Assessing reshoring considerations for life sciences companies

Mike Eickhoff, the Managing Partner of Grant Thornton’s Credits & Incentives team said that while government incentives, accelerated depreciation rules and tax changes under initiatives such as Pillar 2 creates opportunities for reshoring, they don’t address a major barrier: labor availability. Life sciences companies, where Eickhoff has worked with in the U.S., have at times struggled to secure trained workers for manufacturing jobs.

In his client work, Eickhoff described how domestic life sciences companies struggle, in almost every market, to secure adequate levels of trained workers.  In his words, labor was the “number one issue,” cutting across manufacturing generally, not just life sciences. However, what makes life sciences companies unique is that they are highly regulated, require experience in precise manufacturing techniques, and some scientific knowledge is critical. Further, most life sciences companies operate under Good Manufacturing Practices and Good Laboratory Practices which requires discipline in documentation, traceability, and audit readiness. These collective skill sets are not generally available in many U.S. markets.  

What can help solve some labor issues, Eickhoff said, is locating in areas close to research universities or biotech clusters, or in states with robust training programs. This was actually highlighted in the recent announcement of Eli Lilly to locate a $5 billion plant in Virginia. The company commented that the proximity to Virginia Commonwealth University and the contributions of the state Talent Accelerator Program as key elements of its location decision. At the plant level, successful companies complement the location decision where plant-level HR teams create long-term and sustainable partnerships with community colleges and workforce agencies to find and develop qualified candidates.  But even these efforts fall short when demand outstrips supply.

Eickhoff added that while he is excited about the recent reshoring announcements in the life sciences industry, he is curious about how large pharmaceutical firms that are investing billions will be able to identify, train, and develop employees in an already challenging U.S. labor market.  

Optimizing beyond incentives

Stephen Rivera, a CPA, CGMA and a recognized authority on global accounting, said incentives have become a major catalyst for reshoring, but they can also be a trap. Too many organizations chase credits and abatements piecemeal, only to discover claw-backs, timing mismatches, or ineffective utilization. A resilient tax operating model starts with embedding tax design into the capital plan itself, Rivera said.

Rivera said transfer pricing and tax strategy pose fundamental challenges to any reshoring efforts. Bringing intellectual property and income back to the U.S., he said, could provoke intense scrutiny from authorities.

“Once you start doing this, do you now have other pricing documentation you need to look at? It’s kind of like opening Pandora’s box,” Rivera said.

Eickhoff also said companies should have a healthy skepticism toward tax incentives due to their often temporary status. In practice, few incentives prove transformative; companies often cannot fully use them.

“Incentives are great and they’re in the headlines, but at the end of the day you have to run your business, and incentives run out,” Eickhoff said.

Zara Muradali, Head of Life Sciences Industry at Grant Thornton and a Tax Services Principal, emphasized that reshoring decisions are not only driven by federal tax and policy changes.

“You’re not just reshoring to the U.S., you’re reshoring to a state, and what incentives are in place to attract that talent and build the facilities,” Muradali said.

While federal incentives and policies dominate headlines, individual states often determine whether reshoring is successful. In one example, Muradali said Massachusetts is promoting the strength of Cambridge’s research environment (with Harvard University and the Massachusetts Institute of Technology) as an incentive to bring manufacturing facilities into nearby Worcester. Companies do not reshore to an abstract “U.S.” but to specific states with tax incentives, workforce training programs, and physical infrastructure.

Moving assuredly with good governance

Stephen Delano, a Grant Thornton Senior Manager for Growth Advisory said companies often lacked executional capacity for reshoring. Boards and private equity owners might articulate strategies, but businesses still needed external partners to project-manage transitions. His work with clients frequently calls on him to help design and deliver a future-state operating model — an interconnected system spanning governance, procurement, labor, and tax.

Delano added that companies must go beyond surface-level cost comparisons and embrace a “total cost of ownership” (TCO) model that accounts for inventory risks, transportation costs, obsolescence and compliance burdens. Delano said powerful leadership voices sometimes push decisions on companies without rigorous quantitative modeling.

“We often hear powerful voices at the board or C suite that are driving reshoring, but when you peel back the onion, it’s not all that scientific or robust in methodology,” Delano said.

Muradali said reshoring is ultimately a matter of talent and organizational tone. The real determinant of success lies in whether governance structures are strong enough to balance ambition with risk management. Without strong governance structures, companies risked allowing internal biases or board-level preferences to dictate strategy. The true challenge was ensuring that governance mechanisms connected qualitative and quantitative assessments, enabling leaders to evaluate reshoring holistically.

Even with onshore production, pharma remains globally interdependent. Active pharmaceutical ingredients, specialized equipment, and raw materials will continue to come from abroad. Ignoring this reality exposes companies to tariff spikes, export bans, and single-point failures.

Rivera said companies need to be more cognizant of the fragility of their supply and dependence on factors outside their control. In his work, he has seen examples where a single supplier’s failure jeopardized the ability to deliver critical ingredients needed for drug manufacturing, forcing the company to act like a bank and extend a loan just to keep suppliers afloat.

To counter that, any reshoring efforts must be resilient through the establishment of contingency-based supply chains. Dual sourcing is not optional but an essential risk management practice, Rivera said.

One solution is creating and maintaining hybrid supply chains:

• Stress-test for geopolitical shocks and model landed costs across multiple sourcing scenarios.
• Qualify secondary suppliers and build onshore supplier development programs.
• Tighten inspection cadences and quality agreements for overseas partners.
• Use digital mapping to identify and mitigate vulnerabilities in real time.

This mindset protects margins and ensures reshoring doesn’t exchange one form of fragility for another.

Next steps

Reshoring is not simply about capital projects, it is about redesigning how pharmaceutical manufactures, governs and grows. The leaders who thrive will keep three truths in mind:

• Treat reshoring as a location to a new labor market, not a new country
• Insure the company’s governance structures aren’t dominated by personalities and pet projects
• Incentives are turbochargers, but not the engine itself. Reshore for long-term success, not short-term opportunities
• Build globally resilient supply chains at the start

One way to begin is to stand up a cross-functional reshoring governance taskforce with quarterly audit-readiness milestones. By embedding considerations about labor, tax and incentives, compliance, governance and operational resilience into every decision, pharmaceutical leaders can consider reshoring properly as a path to profitability and sustainable success.