Reshoring, friendshoring, nearshoring are changing global supply chains in the medical devices sector, ET HealthWorld

London: Since 2020, global supply chains have faced major disruptions due to geopolitical conflicts, armed conflicts, climate change and demographic changes. These issues have been particularly evident in the medical devices sector, where the need for resilient supply chains is key. The Covid-19 pandemic has exposed vulnerabilities in the sector, causing severe shortages of essential medical products such as ventilators, personal protective equipment and diagnostic equipment. These shortages have highlighted the urgent need for more robust and adaptable supply chains, GlobalData says.
In response to these disruptions, medical device companies are strategically shifting their supply chains to reduce risk and, in the long run, lower production costs. Rising geopolitical tensions have prompted governments to introduce new support mechanisms for “reshoring”, “nearshoring” and “friendshoring”, specifically targeting critical industries such as healthcare.

Reshoring involves bringing part of the supply chain from abroad to the home country. Nearshoring moves business operations closer to consumer regions to lower supply chain costs and increase efficiency. Friendshoring means shifting business activities to politically oriented allies to ensure more reliable and secure supply chains.

Thomas Fleming, medical analyst at GlobalData, commented: “In the US, measures such as the Chip Act and the Inflation Control Act provide subsidies to key sectors such as semiconductors, which will have an impact on the medical device sector. Similarly, the UK government plans to invest billions in domestic manufacturing in life sciences and other key sectors. Despite slow economic growth making supply chain relocation costly, companies are prioritizing these steps to build resilient supply chains and avoid future shortages.”

GlobalData thematic report entitled “Supply Chain Disruptions” reveals that most manufacturers have already begun relocating their supply chains, with as many as 90 percent reporting a positive impact on their operations in some industries (Censuswide survey).

Regions such as Latin America and Mexico are becoming attractive alternatives to previous manufacturing locations, offering large pools of talent and a highly skilled workforce. Southeast Asian countries such as Malaysia, Vietnam and Thailand are also becoming popular due to lower labor costs and rapidly developing infrastructure.

Fleming concluded: “Overall, the trend of reshoring, friendhoring and nearshoring is transforming global supply chains in the medical device sector. This strategic change aims to increase resilience and adaptability in the face of current and future disruptions, ensuring that critical medical supplies remain available when they are needed most.”