Published: July 8, 2025

by José Luis Cárdenas Tomažič 

Adapted from the Spanish column originally published in El Economista on July 8th, 2025 (El desafío de la resiliencia de la cadena de suministro de medicamentos)

In recent years, the discussion around pharmaceutical productive relocation—and that of other industries—has gained a central place on the agendas of public health, international trade, and national security. Nearshoring and friendshoring (relocating production processes to neighboring or allied countries, respectively), reshoring (bringing production back to the country of origin), and onshoring (developing production capabilities within the same country) are no longer technical concepts reserved for industrial economists. They are now part of the new lexicon of decision-makers seeking to ensure timely access to essential medicines.

In a previous column titled “The Challenge of Resilience in the Pharmaceutical Supply Chain,” (available here: El desafío de la resiliencia de la cadena de suministro de medicamentos) I warned that outsourcing production entirely may create the illusion of efficiency, but it does not guarantee supply. The mirage of low prices fades when logistics chains break down, countries impose export restrictions, or critical inputs become concentrated in the hands of a few.

Today, the debate has become more sophisticated. It is no longer just about where production takes place, but about how decisions are made regarding what to produce, under which criteria, and with which incentives. Productive relocation cannot be an emotional reaction or a political slogan. It must be a public policy grounded in evidence, risk, and purpose.

It is neither realistic—nor technically or economically feasible—to aim to produce everything locally. But it is also unwise to rely exclusively on global supply chains that have proven vulnerable to geopolitical, health, or logistical disruptions. The key lies in precisely identifying which products are truly critical, which ones have highly concentrated supplier bases, and in which segments there is existing capacity or potential for local development.

Moreover, it is important to recognize that supply chain relocations are slow, complex, and costly processes, potentially taking between 4 and 7 years depending on regulatory complexity and the infrastructure required, according to some estimates. For this to occur effectively, clear and sustained signals over time are needed from States—not just governments. These decisions cannot be anchored to short political cycles or depend on circumstantial will. International experience shows that countries that have successfully attracted pharmaceutical investment have done so through long-term strategic plans, stable regulatory frameworks, well-designed tax incentives, and public procurement policies aligned with both industrial and health objectives.

This perspective aligns with the recommendations of the 2022 report “Building Resilience into the Nation’s Medical Product Supply Chains” by the U.S. National Academies of Sciences, which underscores that resilience is not a luxury but a strategic investment, requiring selective local production, critical stockpiling, supplier diversification, and sustained international cooperation.

The Pandemic Treaty, adopted on May 20, 2025, by WHO Member States, institutionalizes this logic. In previous columns, I analyzed how this multilateral agreement proposes mechanisms for monitoring, coordination, and response to health emergencies, including provisions on local production (under the concept of “sustainable and geographically diversified local production”), technology transfer, and international cooperation. Its adoption marks a turning point: resilience is no longer merely desirable—it will be legally binding.

But resilience is not built solely with plants and molecules. The pharmaceutical industry generates benefits that go far beyond supply (see WifOR_Global_Economic_Footprint_Study_September_2020.pdf) high-value production linkages, skilled employment, investment in science and technology, and connections with universities and research centers.

In this context, it is also necessary to revisit public procurement models. In previous columns, I have warned about the harmful effects of the “winner-takes-all” approach (a procurement model in which a single supplier is awarded the entire volume), which concentrates production among a few global players, erodes local capabilities, and increases system vulnerability to disruptions. Resilience requires competition, diversity, and redundancy—not concentration.

We are at a paradigm shift. Efficiency can no longer be measured solely in terms of unit price. It must include variables such as continuity, equity, and sustainability. Well-designed productive relocation can be a powerful tool to build more robust, equitable, and future-ready health systems.

But like any scalpel, it must be used with precision. Because in healthcare, improvisation costs lives.