CDMOs, OEMs, and Used Equipment Resellers are Joining Forces to Onshore Pharmaceutical Manufacturing

The US pharmaceutical industry is making a concerted effort to bring a greater share of drug production onshore. Over the past several decades, pharmaceutical manufacturing has increasingly moved offshore, driven in part by lower manufacturing costs and other economic advantages.¹ The COVID-19 pandemic highlighted vulnerabilities in these increasingly global pharmaceutical supply chains and reinforced concerns about the resilience of US drug manufacturing.² At the same time, US dependence on foreign sources for APIs and key starting materials, including significant manufacturing capacity in China and India, has become an increasing national security concern.³

To encourage onshoring, the current administration imposed tariffs under Section 232 of the Trade Expansion Act of 1962, establishing a 100% default rate on imported patented pharmaceuticals, with reductions available based on commitments to US manufacturing and other factors.⁴ Together, these policies are increasingly making offshore dependence a financial and regulatory liability.

APIs are particularly difficult to onshore because the United States has limited domestic production capacity, and building new capacity requires significant capital, specialized infrastructure, technical expertise, and time.

Although onshoring presents substantial challenges, efforts are advancing, and pharmaceutical companies are assessing the best paths for their organizations. Some are making substantial investments in domestic manufacturing infrastructure. Lilly, for example, has committed more than $50 billion to expanding US manufacturing since 2020, including multiple new facilities dedicated to API production.⁵ Others are turning to domestic manufacturing partners. Lifecore Biomedical, for example, announced an agreement in 2025 to transfer commercial manufacturing of an injectable pharmaceutical product from overseas facilities to its US operations.⁶ In September 2026, Lifecore signed the agreement to handle the technical transfer for commercial manufacturing, and revenue is expected by 2028.⁷

The Case Against Building

Building domestic facilities is a natural impulse for pharmaceutical companies looking to bring manufacturing onshore. But building a pharmaceutical manufacturing facility entails steep costs and difficult economic, regulatory, and timeline trade-offs.

Costs vary widely, from $500 million for a small-volume facility producing low-complexity products to $6.5 billion or more for a high-volume facility producing complex, advanced therapeutics.⁸ Timelines are equally daunting, as a new facility typically takes 5 to 10 years to come online, from groundbreaking through validation and regulatory approval.⁹

In theory, it is easier to justify building a plant for a patent-protected drug with higher margins than for low-cost generics; however, by the time a plant is built and running, much of the drug’s patent life has already expired, which cuts into the returns that made the investment attractive.

Labor is another constraint, specifically a shortage of workers with pharmaceutical or biopharmaceutical experience in certain regions of the US. Industry research estimates that roughly 60,000 biopharma manufacturing jobs in the US remain unfilled, and 80% of pharmaceutical manufacturers report a substantial gap between their workforce’s current capabilities and the digital skills modern operations require.¹⁰

Equipment acquisition timelines add another layer of complexity. The multi-year backlogs that plagued industrial machinery during and after the COVID-19 pandemic have largely eased, but new bottlenecks have emerged, driven by geopolitical factors, material shortages, and surging demand for advanced biologic and sterile filling equipment.

Given these challenges, many pharmaceutical companies are turning to CDMOs and CDMOs with available gray space are especially attractive.

CDMOs with Available Gray Space

A CDMO partnership can make onshoring less difficult. There's no capital outlay; staffing and talent issues become the CDMO’s responsibility, and the regulatory groundwork, including quality systems, standard operating procedures, and established FDA relationships, is already in place.

The real challenge is finding a CDMO partner with the right capabilities, equipment, capacity, and flexibility. For many companies working to onshore, one solution is to choose a CDMO with ample gray space and strong relationships with resellers of used equipment.

Gray space is unbuilt area adjacent to or within an operational, registered good manufacturing practice (GMP) pharmaceutical manufacturing facility. This space is not yet outfitted with equipment or utilities. However, it sits within or is attached to a facility or campus that already holds the necessary FDA registration, established quality systems, and existing site infrastructure. A CDMO can generally expand into its gray space quickly because the infrastructure is already in place, allowing it to respond rapidly to client needs and sudden shifts in capacity demands.

In short, CDMOs with gray space offer much of the same flexibility as a pharmaceutical company would enjoy by building its own facility, with the advantage of no capital outlay and CDMO management.

The Path to Rapidly Equipping Gray Space

New equipment from major original equipment manufacturers (OEMs) can take 18 to 36 months to arrive, and even a straightforward new tablet press typically requires 10 to 12 months to build. Used equipment dealers can significantly shorten that timeline, enabling CDMOs to equip available manufacturing space more quickly and respond to customer demand.

The pharmaceutical industry already offers many examples of redeploying manufacturing assets. When Par Pharmaceuticals, an Endo company, closed its pharmaceutical manufacturing campus in Huntsville, Alabama, Federal Equipment Company and its partners acquired the 110-acre site and worked to redeploy its manufacturing infrastructure and equipment. The site ultimately became home to CDMO operations under TriRx Pharmaceutical Services, demonstrating how existing pharmaceutical assets can be repurposed rather than recreated from the ground up.¹¹

When the right equipment is already available, a CDMO can acquire and install it in a fraction of the time required to order a new machine. Equipment held in inventory can often ship within days or weeks after inspection and any required refurbishment, although installation, qualification, and validation timelines ultimately depend on the equipment, facility, process, and the CDMO’s quality requirements.

In this model, the CDMO and the used equipment dealer complement each other. The CDMO provides manufacturing space, technical expertise, and the regulatory and quality infrastructure required to operate the equipment. The used equipment dealer provides access to existing pharmaceutical manufacturing assets, potentially reducing both procurement time and capital requirements. OEMs can further support the process with parts, upgrades, installation, qualification support, and ongoing maintenance.

Collaboration Between CDMOs, Used Equipment Dealers, and OEMs

Pharmaceutical manufacturers used to face a clear choice: buy new equipment from an OEM or buy used equipment. Rather than viewing each other as competitors, reputable used equipment dealers and OEMs now work with CDMOs to meet clients’ needs.

When pre-owned equipment remains supported by the OEM, the OEM may provide key technical support, including replacement parts, upgrades, installation and maintenance services, and documentation and technical assistance for equipment requalification. The OEM still earns service revenue under this arrangement, and if the CDMO later needs additional equipment, established brand loyalty often leads to new equipment sales.

CDMOs and their pharmaceutical clients benefit from both used equipment dealers and OEMs. A dealer with the right equipment in stock can deliver it quickly and at lower cost. A relationship with the OEM provides the service and expertise needed to optimize and maintain equipment performance.

Pre-Owned Equipment Decision-Making Checklists

Answering the following questions will help ensure the desired outcome when considering purchasing used equipment.

Before purchasing pre-owned GMP equipment, consider the follwing:

• Is the equipment suitable for the intended product and process?
• What documentation is available—manuals, drawings, maintenance, calibration and previous qualification records?
• What products/materials were previously processed on the equipment?
• Are product-contact surfaces and materials appropriate and in acceptable condition?
• Has the equipment been modified from its original configuration?
• Does the OEM still support the model, including parts, software and controls?
• Will refurbishment or upgrades be necessary?
• What utilities and facility modifications will installation require?
• What IQ/OQ/PQ activities will be required under the receiving site’s quality system?
• Will cleaning validation, computerized-system validation, or additional process validation be required?

Ask the OEM the following questions before purchasing pre-owned equipment:

• Is this model still supported, and for how long?
• Are replacement and critical spare parts readily available?
• Are current manuals, drawings, specifications and maintenance requirements available?
• Has the equipment configuration or control system become obsolete?
• Can the OEM inspect the machine before purchase?
• Are refurbishment or upgrades recommended?
• Can the OEM support installation, commissioning and FAT/SAT activities?
• What documentation can the OEM provide to support IQ/OQ?
• Is operator and maintenance training available?
• What ongoing preventive maintenance and technical support options are available?

Smart Onshoring Strategies and Well-Constructed Partnerships

Onshoring pharmaceutical manufacturing doesn’t require choosing solely between building on green space and outsourcing. The most practical path often runs through CDMOs with gray space, supported by strong relationships with used equipment dealers and OEMs.

This model sidesteps the steep costs, long timelines, and labor gaps that make new facility construction so difficult. Gray space gives CDMOs room to expand without years of ground-up construction. Used equipment dealers offer speed and cost savings by providing access to equipment that is already available, potentially shortening procurement timelines compared with buying new equipment.

These relationships are most effective when established before an immediate capacity need arises. CDMOs can work proactively with equipment dealers to communicate the types of equipment, technologies, and capacity they may need as customer pipelines evolve. Dealers, in turn, can maintain visibility into available equipment and upcoming facility closures, consolidations, or asset sales. Maintaining relationships with OEMs is equally important, enabling the CDMO to confirm whether specific equipment remains supported and to access technical documentation, parts, inspection, refurbishment, upgrades, training, and qualification support when equipment is redeployed.

Regular communication among the CDMO, equipment dealer, and OEM can make the relationship more strategic. Rather than beginning an equipment search only after a sponsor has committed to a program, the parties can identify potential equipment and technical requirements earlier, evaluate what may be available, and understand what it would take to install and qualify it. When a specific sponsor need emerges, the CDMO is therefore better positioned to evaluate options and develop a realistic implementation plan.

For pharmaceutical companies weighing their onshoring options, this collaboration can offer a faster, lower-risk route to US-based production. The ability to respond quickly, however, depends on having the right relationships, quality systems, technical expertise, and expansion strategy in place before capacity is needed. As pressure to strengthen domestic pharmaceutical manufacturing continues, CDMOs that proactively build these networks may be better positioned to respond to changing sponsor requirements.

References

1. FDA PreCheck Pilot Program. US Food and Drug Administration. Updated April 10, 2026. Accessed October 21, 2026. https://www.fda.gov/industry/fda-precheck-pilot-program
2. Executive Order 14017 on America’s Supply Chains. US Food and Drug Administration. Updated December 19, 2024. Accessed October 21, 2026. https://www.fda.gov/about-fda/reports/executive-order-14017-americas-supply-chains
3. Adjusting imports of pharmaceuticals and pharmaceutical ingredients into the United States. The White House. April 2, 2026. Accessed October 21, 2026. https://www.whitehouse.gov/presidential-actions/2026/04/adjusting-imports-of-pharmaceuticals-and-pharmaceutical-ingredients-into-the-united-states/
4. Fact sheet: President Donald J. Trump bolsters national security and strengthens US supply chains by imposing tariffs on patented pharmaceutical products. The White House. April 2, 2026. Accessed October 21, 2026. https://www.whitehouse.gov/fact-sheets/2026/04/fact-sheet-president-donald-j-trump-bolsters-national-security-and-strengthens-u-s-supply-chains-by-imposing-tariffs-on-patented-pharmaceutical-products/
5. Lilly plans to more than double u.s. manufacturing investment since 2020 exceeding $50 billion. Press release. Eli Lilly and Company. February 26, 2025. Accessed October 21, 2026. https://investor.lilly.com/news-releases/news-release-details/lilly-plans-more-double-us-manufacturing-investment-2020
6. Lifecore Biomedical signs CDMO master services agreement with new large multinational pharmaceutical customer. Press release. Lifecore Biomedical. December 17, 2025. Accessed October 21, 2026. https://ir.lifecore.com/news-releases/news-release-details/lifecore-biomedical-signs-cdmo-master-services-agreement-new
7. Lifecore Biomedical signs agreement for commercial site transfer supporting global pharmaceutical company. Press release. Lifecore Biomedical. September 2, 2026. Accessed October 21, 2026. https://ir.lifecore.com/news-releases/news-release-details/lifecore-biomedical-signs-agreement-commercial-site-transfer8.
8. New manufacturing plant cost 2026: full breakdown by industry. iFactory. April 3, 2026. Accessed October 21, 2026. https://ifactoryapp.com/greenfield-consulting/cost-to-build-manufacturing-plant-2026
9. New drug manufacturing plants: a 2025 guide & analysis. IntuitionLabs. October 12, 2025. Updated August 9, 2026. Accessed October 21, 2026.https://intuitionlabs.ai/articles/new-drug-manufacturing-plants-2025
10. ISPE. Futureproofing US pharma manufacturing jobs. Pharmaceutical Engineering, International Society for Pharmaceutical Engineering, March 21, 2025. Accessed October 21, 2026.https://ispe.org/pharmaceutical-engineering/ispeak/futureproofing-us-pharma-manufacturing-jobs
11. Covitt A. Restarting a manufacturing campus and revitalizing a community. Federal Equipment Company. September 30, 2020. Accessed October 21, 2026. https://resources.fedequip.com/restarting-a-manufacturing-campus-and-revitalizing-a-community

About the Authors

Matthew Mollan, Ph.D., CEO of Experic, has over 30 years of leadership in pharmaceutical development, manufacturing, and clinical supply. He previously led operations at Catalent, Aptuit, Pfizer, and Warner-Lambert/Parke-Davis. He holds a Ph.D. in Pharmaceutical Science and a B.S. in Pharmacy from Rutgers University.

Adam Covitt is President of Federal Equipment Company, based in Cleveland, Ohio. With 30 years in the pharmaceutical and chemical equipment industry, he has built the company's reputation for connecting CDMOs, OEMs, and manufacturers around used equipment sourcing and site liquidations. Mr. Covitt earned a bachelor’s degree from Ohio University in Athens, Ohio.