Will reshoring medicines manufacturing solve shortages in the UK?

Medicines shortages have presented the government, pharmacists and patients with one crisis after another in recent years.

For example, attention deficit hyperactivity disorder medicines, antiepileptics, the pancreatic enzyme replacement therapy Creon (pancreatin; Mylan) and diabetes medicines — such as insulin and glucagon-like peptide-1 receptor agonists (GLP-1 RAs) — have all been subject to shortages in the UK since 2022.

The standard response on the matter from the UK government has been that medicines supply chains are enormously complicated and that it does what it can to address the shortages that emerge as a result of these complex international networks. In 2022, while in opposition, the Labour Party committed to setting up a taskforce as part of its industrial strategy to review supply chain needs “across critical sectors” that “may include” medicines, if they were elected.

However, since then, the frequency of supply chain problems has only increased.

Government data obtained by The Pharmaceutical Journal under the Freedom of Information Act, published in March 2024, show that the number of times manufacturers alerted the government to potential medicine supply problems increased by 67% between 2021 and 2023, from an average of 82 notifications per month in 2021 to 137 notifications per month in 2023. This has now increased further to an average of 169 notifications per month during the first six months of 2024.

Inevitably, this has impacted on the patient care pharmacists are able to offer. Over two-thirds of the 1,265 UK-based pharmacists (68%) surveyed by The Pharmaceutical Journal in April 2024 said their patients had been put at risk during the past six months because of shortages — a 14 percentage point increase on the response to the same question in the 2022 survey.

‘Reshoring’

Some parts of the world have decided that part of the solution to medicines shortages is to increase local production — known as ‘reshoring’ or ‘nearshoring’.

This approach has seen some regulators and governments draw up lists of essential medicines that must be available and ideally manufactured in a particular country or trading bloc.

In December 2023, the European Medicines Agency (EMA) published its first list of “critical medicines”, which it categorised as essential for healthcare systems across the EU. The list contained more than 200 active substances of medicines for human use, covering a wide range of therapeutic areas — as well as vaccines and treatments for rare diseases — reflecting the outcome of a review of 600 active substances taken from six national lists of critical medicines.

The EMA did not tie the list to any action, but a European Commission paper on addressing medicines shortages across the EU, published in October 2023, vowed to launch a study into how legislation could help offer long-term structural support to critical medicines production within Europe, paving the way for a potential ‘Critical Medicines Act’.

As a first step, a Critical Medicines Alliance — aimed at uniting national authorities, industry stakeholders, healthcare organisations, civil society representatives, the European Commission and EU agencies — was set up in April 2024, with its first set of recommendations expected to be published by the end of 2024.

Also published in October 2023 was an analysis of the European medicines market by Dutch-based banking giant ING, which concluded that the responsibility for 65% of drug shortages could be laid at the door of either medicines production or distribution.

It suggested that reshoring would make for more stable supply chains, while acknowledging that it would be expensive and complicated.

ING’s analysis estimated that for 60% of European demand for drugs to be produced within the EU, it would need to increase production substantially; for example, 7,772 more tonnes of metformin, 1,101 more tonnes of amoxicillin and 452 more tonnes of levetiracetam per year.

However, EU countries are pressing ahead with reshoring plans regardless. In June 2023, Emmanuel Macron, president of France, announced a plan to increase the country’s production of 50 medicines, picked from a list of 450 critical medicines drawn up by the French health ministry.

“We must absolutely secure our supply chains, either by completely reshoring or diversifying [supply] and continuing to innovate,” he said at the time.

The plan provided €160m to support eight new production projects that would manufacture medicines, of which Macron said there was “a clear dependence on imports from outside the EU”, including amoxicillin and morphine, as well as several anaesthetics and anticancer drugs.

The United States is taking a similar approach, with president Joe Biden signing an executive order in August 2020 that directed the US Food and Drug Administration to “identify a list of essential medicines, medical countermeasures and critical inputs that are medically necessary to have available at all times in an amount adequate to serve patient needs and in the appropriate dosage forms”.

The order stated that it “seeks to ensure sufficient and reliable, long-term domestic production of these products, and to minimise potential shortages by reducing our dependence on foreign manufacturers”.

Closer to home

However, while other countries have chosen to go down the reshoring path, similar proposals will not necessarily work for the UK, according to Rick Greville, a director at the Association of the British Pharmaceutical Industry (ABPI) with responsibility for distribution and supply.

“It’s a different environment because France and Belgium [in its role as presidency of the European Commission] might be doing it on behalf of Europe, [the United States] is a large enough market to justify manufacture within its own territory, as is Europe in many cases,” he says.

“The UK alone probably isn’t big enough to do that. It’s important to remember that the UK market is about 2.5% or 3.0% of the global market, so it isn’t that big in terms of decision-making in global companies,” says Greville.

However, Mark Samuels, chief executive of the British Generic Manufacturers Association, argues that having more medicines produced in the UK would help increase supply chain resilience, but admits that it is not a complete solution.

“We believe it would be one element of addressing issues with shortages, although not the total answer,” he says. “Indeed, there can be many reasons for a shortage and so a successful approach requires a multi-faceted response.”

One other solution Samuels suggests would be to recognise the performance of companies in previous tenders when renewing NHS medicines contracts, but he says these processes should still be open to manufacturers outside the UK.

“We need a carrot, not just a stick, with NHS tenders giving far more weight to the importance of a secure and reliable supply record.

“If a company keeps going out of stock or doesn’t communicate shortages adequately, then, of course, there has to be some consequence for that in terms of future awards.

“We support appropriate funding for domestic manufacturing, but tendering, in our view, should be based on a level playing field for all potential suppliers.”

Liz Breen, director of the Digital Health Enterprise Zone and professor of health service operations at the University of Bradford, says a critical medicines list in the UK would be useful to target action and funding, but stresses that it would work better as guidance rather than a must-do.

She adds that it would help tackle medicines shortages if such a list informed effective procurement strategy for medicines that are not manufactured in the UK and where it would not be cost-effective to do so.

Innovative medicines

Moving toward domestic manufacturing of innovative medicines is a post-COVID measure, says Martin Turner, associate director, policy, public affairs and investor relations at the BioIndustry Association (BIA).   

The pandemic showed that having flexible onshore capabilities to produce innovative medical products is essential to protect modern economies from public health threats, he says.

As a result, he adds: “Countries around the world are now competing more than ever to attract these manufacturing investments to their shores.”

The UK has had mixed results when it comes to attracting these investments. In November 2023, Flagship Pioneering — the parent company of Moderna — signed a memorandum of understanding with the UK government to open its first site outside of the United States, in London. Then, in January 2024, GSK said it was investing £200m in its six UK manufacturing sites, with its chief executive Emma Walmsley quoted as saying that Britain was “uniquely placed” to perform well in the life sciences sector.

Conversely, in February 2023, the chief executive of AstraZeneca was quoted as saying that a “discouraging” UK tax rate persuaded the company to develop a £350m active pharmaceutical ingredient facility in Dublin.

“Companies consider many factors when deciding where to invest in new manufacturing facilities, including the availability of skills, transport connections, political stability, and capital investment and running costs,” says Turner.

“The UK scores highly on many of these but faces strong competition internationally, especially on economic incentives.”

Government incentives

Over the past decade, the government has made a smorgasbord of announcements on financial help and support for homegrown manufacturing of innovative medicines. While this will not deal with shortages of existing drugs, it could prevent future shortages by ensuring that new generations of drugs are made in the UK.

Incentives include the ‘Advanced therapies manufacturing action plan’, published in 2016 jointly by Innovate UK, the ABPI and the BIA; Innovate UK’s award of £13m in 2023 to 17 innovative medicine manufacturing programmes through its ‘Transforming medicine manufacturing’ programme; and Life Sciences Innovative Manufacturing Fund (LSIMF) grants, also announced in 2023, through which £17m of government funding has contributed towards manufacturing projects in both medical diagnostics and medicines.

In the 2023 autumn budget, the Conservative government raised the stakes, announcing £520m to support life sciences manufacturing in the UK from 2025 to 2030.

Within this, the government said it would provide £60m in capital grants for investment in the manufacture of medicines, medical diagnostics and medical technology products.

The new Labour government confirmed this funding as part of its 2024 autumn budget and has subsequently opened the first of four rounds of applications to the fund.

Joe Edwards, director of UK competitiveness and devolved nations at the ABPI, says this support is welcome but points out that it is hard to compete on scale with other economies, which is why the ABPI supports government emphasis on encouraging UK production of innovative medicines.

“The [United States] is putting in multiple billions of pounds and we, frankly, are unable to do that in the UK,” he says.

“Similarly, countries such as Canada and France are putting in significant amounts, and Ireland also puts in a high level of capital grants support and has a very low corporation tax basis, which makes it extremely competitive.

“But from the capital grants side of things, we can’t get everything, which is why we suggest that we really double down on innovative high-value therapies where the UK has a really good skills base, a good interlinked R&D ecosystem, and also try to push the sustainability angle because we have a lot of technological expertise in our research centres, which are really leading the way globally on how to decarbonise direct manufacturing and also supply chains.”

Breen is less sure that this is where the emphasis should lie, with her main concern being that the focus becomes only ‘cutting edge’ and that fundamentals are overlooked.

“Whilst innovative advances can improve capability, capacity and creation of new drugs … issues such as medicines production and access don’t always require this intervention. These require fundamental business and operations management decisions — what to make, how much, where from, contract negotiation, supplier performance management, etc.

“Investment in resources to support this should ensure better access to medicines and services to patients.”

A spokesperson for the Department for Science, Innovation and Technology told The Pharmaceutical Journal that chancellor Rachel Reeves has announced a multi-year spending review to conclude in spring 2025, which will determine public R&D budgets.

They added that plans to support investment in the life sciences sector will be set out in due course, but that the government would take a long-term approach to funding cycles.

“As part of our new industrial strategy, we are aiming to cement the world-leading status of the UK life sciences sector, driving economic growth and transforming healthcare in every part of the UK,” the spokesperson said. 

“The government is actively considering how best to support and enable industry partners on medicine supply, domestically and internationally, to boost our manufacturing capability and put the UK at the front of the queue for new medicines and vaccines to help to ensure patients have access to the medical goods they need.”

As part of the Labour government’s growth mantra, it hosted an enterprise summit in October 2024 for international firms, where Eli Lilly — the US manufacturer of weight loss drug Mounjaro (tirzepatide) — announced it would work jointly with the UK government to open the first of its ‘Gateway Labs’ innovation accelerator in the UK.

The facility will support early-stage life sciences businesses to develop transformative medicines by providing laboratory space, mentorship and potential financial backing.

Ultimately, the government can offer incentives and promise growth in innovation, but it will be up to medicines manufacturers where they set up their facilities. Greville believes that a move to the UK presents a number of advantages, but he is not optimistic that it would mitigate the country’s ongoing shortages problem.

“There is little evidence that the geography of production influences supply resilience specifically, beyond where countries restrict trade,” Greville says. “But where countries operate with open trade, the place of production isn’t as critical as lots of other things.

“There are lots of very good reasons why the UK should do its best to attract as much pharmaceutical manufacturing as possible. Loads of economic benefits for encouraging manufacture, but supply resilience is probably way down that list of benefits.”