How are geopolitical factors influencing sourcing and manufacturing decisions for 2026 and beyond?

Policies like the U.S. BIOSECURE Act have expanded risk management conversations, particularly for early stage programs backed by government funding. Sponsors aren’t walking away from partners overnight, but they are scrutinizing whether a CDMO operates in a region that could be subject to future restrictions. With so much uncertainty in product development, few teams are willing to layer on additional geopolitical risk if it can be avoided.

For commercial programs, the decision-making is different. Many existing products manufactured abroad are insulated by grandfathering provisions, and a number of them will complete their life cycle before BIOSECURE related constraints take effect. The bigger near term disruptor is tariffs and trade restrictions. These are immediate, quantifiable, and capable of reshaping supply strategies in real time. When tariffs materially erode revenue, companies may consider transferring commercial production, even with the significant cost, regulatory burden, and at minimum, a six to nine month timeline such a move entails.

Since tariffs tend to persist once implemented, sponsors are increasingly weighing the long term financial impact of staying put against the strategic value of relocating. As a result, geopolitical risk is directly influencing where companies source materials and where they choose to manufacture for 2026 and beyond.

Geopolitical forces are reshaping global supply strategies, and the core trend is a decisive shift toward risk diversified, regionally balanced manufacturing. Companies are responding to frameworks like BIOSECURE, which tighten controls on biotechnology supply chains and encourage firms to relocate sensitive production to trusted jurisdictions. At the same time, escalating tariffs and targeted trade restrictions, particularly between the United States, China, and the EU, are making single country sourcing untenable from both a financial and operational standpoint.

As a result, organizations are accelerating “China plus one” and “friendshoring” strategies, distributing production across Southeast Asia, India, Eastern Europe, and Mexico. Regional incentive programs, such as U.S. CHIPS Act subsidies, EU Net Zero Industry Act benefits, and U.K. advanced manufacturing credits, are further encouraging companies to build localized, resilient production hubs close to end markets.

The cumulative effect is a long term redesign of supply networks: shorter, more transparent, and more politically aligned. Firms are prioritizing dual sourcing, nearshoring, and vertical integration to reduce exposure to geopolitical shocks. By 2026 and beyond, supply chains will be defined less by cost optimization and more by security, compliance, and strategic autonomy, with geopolitical alignment becoming a core criterion in supplier selection.

Geopolitical uncertainty, including the BIOSECURE Act, tariffs, and others, are emphasizing the importance of “de-risking” manufacturing supply chains and sourcing procedures for CDMOs and their clients. In particular, the BIOSECURE Act has made it essential that CDMOs scale up efforts to friendshore and strengthen U.S. manufacturing capabilities. Manufacturing decisions made in response to today’s policy environment will shape product supply for years, so companies need to think beyond immediate cost or access questions and build partnerships that can remain stable over the long term. This is why companies are increasingly looking for partners that can give them flexibility across trusted regions, not just added capacity.

At Bora, our focus is building trust with our customers by helping them build supply chain resilience and regulatory continuity to reduce the risk of sudden disruptions to manufacturing and sourcing. By providing flexible operations across a variety of regions, we can navigate the cost uncertainties brought by tariffs and trade restrictions while delivering on our main mission: providing patients the critical medicines they need most.

In this environment, resilient manufacturing strategies will depend on having the right regional options and the ability to adapt as policy and trade conditions continue to evolve.

Geopolitical dynamics are reshaping how biopharma companies think about supply chains. Trade restrictions, tariff differentials, and global policies are driving a notable industry shift toward distributed, resilient networks.

The impact is clear: sourcing decisions are no longer only about price and capability but also about predictability and business continuity. Companies are prioritizing partners in allied nations with established trade agreements. South Korea’s existing U.S. trade pact, for instance, provides a favorable position compared with countries without similar trade frameworks. This structural advantage carries significant weight.

Tariffs alone do not drive decisions, however. Supply chain continuity has become a strategic imperative; clients increasingly want multi-sourcing optionality. They are seeking not only consistency but also flexibility. A CDMO with manufacturing nodes in both allied Asia and the United States helps navigate regulatory complexities. And the ability to run dual-site tech transfers can reduce the timeline by months.

Pipelines are more diverse and technically complex than ever, while the bar for manufacturing excellence keeps rising. Partners that can execute consistently on timelines, quality, and cross-border flexibility will be well-positioned in an environment shaped by ongoing policy shifts.

Globalized pharmaceutical supply chains enable geopolitical factors to significantly influence sourcing and manufacturing decisions, especially for generic manufacturers.

Generics account for roughly 90% of the medicines prescribed to Americans, so a resilient supply chain is essential to our healthcare system. However, generic drug manufacturers operate on thin profit margins, making it challenging for them to invest in supply chain resilience through nearshoring or onshoring of manufacturing operations.

Recent analysis from the USP Medicine Supply Map found that the U.S. holds just 8% of drug master files (DMFs) for active pharmaceutical ingredients (APIs), an indicator of manufacturing capacity. The analysis also found that the U.S. accounted for just 3% of new facility filings, while combined filings from China and India accounted for almost 70% of active DMFs.

To reverse the trend toward geographically concentrated offshore production, domestic manufacturing will need to become more economically and technologically viable. Manufacturers are increasingly reimagining the traditional chemistry processes associated with pharmaceutical manufacturing, creating alternative synthesis pathways. Advanced manufacturing technologies, such as continuous manufacturing, can also support more efficient production.

Looking ahead, additional support and incentives from the federal government to invest in supply chain solutions will be essential to mitigate potential disruptions and build resiliency.

The location of your CDMO partner is especially crucial given changing geopolitics and the broader program strategy. For gene therapy programs, the CDMO's location is particularly important because of factors unique to these therapies, such as continuous technological advancements, shifting regulatory requirements, and the need for easy access to both patient populations and funding. These considerations make the United States the optimal choice for a gene therapy CDMO partner, even for drug developers based elsewhere.

From what we’re hearing in conversations with our customers, geopolitical considerations have become an increasingly important part of outsourcing decisions for 2026 and beyond. While scientific expertise, quality, and speed remain the foundation of partner selection, many companies are now placing greater emphasis on supply chain resilience, geographic diversification, and long-term risk mitigation. Proposed legislation such as the BIOSECURE Act, along with tariffs, trade restrictions, and evolving regional policies, has prompted many organizations to evaluate where critical development and manufacturing activities are located.

Rather than relying on a single sourcing strategy, our customers are looking for flexibility and optionality. They want partners that can adapt as the geopolitical landscape evolves while maintaining continuity, quality, and execution.

This is where BioDuro is well positioned. As a U.S.-based contract research, development, and manufacturing organization (CRDMO) with operations in both Taiwan and mainland China, we offer customers the flexibility to align sourcing strategies with their business, regulatory, and risk management objectives. Looking ahead, we expect geopolitical resilience to remain an important consideration alongside scientific expertise and execution when selecting long-term outsourcing partners.

These geopolitical forces are clearly accelerating the move toward more regionalized manufacturing and more resilient supply chains.

Customers are increasingly looking for manufacturing partners that can offer high-quality, reliable, and regionally aligned supply options that reduce risk and support their long-term commercial strategy. In practical terms, that often means looking at U.S.-based or dual-region manufacturing pathways to improve supply continuity, reduce handoffs, manage potential tariff exposure, and better navigate a changing regulatory and trade environment.

At AGC Biologics, we see this as a real shift in how customers are making sourcing decisions. Capacity on paper is not enough. Customers want what we call “qualified capacity”: proven expertise, a strong regulatory track record, and confidence that their partner can execute complex programs successfully. Partners that can simplify the path from development through drug product supply are becoming increasingly valuable.

That is one reason our new strategic partnership with Pyramid Pharma Services is so important. By combining AGC Biologics’ drug substance development and manufacturing expertise with U.S.-based sterile fill-finish, device assembly, labeling, and packaging capabilities, we can offer customers a more integrated domestic supply solution for clinical programs. This kind of end-to-end U.S. option is increasingly attractive for companies that want greater control, fewer supply chain vulnerabilities, and manufacturing closer to their target market.

Looking ahead, we expect geopolitical considerations to remain a lasting driver of outsourcing strategy. The right answer will not be one-size-fits-all. Companies need options across regions so they can make the best decision for each individual project, based on risk, timeline, regulatory strategy, and long-term commercial needs. The companies best positioned for success will be those that build flexibility into their supply chains early and work with partners that can provide regional strength, technical depth, and integrated execution.

Geopolitical developments are reshaping outsourcing strategies in both the near and long term. Policies such as BIOSECURE, shifting tariff regimes, and region specific incentives are accelerating a move away from globally distributed supply chains toward regionally anchored manufacturing footprints. Many innovators are looking at regional manufacturing strategy — U.S. for U.S., Europe for Europe, and Asia for Asia — to diversify supply chains and reduce geopolitical risk.

Tariffs and trade restrictions are particularly influential because their financial impact is felt instantly. Companies that once avoided site transfers due to cost, regulatory burden, and supply risk are now reassessing those assumptions as tariffs create ongoing, non recoverable revenue pressure. Many innovators are actively exploring U.S. re shoring opportunities, signalling how geopolitical volatility is driving near term decision making.

BIOSECURE and similar policies are also influencing early stage outsourcing choices by elevating the importance of proximity, responsiveness, and technical reliability. Sponsors are increasingly favoring partners that can rapidly initiate programs while providing reliable execution and predictable technology transfer, helping maintain continuity as policy and regulatory risks continue to evolve.

The current environment of uncertainty surrounding things like the BIOSECURE Act, tariffs, evolving trade restrictions, and shifting incentives for domestic manufacturing and outsourcing is having a significant impact on strategic sourcing decisions across the life sciences industry. Companies are recognizing that supply chain and manufacturing choices made today will have long-term implications for business continuity, regulatory compliance, customer relationships, and market access.

As a result, prospects are conducting more rigorous due diligence on potential strategic partners, evaluating not only technical capabilities and capacity, but also geographic footprint, supply chain resilience, risk mitigation strategies, and long-term alignment. There is a priority being put on regional manufacturing solutions, while at the same time making sure that the regional CDMO has the ability to support globally if/when needed. That flexibility is viewed as a requirement, not a luxury.

Due to these geopolitical factors, as well as heightened regulatory scrutiny, organizations are operating with an increased sense of urgency, particularly around the technical transfer of commercial products, as they seek to proactively address potential disruptions and secure reliable manufacturing partners before market conditions become more restrictive. This combination of market factors and accelerated decision-making is creating a dynamic sourcing environment where companies must carefully balance speed, risk, and strategic fit from a technical and regional perspective to ensure sustainable growth and uninterrupted supply.

Geopolitical factors are having a bifurcated impact. U.S. pressure has certainly led biopharmaceutical companies to commit to U.S. factories, almost all of which are geared toward large-scale commercial manufacturing. But the pressure on companies from China is having an unexpected reverse result: U.S. pressure on them to be more aggressive with pricing and other tactics to attract early-stage customers in product development, especially cash-conscious biotech companies, who, in turn, are happy to save money now and deal with downstream problems later. This is especially true in Europe, where the negative sentiment toward China isn’t as strong, but we’re seeing it in the United States as well.

For an industry built solely on innovation and intellectual property (IP) that protects novelty, it is surprising to me that, even in the face of known IP risks, the siren song of cash savings and speed now trumps all.

With all the geopolitical talk about artificial intelligence (AI) and chips, would we develop our best next-generation chips in China to save a few near-term dollars? Why are our next-generation complex biologics and other therapeutic candidates any different?

As geopolitical dynamics continue to reshape global supply chains, pharmaceutical companies are reassessing their sourcing models, with a particular focus on critical, high-value excipients and specialty ingredients for which alternatives are limited. In this context, supply security and business continuity have become strategic priorities.

To address these evolving challenges, suppliers must invest in robust and resilient manufacturing networks. At Gattefossé, this commitment is exemplified by the recently launched brand new production facility in Lufkin, Texas, expanding our industrial footprint beyond Europe and Asia.

This strategic investment does not only increase our global manufacturing capacity to support accelerating market demand but also bring production closer to customers in the Americas while reinforcing the resilience and agility of our worldwide supply chain. The result is a stronger, more reliable supply network designed to secure long-term availability of the innovative excipients that enable pharmaceutical breakthroughs.

For our partners, Gattefossé’s investment in supply chain resilience also creates value beyond operational continuity. It reinforces confidence among stakeholders and aligns with the growing expectations of governments and health authorities, for whom securing access to medicines has become a critical strategic priority.

Geopolitical factors are becoming central to sourcing and manufacturing strategies for 2026 and beyond, with the ultimate goal of mitigating supply risk. For example, national security trade remedies under Section 232, active investigations under Section 301, temporary global tariffs under Section 122, and evolving legislation, such as the BIOSECURE Act, require drug developers, including innovators, generics, and over-the-counter (OTC) producers, to prioritize partners that can provide supply continuity, geographic flexibility, and strong quality track records.

In the United States, this trend continues across the value chain, driving a concerted effort to develop and manufacture lifesaving medicines locally, including all key inputs into the final dosage form. For example, recent affirmative antidumping and countervailing duty determinations on hard empty capsules imported from China, Brazil, India, and Vietnam have reinforced the strong mandate for fair market pricing and sustainable, resilient manufacturing footprints in the United States.

On the regulatory side, the U.S. FDA’s decision to revoke authorization for FD&C Red No. 3 (erythrosine, E127) in food and ingested drugs is another example of a critical shift, requiring considerable reformulation efforts for products intended for the U.S. market. In this environment, proactive, advanced planning becomes critical, particularly for high-volume or late-stage programs. Securing a partner with broad capabilities and deep formulation expertise enables developers to reformulate efficiently, ensuring market continuity with minimal disruption.

As a result, drug developers are engaging partners earlier in development and prioritizing those with the expertise to support long-term capacity and technology investments. At Lonza Capsugel, our global footprint and continued strategic investments are designed to support customers and maintain timelines while mitigating geopolitical, regulatory, and supply chain risk.

Biosecurity reflects a broader shift in Washington: biotechnology is now viewed not only as a health and innovation issue but also as a national security and supply chain resilience issue. As the government pursues priorities like pricing and access, there’s growing recognition that we need domestic capacity to support those goals. In practice, that’s creating space for CDMOs to play a role in aligning with U.S. investment priorities.

For example, earlier this year, the U.S. Department of Commerce allowed contracted manufacturing to count towards onshoring commitments, thus making onshoring a viable option for a greater range of companies. Recently, the FDA announced their PreCheck Pilot Program, which offers a regulatory fast-track option for manufacturers building domestic capacity. FUJIFILM is proud of our Holly Springs, North Carolina, facility, one of two CDMO facilities chosen to participate.

Today’s major challenge is to ensure we’re optimizing cost and speed without undermining long-term innovation. For industry, the practical takeaway is that companies need to understand their exposure, review supply chain dependencies, seek opportunities to increase domestic manufacturing capacity, and secure manufacturing capacity early. For policy, we need to continue protecting national security without disrupting patient access or the ability to manufacture complex medicines at scale.

Geopolitical factors are reshaping manufacturing strategy across biopharma, and 2026 has seen that shift accelerate. The BIOSECURE Act effectively removed WuXi as a viable CDMO option for U.S.-bound programs, and companies are responding by diversifying supply chains and building redundancy into regions perceived to be more stable. Tariffs and trade restrictions are pushing sponsors to weigh the cost of resilience against the cost of efficiency in ways that would have seemed unnecessary five years ago. Cell therapy is a useful lens on where the broader industry is headed. For Cellares, regional manufacturing has been a biological necessity from day one. Starting material is fresh blood collected from a patient, and there’s a narrow window before manufacturing has to begin, so global supply chains were never realistic to begin with. That’s why Cellares has or is building IDMO Smart Factories in the United States, Europe, and Japan, manufacturing locally for the patients in each region, and recently joined the New American Industrial Alliance to support the broader push toward domestic biomanufacturing capacity. The broader lesson is that companies whose supply chains were already built around proximity and redundancy, whether by design or necessity, are approaching this new landscape from a position of strength.

Geopolitical factors are increasingly central to sourcing and manufacturing decisions for 2026 and beyond, particularly in advanced therapy sectors, such as cell and gene therapy (CGT), where supply chains are specialized and highly interdependent. Policies such as the BIOSECURE Act, evolving tariffs, and trade restrictions are accelerating a shift away from purely cost driven global optimization toward resilience driven regionalization — while simultaneously increasing pressure to control costs in an already complex environment.

Heightened regulatory scrutiny and trade barriers are prompting developers and CDMOs to reassess reliance on certain foreign suppliers of critical starting materials, including viral vectors, plasmids, and key ancillary components. In response, Minaris is expanding its competitive bidding processes and proactively diversifying sourcing strategies beyond traditional dual source models to strengthen supply continuity and cost discipline. However, CGT presents unique constraints: some critical materials and consumables remain effectively single sourced due to technical, regulatory, or IP limitations. In parallel, the smaller batch sizes inherent to many CGT products limit the pricing leverage typically associated with high volume procurement, making cost optimization more challenging.

At the same time, regionalization efforts are contributing to rising labor costs, particularly in established U.S. and European CGT hubs where competition for experienced GMP talent is intensifying. As a result, scalability and automation are becoming critical levers for cost management. Investment in closed, automated systems not only supports localized, resilient manufacturing models but also reduces manual intervention, improves consistency, and mitigates labor driven cost escalation.

Regional incentives continue to catalyze domestic vector production and cell processing capacity, but long term competitiveness will depend on more than geographic footprint alone. CDMOs that can combine secure, compliant, and geographically diversified supply chains with automation enabled efficiency and disciplined cost management will be best positioned to ensure sustainable growth and continuity of patient access.

As a global CDMO, Evonik has observed a clear shift toward a “region-for-region” supply model, particularly for small molecule patented APIs. Rather than relying on a single global supply network, many multinational pharmaceutical companies are seeking manufacturing partners within each major commercial region to improve supply security, reduce geopolitical risk, and mitigate potential tariff exposure.

During the first half of 2025, uncertainty surrounding proposed U.S. pharmaceutical tariffs prompted many innovator companies to evaluate domestic manufacturing options. Evonik saw a significant increase in requests for proposals related to specific API assets, as companies assessed contingency plans and explored opportunities to regionalize supply. While many of these evaluations did not immediately translate into outsourcing decisions, they signaled a growing focus on supply chain resilience and manufacturing flexibility.

By the first half of 2026, the market had become more decisive. Companies revisited earlier assessments and began advancing projects requiring U.S.-based manufacturing, particularly for products intended for the U.S. market. This trend reflects a broader strategic shift: pharmaceutical companies are increasingly balancing cost considerations with supply security, regulatory certainty, and market access. Looking ahead, we expect geopolitical factors — including tariffs, trade policies, regional incentives, and supply chain security — to remain key drivers of sourcing and manufacturing decisions, reinforcing the value of a diversified and regionally aligned production network.

The days of chasing the absolute lowest price on the global market are fading. Between geopolitical friction and new laws, such as the BIOSECURE Act, pharma companies are rapidly shifting away from sprawling global supply chains. Instead, they are looking for manufacturing, packaging, and storage capacity much closer to home.

Right now, suppliers and subcontractors, especially those tied to China, are under a microscope. Rather than wait for enforcement; sponsors are proactively auditing their dependencies and lining up backup CROs and CDMOs.

It is no longer just about where a drug is finished. With tariffs and trade rules changing fast, companies must look at the origin of everything — from APIs and raw materials to the vials they are packaged in. Government incentives are helping fuel this shift, with U.S. policies pushing for onshoring and the EU Critical Medicines Act forcing diversification across Europe.

Ultimately, procurement teams are looking at the big picture. When choosing a supplier, they are no longer looking at just the unit price. They are factoring in trade risks, setup complexity, shipping delays, and the absolute necessity of keeping medicine on the shelves for patients.

Geopolitical uncertainty is shifting manufacturing strategy from cost-based sourcing to resilience-based partnership. Evolving tariffs, trade restrictions and regional regulatory expectations are prompting drug developers to seek strategic CDMO partners that can combine global scale with regional diversification, robust quality systems, and long-term investment planning. For CDMOs, this means building capacity and expertise in key regions, including the United States, while maintaining the integrated capabilities needed to support the path to market for innovative therapies.

As a result, sourcing and manufacturing decisions are becoming more strategic and outcome-led. Companies are looking for partners that can help absorb geopolitical, regulatory, and supply chain complexity while supporting continuity, speed, and reliable execution across regions. Swiss-based manufacturing can also offer an additional layer of resilience, supported by the country’s stable and low risk operating environment and central position within the European life sciences ecosystem. This is especially important for small biotech companies, which may not have the resources or infrastructure to manage global manufacturing complexity on their own.

Technology will also play an important role in strengthening manufacturing resilience. Advanced digital and automation capabilities can improve planning, enhance efficiency and first-time right, and provide greater visibility across complex supply networks. However, technology alone is not enough. In a changing geopolitical environment, drug developers need partners that can combine digital capability with global expertise, regional execution, quality oversight, and end-to-end development and manufacturing support to help progress the medicines of tomorrow with greater confidence.