With an accelerated interest for automation in the manufacturing space along with intensified domestic policies, the US pharmaceutical industry is rapidly evolving. According to reports by McKinsey and Pharma Manufacturing, pharmaceutical has been historically slower to implement automation and digitalisation compared to other manufacturing sectors. However, the new intensified ‘Buy American’ policies and the Covid-19 pandemic are expected to change – and accelerate – the adoption of robotics in the US pharmaceutical manufacturing sector.

DEMAND IN ROBOTICS BOOST PHARMACEUTICAL MANUFACTURING SECTOR 

Business conditions for US pharmaceutical manufacturers are changing rapidly by forces including intense global pricing pressures, highly vulnerable global supply chains, and increasing domestic protectionist policies. According to articles published by the Food and Drug Administration (FDA) and National Institutes of Health, the Covid-19 pandemic has propelled the acceleration of reshoring manufacturing back to the US, as the country’s vulnerability to supply chain fluctuations of generic drugs and medical supplies became particularly apparent during the pandemic. The heightening concern of US dependence on China for critical medical and pharmaceutical supplies pushed the Trump administration to introduce the executive order of Protecting Our Pharmaceutical Supply Chain from China Act of 2020. This act mapped out reshoring initiatives to incentivise large American pharmaceutical companies to bring their production facilities closer to home (US. Congress S.3537). Together with other protectionist policies introduced and suggested by both Trump and Biden administrations, the effect on the domestic production of pharmaceutical drugs in the US in the long term is projected to be positive.

As American drug producers face accelerated pressure to increase productivity of their domestic manufacturing plants to compete with labour intensive markets, industry bodies are expecting an increase in demand for automation and robotic solutions. According to Robotics Industries Association and ZMR, by 2026, the global pharmaceutical robotic market is expected to reach USD 200 million with an annualised growth rate of almost 13.2 percent, up from USD 93 million in 2019. The International Federation of Robotics (IFR) claims robotic installations in the US pharmaceutical sector increased by 11.4 percent between 2016 and 2018, while the trajectory of growth is set to accelerate in line with the growing concern of securing supply chains with an expected CAGR of 10 percent in the upcoming years. In 2020, life science was the sector showing the highest growth year-to-date in robotic sales order intake in North America, increasing by 97 percent from the first half of 2019 according to Robotic Industries Association.

ENHANCED REGULATIONS REQUIRE SOLUTIONS FOR PICKING & PACKING

Within the pharmaceutical manufacturing value chain, robotics is most commonly used in the final steps when products are picked up and packaged. North America, with the US as the dominating country, has the largest market for pharmaceutical packaging globally and forecast figures by Mordor Intelligence suggest sector is expected to grow with a CAGR of 8.3 percent until 2025. Based on a survey conducted by PMMI Business Intelligence, around 61 percent of pharmaceutical manufacturers in the US use robots for packaging purposes, and both current and new users are scaling up the implementation of automation in picking and packaging processes. Swedish automation companies offering solutions for flexible configurations with high speed and accuracy could see this area as a particular potential for growth.

There is also a growing need for track and trace solutions as several new regulatory requirements come into force. The Food and Drug Administration (FDA) requires that all produced packages must be labelled with the exact mark approved by the pharmaceutical manufacturer, a process which will benefit from using robotics rather than being controlled by humans - which often is still the case. FDA has a goal of unit-level traceability within manufacturing of prescription drugs by 2023, implemented through the Drug Supply Chain Security Act (DSCSA). Investments in new equipment will help manufacturers adapt to the rules with integrated automation supporting efficiency while maintaining compliance.

SWEDISH COMPANIES NEED TO LOCALISE AND STRATEGISE

For Swedish companies looking to compete with domestic players and grow their footprint in the US pharmaceutical manufacturing sector, a local presence will be critical to meet increased requirements on domestic content while also respond to the mounting pressure to re-shore pharmaceutical manufacturing. Biden’s Buy American Act will tighten rules for domestic content and procurement processes for American products, services, supply chains, and the transportation of goods. Navigating key issues impacting pharmaceutical supply chains, operations and customer landscape is important to create a more resilient and competitive position in the US.

Contact our team if you want to learn more about opportunities in the US industrial sector and how to navigate the new business landscape.