient, flexible supply chains with strong domestic components, pharmaceutical manufacturers can ensure product availability while potentially gaining competitive advantages through enhanced quality, reliability, and innovation.”
As reshoring efforts continue to accelerate, America’s pharmaceutical supply chain is poised for a significant transformation that promises greater security, resilience, and self-sufficiency in the face of an increasingly unpredictable global landscape. While the journey may be lengthy and complex, the potential benefits for national security, public health, and economic prosperity make it a compelling path forward for the pharmaceutical industry.