Professional headshot of Mario Subramaniam
Mario Subramaniam, life sciences lawyer and legal director, Pinsent Masons

“If they can’t offset that cost by either raising their prices or getting some sort of other government help to assist them with those increased prices to meet that gap of energy pricing increases, then they have no choice — it’s no longer viable to manufacture it in that market and I can see those products potentially being offshored,” Subramaniam said.

So far, many generics manufacturers have been able to weather the storm. On a recent third-quarter earnings call, the chief financial officer for the German injectable generics manufacturer Fresenius Kabi noted the company has largely been “shielded from increases in energy costs” because of existing contracts running until the end of 2022 and partially into 2023.

But if high energy costs continue to persist “past the winter of 2023, potentially where (companies are) looking into 2024 and being in similar or worse conditions” Subramaniam said, “decisions may start to be made” about whether to relocate manufacturing facilities.