Sep 9, 2020

The Boyd Company: reshoring in the American pharma industry

pharmaceutical
global supply chain
Reshoring
USA
Matilda Pilkington
2 min
A gloved hand putting pharmaceuticals in test tubes
The Boyd Company takes a detailed look at how the pharmaceutical industry is reshoring in the wake of COVID-19...

Covid-19 has exposed large vulnerabilities in the pharmaceutical supply chain within the US, this has prompted some organisations to relocate portions of their supply in an attempt to plan for the unexpected in the future.

With a huge spike in the requirements of PPE, test kits, and drugs, The Boyd Company has pinpointed a weakness in supply chains dependent on offshore suppliers. This weakness is also an opportunity for the 12 states that contain the 25 East-Coast cities Boyd has identified as well-positioned to benefit from this new wave of local pharma investment.

According to Janet Woodcock, Director - Center for Drug Evaluation and Research, only 28 percent of the manufacturing facilities making APIs to supply the U.S. market are based there. Leaving 72 percent of active pharmaceutical ingredients sourced from overseas, the pandemic has shed a harsh light on the risk of relying too heavily on overseas suppliers. Another stimulant for this move is the predicted volume of the anticipated COVID-19 vaccine when it becomes available.

According to Boyd, the states set to benefit from this switch in direction are Massachusetts, New Hampshire, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, North Carolina, Georgia and Florida. The cities were selected based on their proximity to regional pharmaceutical production hubs, transportation infrastructure, real estate inventories for development and logistics considerations. Read the full report to find the specific 25 cities they believe will benefit most. 

As well as the recent issues brought to light due to the global pandemic, there are also growing uncertainties surrounding tax and trade costs which is causing an increased focus on operating cost structures and efficiencies within the pharmaceutical industry. Ultimately, many businesses would benefit from the reduction of costs and lower disruption possibilities associated with the reshoring of their supply chains.

The Boyd Company, Inc., provides location counsel to leading American and overseas corporations.

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Jun 16, 2021

EU and US agree end to Airbus-Boeing supply chain tariffs

supplychain
Boeing
Airbus
tariffs
3 min
Supply chains embroiled in Airbus-Boeing dispute will no longer be impacted by $11.5bn tariffs imposed on food and beverage, aircraft and tobacco

The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic. 

Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years. 

It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC. 

The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn. 

In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products. 

Boeing-Airbus dispute by the numbers  

  • The dispute began in 2004
  • Tariffs suspended for 5 years 
  • $11.5bn worth of goods affected by tariffs
  • $3.3bn in duties paid by businesses to date 
  • 15% levy on aircraft and 25% on non-aircraft goods suspended

Both sides welcome end to tariffs 

European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.

“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.

Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”. 

The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."

This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.

Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”

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