**London**: Brad Stewart from BDO discusses the challenges tariffs pose to life sciences manufacturing reshoring. He emphasises the need for businesses to evaluate the impact of potential tariff changes, highlighting that while reshoring may increase costs, it could fortify vulnerable supply chains for long-term stability.
In a recent video interview with Pharmaceutical Commerce, Brad Stewart, co-leader of BDO’s national life sciences division, discussed the intricate challenges that tariffs present to the reshoring of manufacturing services within the life sciences sector. This area, known for its complexity, is characterized by extensive supply chains that span multiple countries and involve a mix of highly regulated processes that do not adapt quickly to changes.
Stewart addressed the uncertainty that looming tariff policies from potential changes in leadership may bring, emphasising that businesses must evaluate the impact of such administrative shifts when making reshoring decisions. He pointed out that while relocating manufacturing services back to the U.S. could incur higher costs, doing so may ultimately contribute to stabilising supply chains that are currently vulnerable to fluctuations caused by tariffs.
“The supply chain in the life sciences industry is large, long, highly-regulated, and takes long periods of time to change,” Stewart stated. “If you have capacity in the U.S. now, does it make sense to prioritise that? Absolutely. That’s just one way to de-risk your supply chain.”
Stewart elaborated that the life sciences supply chain encompasses not just finished products but also raw materials and components sourced internationally. He indicated that drug substance production can occur in one region while fill-finish processes may happen elsewhere. This globalised supply chain makes it challenging to navigate tariff implications, particularly at various stages of production. The complexity is compounded further by issues related to transfer pricing and taxes, necessitating that companies devise strategies to mitigate these risks.
In response to these obstacles, Stewart advised life sciences companies to consider moving more manufacturing capacity back to the U.S. Specifically, he mentioned that while establishing new capacity in the U.S. represents a significant financial investment, it is advisable for companies contemplating long-term growth. By doing so, firms can better manage uncertainties related to tariffs and focus on their primary objective: producing life-saving products.
Stewart also highlighted the internal challenges that a substantial proportion of life sciences Chief Financial Officers (CFOs) are currently facing. These hurdles include navigating complexities in manufacturing while also exploring how artificial intelligence may assist industry leaders in optimising their supply chains.
The conversation indicates a clear recognition of the pressing need for strategic adaptations within the life sciences sector as it faces the multifaceted effects of tariffs and global trade uncertainties.
Source: Noah Wire Services
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