Pharmaceutical companies are increasingly re-evaluating their reliance on Contract Development and Manufacturing Organisations (CDMOs) and considering insourcing both clinical and commercial manufacturing.
After decades in which outsourcing offered cost efficiency and flexibility, recent disruptions have exposed vulnerabilities in extended supply chains. Events from the COVID-19 pandemic to shifting trade policies have underscored the risks of over-reliance on external manufacturers.
In response, many organisations, including major European pharma firms, are exploring bringing production back in-house to gain more control over quality, timelines, and supply security. This article examines the key considerations for insourcing, the growth drivers behind this shift, the main challenges companies face, and the potential benefits of in-house manufacturing, drawing on industry insights and Linesight’s experience supporting life sciences projects across Europe.
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Capacity and demand
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Capital investment
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Expertise and workforce
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Regulatory compliance
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Time-to-market
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Strategic capacity building
Capacity and demand
Capital investment
Expertise and workforce
Regulatory compliance
Time-to-market
Strategic capacity building
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Capacity and demand
Insourcing is most viable when a company has sufficient and stable demand to keep its facilities utilised. Under-utilisation can erode cost efficiency, as expensive equipment and staff may sit idle if demand fluctuates. Companies should forecast long-term product volumes to ensure an in-house plant will be efficiently used.
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Capital investment
Unlike outsourcing, building or expanding a GMP-compliant facility requires substantial up-front capital expenditure. From construction and equipment to validation, the investment is significant and only pays off over time. This ties up funds that investors might prefer to see spent on R&D or product launch activities. Companies need a strong financial case (e.g. a high-margin product or portfolio of products) to justify the capital outlay.
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Expertise and workforce
Operating a pharmaceutical manufacturing site demands specialised talent, engineers, technicians, quality assurance and control, supply chain experts, etc. Smaller biotech companies often lack the deep Good Manufacturing Practice (GMP) experience and breadth of skills needed for in-house production . Recruiting and retaining these skilled professionals can be challenging and costly. Organisations must consider whether they can assemble a team with the right expertise to run the facility in the shortlisted locations, at the required regulatory standards.
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Regulatory compliance
Any new or expanded facility must meet stringent regulatory requirements. Companies taking manufacturing in-house need to obtain facility licenses and approvals from authorities (FDA, EMA, etc.), implement robust quality systems, have expert teams to manage the process and be inspection-ready at all times. Maintaining compliance for multiple in-house sites globally can be as complex as overseeing a third-party manufacturer. This consideration includes mastering specialised processes (for example, aseptic processing or lyophilisation) and ensuring all operations follow current GMP standards.
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Time-to-market
Building a manufacturing plant or repurposing an existing site is time-consuming. Design, construction, equipment installation, and validation can take years. Utilising existing internal sites can shorten this, but a greenfield project will have extended timelines compared to leveraging an established CDMO’s ready capacity. Companies must plan for this lead time or use a hybrid approach.
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Strategic capacity building
Investing in internal manufacturing is also an investment in the company’s future capabilities. It forces the organisation to develop competencies that can become strategic assets such as expertise in biologics production, sterile manufacturing, or new delivery technologies. Over time, this can compound into a competitive advantage. By having its own manufacturing base, a pharma firm can more confidently pursue aggressive R&D or product expansion, knowing it has the means to produce those treatments if they succeed. For example, Moderna’s decision to build an mRNA vaccine manufacturing facility in Australia, supported by Linesight in project management, not only expanded Moderna’s global manufacturing footprint but also “ensures that Australia can respond more effectively to future pandemics” by having local vaccine supply. Such cases show how insourcing can enhance a company’s credibility and stakeholder trust.
Drivers behind the shift to insourcing:
Supply chain resilience and security: The fragility of global supply chains became evident during the global pandemic. This, coupled with other external forces like tariff threats, has “tempted Europe to seek independent biopharma production” to mitigate risk. Senior executives report that while offshoring to regions like India or China was once justified by speed and low cost, those benefits have been overshadowed by concerns about quality and reliability. Ensuring a reliable supply of medicines, especially essential or strategic drugs, is a major driver for insourcing.
Product control and intellectual property: Many large pharma companies cite “control” as the top reason to bring manufacturing steps back in-house. They want to mitigate risks by not being “entirely dependent on the skills and stability of a third party” for critical production. Additionally, many companies choose not to engage CDMOs for their most valuable or confidential compounds when those CDMOs are concurrently serving other clients.
Geopolitical and policy factors: Geopolitics is playing an increasing role in manufacturing strategy. In Europe, the pandemic and rising global tensions have sparked a policy shift towards “strategic autonomy” in medicines. The EU’s proposed Critical Medicines Act in 2025, for example, is aimed at addressing drug shortages by reducing supply dependencies on foreign manufacturers. Initiatives like the EU’s “European Biotech Act” and other incentives are encouraging investment in local biomanufacturing capabilities.
Technological and market drivers: The nature of pharmaceutical pipelines is evolving, and this affects make-versus-buy decisions. Advanced therapies such as cell and gene therapies, mRNA vaccines, and personalised medicines often require highly specialised manufacturing processes and equipment. In some cases, the available CDMO infrastructure hasn’t yet caught up to these new technologies. Controlling the manufacturing of complex therapies in-house can facilitate closer collaboration between R&D and production teams, accelerating tech transfer from lab to factory.
Economic considerations: Paradoxically, even some cost considerations favor insourcing under the right conditions. While outsourcing is generally seen as more cost-effective for companies lacking scale, a company with a deep pipeline or multiple products in the same facility can achieve economies of scale internally. Especially in fields like personalised medicine outsourcing is extremely expensive; if a smaller company can manage those processes in-house, it may gain efficiency and save costs in the long run. Additionally, by insourcing, companies avoid the scenario of competing for production slots at a busy CDMO - which can carry premium pricing during high-demand periods. In Europe, some governments are also tweaking economic levers to make local production more viable for instance, Germany passed laws allowing drug makers to increase generic drug prices if they produce in Europe, to offset the higher costs of onshore manufacturing. Such measures improve the business case for insourcing in certain segments.
It’s important to recognise that companies do not need to choose all-or-nothing between insourcing and outsourcing. Many leading firms use a hybrid model, they manufacture core products and sensitive processes internally, while still partnering with select CDMOs for surge capacity, regional supply, or specialised capabilities.
This balanced approach “helps to secure supply, optimise performance, and minimise risks” by leveraging the strengths of both strategies It is interesting to note that the percentage of global pharmaceutical production outsourced to CDMOs has risen over the past decade from 34% in 2014 to 49% in 2023. The trend now is that the pendulum is swinging slightly back toward insourcing for certain areas, but almost always as part of a mixed strategy.
Insourcing pharmaceutical manufacturing is a strategic journey, not just a binary decision. Organisations must align this move with their long-term business strategy, product portfolio, and risk tolerance. For senior industry stakeholders, the decision to build internal manufacturing capabilities comes down to a careful trade-off: control and resilience vs. cost and complexity. Engaging experienced consultants and project managers can greatly assist in the transition.
Companies like Linesight, which have years of experience delivering life sciences facilities across Europe, bring valuable expertise in cost control, scheduling, and regulatory compliance to such projects. By leveraging best practices and benchmarking data from dozens of pharma facility projects, they can help a firm avoid pitfalls and implement an insourcing strategy efficiently and safely.
Ultimately, the decision to insource should be guided by the strategic value it offers: ensuring reliable access to high-quality products, enabling agile response to market needs, and building a manufacturing engine that propels innovation.
