The pros and cons of reshoring to address the problems of shortages in global pharmaceutical value chains: the case of antibiotics

Abstract

Purpose Antibiotics shortages have become an increasingly common problem in Europe because of several reasons, including the offshoring of the production of active pharmaceutical ingredients for many of these products to low production cost countries, such as China and India. The problem has deteriorated because of the Covid-19 crisis that has put most global value chains (GVCs) under great stress. This situation has boosted extensive discussions among academics, practitioners and policymakers on possible changes to the configuration of GVCs. This paper aims to focus specifically on antibiotics supply chains from the perspective of a small country (Sweden), and analyse the pros and cons of backshoring and nearshoring alternatives, as a means to reduce drug shortages. Design/methodology/approach This work adopts a systemic perspective to capture the implications of reshoring for the different stakeholders involved in the antibiotics field. The present meso-analysis, focusing at the industry level, is based on multiple sources of primary data collected between 2014 and 2021, including participation in policy-related projects and interviews with over 100 representatives of key stakeholders in the antibiotics field. Findings This paper shows how reshoring can address the problems of drug shortages and reduce availability risk in antibiotics’ GVCs. However, the authors show that no simple and best solution exists because both alternatives of reshoring, i.e. backshoring and nearshoring, entail pros and cons for different stakeholders. The authors conclude with implications for policymakers and managers. Research limitations/implications The analysis of pros and cons of both backshoring and nearshoring for various stakeholders offers relevant implications for research on operations and supply management, international business and economics/political science. Originality/value This paper looks at reshoring as a policy-driven decision and provides an innovative systemic perspective to analyse the implications for different stakeholders of two reshoring options concerning the antibiotics supply chain.

Reshoring: A Road to Industry 4.0 Transformation

“…, 2020). Reshoring from markets with high sales potential presents a significant challenge for managers, as the decision may lead to either a loss of sales or an increase in selling costs (Baraldi, Ciabuschi and Fratocchi, 2022; Barbieri et al. , 2022; Boffelli et al.…”

“…Disruptions of any kind prompt managers to explore cost-effective options for managing their supply chains while ensuring superior control over quality and operations (De Lima and Seuring, 2023;Huq, Pawar and Subramanian, 2021;McMaster et al, 2020). Reshoring from markets with high sales potential presents a significant challenge for managers, as the decision may lead to either a loss of sales or an increase in selling costs (Baraldi, Ciabuschi and Fratocchi, 2022;Barbieri et al, 2022;Boffelli et al, 2020). Companies generally decide in favour of reshoring due to political situations, such as changes in tariffs or the withdrawal of tax incentives by the host country, as such conditions threaten the primary objective of offshoring (Moradlou et al, 2021).…”