Trade and geopolitics
Friend-shoring pharmaceutical supply chains: The road to India
Published 21 February 2023
In 2022, China's Covid-related lockdowns paralyzed the global supply of key pharmaceutical products. The events, combined with geopolitical competition and macroeconomic demands, are spurring a rethink on the shape of global supply chains. In the pharma industry, India could emerge as a destination in the US' new "friend-shoring" strategy.
As the world economy emerges from the Covid-19 pandemic, national leaders no longer appear convinced of the wisdom of free trade, especially when it results in the concentration of crucial supply chains in geopolitically risky areas. Among US officials, “friend-shoring” has emerged as an strategic pivot away from the costs and perceived drawbacks to both unrestricted foreign investment and “onshoring” industries.
In friend-shoring the supply chains of pharmaceuticals, whose importance was reinforced by the pandemic, India appears to be a leading candidate in atttempts to "friend-shore" the pharmaceutical supply chain. In this paper by Akhil Ramesh and Rob York of Pacific Forum, the authors assess how India's recent economic liberalization measures, the growing partnership between New Delhi and Washington, and India’s status as the "pharmacy of the world" combine to present opportunities for the country. But India' domestic industry faces a number of challenges, including its lax regulatory oversight and dependency on China for raw components. Ramesh and York also argue that the friend-shoring of pharmaceutical supply chain to India would urge Delhi to bring greater accountability to its pharmaceutical industry while also stepping up monitoring of subsidies to prevent inefficiency.
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