Build API facilities in Central and Eastern Europe to fix drug shortages, says report

An EU study claims that building more API facilities in Central and Eastern Europe could help solve drug shortages and weaknesses in the supply chain. The literature review suggests the Czech Republic, Poland, and Hungary as sites for new production locations in Europe given that their staff costs are lower than in Western Europe, but notes that higher-income countries, such as Germany, the Netherlands, and Belgium also make attractive production locations. Furthermore, although higher salaries are a deterrent against reshoring API manufacturing to Europe, rather than Asia, future technology will lead to an increase in automation and robotisation, and this might result in a need for fewer production employees. 

The question of whether, and how, to move more API supply chains away from Asia and closer to their final markets, is more and more debated in Europe and North America (see 'Pharmaceutical Sourcing and Onshoring Survey', July 2022, GlobalData). Increased drug shortages, the exposure of supply chain vulnerabilities by the Covid-19 pandemic, and economic and political drivers have contributed to calls for more home-grown API. 

European stakeholders argue that, although the region may be more expensive than India or China, it brings supply security, quality, transportation speed, and more control for governments to steer production to critical pharmaceuticals. However, the EU study found that pharmaceutical companies reported not reshoring because of the time and money. Europe also lacks suppliers to source key materials for API production. 

The 'Potential measures to facilitate the production of active pharmaceutical ingredients (APIs)' report was commissioned by the Committee on the Environment, Public Health and Food Safety (ENVI).