Healthcare supply chain risks drive PE onshoring deals, says Arlington’s Matthew Altman

The global healthcare supply chain is extremely complex and sensitive to any change, big or small, from the six-day blockage of the Suez Canal by a grounded container ship in 2021 to October’s short-lived but significant dockworkers port strike across the US East and Gulf coasts.

It is events like these that are incentivizing healthcare companies to move manufacturing operations for pharmaceuticals and medical devices back home, a trend known as onshoring. Also propelling this change are supply chain vulnerabilities exposed by the covid pandemic and geopolitical uncertainty across multiple trade lanes and long-term macroeconomic trends. This in turn has created incentives for PE firms to invest in and help owners navigate the risks of this process to continue scaling their companies effectively.

“The need for resilient supply chains, increasing support and incentives from the government and ongoing concerns about global trade tensions will continue to drive new investments in companies that are already onshoring or have the capability to do so,” Matt Altman , a managing partner of Arlington Capital Partners , told PE Hub . “Advances in manufacturing technologies, such as automation and artificial intelligence, will make onshoring more cost-effective and viable for a broader range of healthcare companies.”

To read more about how onshoring is shifting PE investment strategies, click here.