Why healthcare reshoring won't mean fully domestic supply

U.S. pharma reshoring is becoming a supply chain diversification story

U.S. trade and regulatory policy is accelerating investment in pharmaceutical manufacturing, but a fully domestic supply chain remains unlikely. Instead, the next decade is likely to produce a more diversified healthcare network combining new U.S. capacity with established manufacturing hubs in Europe, India, Mexico, Canada, and parts of Asia.

How U.S. tariffs and regulatory incentives are accelerating reshoring

• Section 232 tariffs that began phasing in this year establish rates as high as 100% on imports of certain patented pharmaceuticals, active pharmaceutical ingredients, and key starting materials.
• The U.S. Food and Drug Administration is also trying to reduce the time and regulatory uncertainty associated with adding domestic capacity. Its PreCheck Pilot Program is designed to streamline evaluation and inspection of new U.S. pharmaceutical manufacturing sites.

A highly interconnected pharma supply chain

• Europe: The EU is particularly important for branded drugs, active ingredients, and biologics.
• India: About half of U.S. generic prescriptions are filled with products manufactured in India. But Indian manufacturers themselves depend heavily on Chinese starting materials, leaving upstream exposure to China.
• China: China accounts for an estimated 60–80% of global starting material supply and is also a significant source of active ingredients, protective personal equipment, and medical-device components.
• Mexico and Canada: Mexico has become a significant nearshoring location for medical-device manufacturing, while Canada supplies certain pharmaceutical inputs and specialty devices.

Why U.S. pharma reshoring has limits

• Generics account for roughly 90% of U.S. prescriptions but only 13.1% of drug spending, making the economics of new U.S. production difficult.
• Moving finished-drug manufacturing to the United States does not eliminate reliance on foreign ingredients and key starting materials.
• Reshoring alone doesn't eliminate supply risk. A 2024 disruption at a North Carolina facility that produced approximately 60% of U.S. IV-fluid supply demonstrated the vulnerability created by concentrating critical production at a single domestic site.

What pharma reshoring means for logistics

Given the economics of drug production and the complexity of global supply chains, the next five to 10 years are more likely to produce a diversified network of domestic and trusted international suppliers than a fully reshored pharmaceutical supply chain.

New U.S. manufacturing will create additional inbound flows of active ingredients, starting materials, packaging, equipment, and other inputs as well as domestic movements between manufacturing sites, distribution centers, healthcare systems, and final customers.

As a result, shippers are advised to:

• Map ingredient and starting material origins to assess supply chain risks and opportunities.
• Monitor trade policy closely. Changing tariffs and incentives may alter production and transportation down the road.
• Plan for changing freight flows as new U.S. manufacturing comes online, while maintaining geographic and facility redundancy.
• Expect a hybrid network. Europe, India, China, Mexico, and Canada will continue to matter as the United States selectively expands domestic capacity.

Livestock and pet healthcare fuel pharma growth

The global veterinary pharmaceuticals market is projected to grow by more than 10% annually through 2033. North America is the largest market, accounting for more than one third of worldwide revenue in 2025. Growth is being driven by preventive care, expanding livestock production, rising spending on companion animals, and new drug formulations and delivery systems.

Tighter livestock controls drive specialized pharma

• Farm animals account for nearly 63% of the veterinary pharmaceutical market. Poultry, swine, and cattle operations are increasing their use of routine disease-prevention and herd- and flock-health programs.
• Parasiticides are the largest product category, accounting for nearly 36% of the market. Because parasite control programs typically require repeated preventive treatments, they generate recurring pharmaceutical demand.
• Tighter antimicrobial stewardship rules are changing how livestock producers manage animal health. Greater restrictions on antimicrobial use, prescribing, residue limits, and withdrawal periods are pushing the industry toward more targeted treatment and disease prevention.
• Generic veterinary drugs are the fastest-growing drug segment, with growth of around 12% projected over the 2026–2033 period as producers and veterinarians look for lower-cost alternatives.
• Long-acting and species-specific formulations are also gaining importance. These products can reduce dosing frequency and simplify treatment, helping address farm labor shortages.

More Americans own pets

• Approximately 95 million U.S. households, or 71.6%, own a pet in 2026, compared with 56% when tracking began in 1988. About 71 million households have dogs and 53 million have cats. Notably, 70% of Gen Z pet owners report owning two or more pets.
• Pet spending continues to grow as well. Americans spent $158 billion on pets in 2025, with spending projected to reach $165 billion in 2026. Veterinary care and product sales alone are projected at $42.4 billion.
• Companion-animal healthcare is expanding beyond acute treatment toward preventive care and treatment of chronic and age-related conditions.
• Distribution is evolving too. Over-the-counter veterinary medicines are expected to be the fastest-growing type as preventive care increasingly moves into retail and digital channels.

The logistics takeaway

• Rural and urban supply chains are different. The livestock market is increasingly driven by planned, recurring preventive programs on farms and ranches, while the pet market spans veterinary clinics, retailers, and digital channels.
• Regulatory complexity is increasing, particularly for food-producing animals, adding compliance considerations throughout veterinary pharmaceutical manufacturing and distribution.
• Growth in generics, long-acting formulations, and specialized delivery methods means manufacturers and distributors need supply chains capable of handling a broader portfolio of products.
• Temperature-control requirements vary by product, but specialized expertise in pharmaceutical handling and distribution remains critical.

New U.S. tariffs on Canadian imports hit the healthcare supply chain

A revised Section 338 tariff of 50% on certain Canadian imports took effect October 30, 2026, adding roughly 100 product classifications while removing 22. For healthcare, newly affected goods include certain diagnostic and laboratory reagents, nutritional supplements, and medical and scientific equipment.

What healthcare shippers can do

• Carefully review which Canadian imports fall under Section 338.
• Assess the resulting impact on landed cost.
• Evaluate alternative suppliers where practical.

C.H. Robinson customers can take advantage of our Sourcing Analysis Tool. For certain specialized products, non-Canadian substitutes may not be readily available, making planning around the additional cost particularly important.

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