For decades, labor costs and proximity to suppliers dominated site selection decisions. Today, those factors still matter—but they’re no longer the whole picture. Tariffs and geopolitical risks have shifted the equation.

A recent analysis found that even a 25% tariff could add more than $50 billion annually to U.S. drug costs if absorbed across the system. Numbers like that show how quickly “cheapest” can turn into “most expensive.”

Instead of focusing on just labor rates, companies are weighing factors like:

• Regulatory stability – predictable environments reduce costly delays.
• Talent availability – access to skilled engineers, operators, scientists.
• Resilient logistics – reliable airports, utilities, transport hubs.
• Risk management – reduced exposure to sudden disruptions or disasters.
   

Consider this: A company producing high-volume, mature medicines may benefit from moving production closer to home, gaining predictability and faster delivery. Meanwhile, a startup with niche therapies may still lean on contract partners for flexibility and speed.

Facility design has become just as important as site geography. More companies are turning to modular construction and prefabricated cleanroom units that can be deployed faster and scaled in phases. This approach gives companies room to adapt to changing demand without the cost of tearing down and rebuilding.

Imagine a site that starts with a core capacity but has the flexibility to double in size with plug-and-play modules. That’s not a futuristic idea; it’s already being piloted by major players who see modular design as a hedge against both demand spikes and policy shifts.

Location still plays a critical role. Regions with strong universities, biotech clusters and workforce development programs are increasingly attractive not just for today’s hires, but for long-term talent pipelines.

While lower-cost locations may look appealing on paper, volatility can turn savings into losses overnight. Choosing sites with predictable regulations, skilled labor and reliable infrastructure often delivers a lower total cost of ownership over time.

Think of it this way: Paying a premium for clarity and stability is like buying insurance. You’re not just reducing financial risk—you’re protecting your ability to serve patients and grow sustainably. Tax incentives, state partnerships and workforce programs can help offset those higher upfront costs, making the long-term case even stronger.

The policy landscape may feel uncertain, but it’s also creating a unique window for growth. By approaching site selection as a strategic investment—not just a compliance necessity—companies can position themselves to be more agile, resilient and competitive.

Whether it’s accelerating greenfield builds, expanding through CDMOs or experimenting with modular designs, the winners in this new era will be those that combine smart planning with decisive execution.