Deglobalization and the pharmaceutical industry

Deglobalization, Industry 4.0, and biosimilars may change the trade routes
Several changes in the market are affecting current pharma trade routes, but the combined effect is difficult to predict. For many years, pharmaceutical companies have located manufacturing to developing countries to reduce labor costs and other production costs. There is still lot of collaboration in the industry, where for example raw material may be manufactured in China, shipped to India for further development, and the finished products will then be shipped to for example the US. However, there is also the opposite trend of deglobalization, where companies are relocating manufacturing back to the home market.

There are several drivers behind the deglobalization trend. Next generation manufacturing, or Industry 4.0, are terms that describe the new developments in manufacturing with a high degree of automation and process control. This radically reduces manpower requirements, which means that labor costs are not as decisive as before. Instead, market closeness becomes more important as well as access to well-functioning infrastructure. Local production also minimizes the political risks of global business. While Asian countries are affected negatively by the deglobalization trend, the Asia Pacific region has the largest number of biosimilar products in development. The region is already one of the most important producers of biosimilars in the world. How trade routes will be affected is, as noted before, hard to predict but one thing is clear: the demand for cold chain logistics will increase globally with the continued growth of biologics and biosimilars.