The resiliency of biopharmaceutical supply chains has never been more important and in many ways more vulnerable. Despite the potential for disruptions, 75% of global life sciences executives are “positive to cautiously positive” about 2025, according to a survey published earlier this month by the Deloitte US Center for Health Solutions.
When it comes to business volatility in 2025, 36% of the life sciences executives surveyed see manufacturing and supply chain risks as “unpredictable” — with the same percentage citing inflation and economic recession as being in the same category of unpredictability.
Among the actions that life sciences companies are taking to prepare for 2025, 37% of executives identified building “resilient and adaptable supply chains” as a top priority. In the survey, 30% of biopharma executives also indicated that manufacturing and supply chain risks could significantly impact their strategies.
Deloitte’s survey results noted that supply chain digitalization can help support such efforts at resiliency and adaptability. Looking ahead to 2025, 34% of executives said the proliferation of generative AI is a trend impacting their strategies, while 31% of executives said they are investing in technology platforms for digital tools services.
Anshul Agarwal, global supply chain and manufacturing practice lead at consultancy ZS, told Pharma Manufacturing that 2025 is poised to be a pivotal year for biopharma supply chains as logistics and manufacturing will remain a challenge. However, he contends that companies investing in data, analytics, and technology will have a competitive advantage in their ability to improve traceability, streamline operations, and provide better decision-making.
“The gap or the challenge is in biopharma being able to adopt the technologies,” Agarwal said. “They’re still working in siloed decision-making with a lot of systems rather than consolidating those systems.”
When it comes to AI investment, Agarwal said companies are looking to move beyond “static” resiliency and adaptability solutions that inform them “once things have happened” in the supply chain to the implementation of more predictive capabilities.
“Resilient supply chains are necessary for a strong American manufacturing sector and many other sectors that are essential to our prosperity and national security,” Lisa Strama, CEO of the National Center for Manufacturing Sciences (NCMS), said in a statement. NCMS is “strongly committed to advancing AI in manufacturing” and “multiple federal organizations are emphasizing the need to expand public-private partnerships to accelerate AI for supply chain resilience.”
Policy issues on the horizon
From shifting global trade dynamics to inflation trends to interest rate cuts, several economic factors could influence biopharma supply chains in 2025 — and with policymakers in a position to mitigate some of them.
If 2024 is any indication, policymakers in 2025 have their work cut out for them. In the U.S., 2024 saw a staggering number of drug shortages — the highest number recorded since the American Society of Health-System Pharmacists began tracking the data in 2001 — including central nervous system drugs, antimicrobials, hormone agents, injectable fluids and electrolytes, as well as chemotherapy drugs.
Adding to the potential challenges in 2025, while the BIOSECURE Act — which prevents U.S. federal funds from supporting certain Chinese contract manufacturers — has stalled in Congress, the proposed legislation could threaten an already strained U.S. biopharma supply chain if it secures congressional passage and is signed into law.
The good news is that House of Representatives lawmakers in May 2024 updated their bill with a grandfather clause that would allow existing contracts with the five Chinese CDMOs named in the BIOSECURE Act as U.S. national security threats to be maintained until 2032, providing some leeway for American companies to make other business arrangements.
Although the U.S. relies heavily on China for “everything from raw materials to intermediates to APIs to biologics,” it is “not realistic to consider that a wholesale shift will happen quickly,” according to CPHI’s 2024 annual report. Still, companies across the biopharma industry “are re-evaluating their supply chain strategies” given the looming legislative threat of the BIOSECURE Act, according to CPHI.
“The ripple effect is already being felt by Chinese CDMOs (those not referenced in BIOSECURE feeling slowdown in demand),” states the report. “Conversely, our discussions with several CDMOs in the U.S., EU, and India have seen programs shifting to these geographies, although not widespread yet.”
Reshoring API production
When it comes to reshoring active pharmaceutical ingredient (API) production to the U.S., the API Innovation Center (APIIC) — a nonprofit organization in St. Louis — is working with the biopharma industry to develop and manufacture domestically produced APIs. In September, the center was awarded $14 million by the U.S. Health and Human Services (HHS) Administration for Strategic Preparedness and Response’s (ASPR) Center for Industrial Base Management and Supply Chain (IBMSC) to lead the development and domestic production of three critical APIs.
“We’re a private-public partnership that has adopted a very different model with regards to how we’re trying to build drug supply chain resiliency and stability,” Tony Sardella, chair and founder of APIIC, told Pharma Manufacturing. “The real driver in most cases of the shortages is the availability of the active pharmaceutical ingredient.”
Sardella noted that currently 91% of all prescriptions in the U.S. are generic drugs, with 83 of the 100 most used generic medicines having no domestic source for their ingredients.
“We don’t produce enough of it in our own native country to give us stability and to avoid these kinds of challenges,” he said. “We have capacity to produce them. The capacity is idle and that’s the premise of our model.”
According to Sardella, 50% of the capacity in the U.S. to produce medicines is sitting idle —representing approximately 30 billion doses per year.
The center partners with government and industry and invests in advanced manufacturing equipment that has the potential to increase scalability and decrease the cost of production.
“You can’t bring the same technological approach to making these medicines from foreign countries that have an advantage when it comes to the cost of labor and environmental rules,” Sardella said. “You have to fundamentally leapfrog them with new, advanced technology.”
APIIC’s goal is to reshore 25 medicines over five years by contracting with existing manufacturers that have idle capacity. Earlier this month, the center awarded a contract to Missouri-based Sentio BioSciences to advance the development and domestic production of two pharmaceutical molecules that have historically faced shortages: propofol, which is used during general anesthesia for medical procedures, and a local anesthetic bupivacaine which currently has no U.S. API source.
International cooperation
The Biden administration in June 2024 announced the formation of the U.S. National Security Council’s Biopharma Coalition (Bio-5) to support more secure biopharma supply chains, in partnership with the Office of Pandemic Preparedness and Response.
The goal is for the U.S., EU, India, Japan, and the Republic of Korea to work together to strengthen biopharma supply chain resilience. The Bio-5 is specifically focused on “building resilient supply chains for active pharmaceutical ingredients (APIs) currently sourced primarily from the People’s Republic of China,” with the five countries looking for “opportunities for their governments and the private sector to deepen coordination on policy, regulations, R&D capabilities, and other tools to enhance the resilience of this vital sector.” The mission is to build trusted, resilient, and sustainable biopharma supply chains.
“We’ve seen some supply chain issues that have led to calls for greater resilience in supply chains,” Gil Roth, president of the Pharma & Biopharma Outsourcing Association (PBOA), told Pharma Manufacturing.
While the Bio-5 held an inaugural meeting in June to discuss biopharma supply chain resilience, affirming the “national and economic security imperatives” of their coalition, Roth warned that “everyone has a shore so onshoring doesn’t help when the U.S. wants to onshore, but the EU wants to onshore and when Canada wants to build greater vaccine manufacturing capacity.”
Roth worries about the rise of another global pandemic in the not-to-distant future on the scale of COVID-19.
“What happens if a huge surge of certain types of supplies is allocated again to vaccine manufacturing, when those are the same sorts of products, components, and such that are used for biologic manufacturing?” Roth asked. “That becomes a real question as to who can carry redundant supply and where that should exist in the supply chain.”
At the same time, Roth pointed to the fact that part of the complexities of the COVID-19 vaccine rollout and biopharma supply chain during the coronavirus pandemic “wasn’t just about lipid nanoparticles and manufacturing messenger RNA — it was about cardboard and about glass and about syringes and, if you can’t put the vaccines in a box when you ship them out, they’re not leaving the warehouse.”
Biopharma supply chains are not just about “sexy” technology, according to Roth, who said he heard anecdotally about a “labeling issue” where the supplier of labels told a CDMO: “we can send you the labels, but there’s no backing paper because the backing paper guy is shipping everything out for some COVID-related product.”
For Roth, the lesson learned is “you also need these standard things in massive amounts, and whether we’re capable of handling that sort of surge, I don't know.” COVID-19 “really brought this to light for CDMOs and for their customers that there does need to be some buffer built in when it comes to different aspects of the supply chain.”
Mike Lehmicke, senior vice president for science and industry affairs at the the Alliance for Regenerative Medicine, told Pharma Manufacturing that single-source items such as reagents are still common. Depending on the specific supply chain in question, “manufacturing is like one week or one day from becoming a big problem all over again,” Lehmicke said.
The outgoing Biden administration has been initially working with international trade partners to cooperate and develop more robust, alternate biopharma supply chains. However, what happens with the Bio-5 and the incoming Trump administration remains to be seen, according to Roth.