American Think Tank: China's Ace in the Sino-US Trade War - Pharmaceutical Supply Chain

Beijing's advantage in the pharmaceutical sector is more complex than its advantage in semiconductors or the West's advantage in rare earth elements. China holds a dominant position in multiple key links of the global pharmaceutical supply chain. Recent revelations at the Politico Europe Healthcare Summit indicate that nearly half of the generic drugs in Europe come from China, and in the entire Western world, there is now only one fully integrated penicillin production base.

According to the Atlantic Council, about 27% of the Pentagon's drug purchases come from China, and China accounts for 90% of the U.S. imports of penicillin and streptomycin antibiotics. Approximately 40% of all active pharmaceutical ingredients imported into the United States come from China, and more than 40% of the imports of chemicals and solvents used in pharmaceuticals also come from China. China is the sole supplier of about 700 critical medicines. These figures may underestimate China's actual dominance, as many products imported by the United States from India also rely on Chinese inputs.

It is not easy to find alternatives to counter China's influence. In fact, the West does not even know where to start. In a recent report submitted to Congress, the U.S.-China Economic Security Review Commission admitted that it is currently impossible to fully understand the extent of China's control in this area. Before taking measures to alleviate this vulnerability, Congress must require pharmaceutical companies to identify and disclose the sources of all their raw materials. The commission also urged Congress to set price floors to prevent China from flooding the global market with products at low prices, thereby stifling emerging competitors.

Given the current political climate that emphasizes "affordability," implementing these measures is no easy task. However, considering that if circumstances escalate to an extreme, no force can stop Beijing's actions, and even if the West finds sufficient substitutes for rare earth elements, China's pharmaceutical strength will still remain, it may be unavoidable to bear these politically unfavorable costs.

Source: The National Interest

Author: Milton Ezrati

Date: December 22

Original: toutiao.com/article/1852264368889097/

Disclaimer: This article represents the views of the author alone.