【By Liu Bai, Observer News】China has become one of the world's largest producers of pharmaceutical raw materials. On October 15, The New York Times reported that a newly released survey once again revealed how deeply the United States relies on China in the initial stages of the pharmaceutical production process: nearly 700 types of active pharmaceutical ingredients (APIs) used in the U.S. have at least one chemical raw material entirely dependent on Chinese supply.

Active pharmaceutical ingredients (APIs) are the effective components used in producing various medicines. China produces a large amount of key starting materials (KSMs), which are essential compounds for producing APIs.

On October 14, the non-profit organization USP (United States Pharmacopeia) released a new report that traced the pharmaceutical supply chain to find the sources of chemical raw materials used in drug manufacturing and analyzed the origin distribution of KSMs required in the production of APIs approved in the U.S.

The analysis found that as many as 58% of the KSMs required for these APIs are supplied by a single country, concentrated in China (41%) and India (16%).

In the APIs analyzed, 679 (37%) had at least one KSM that relied on Chinese supply.

These nearly 700 APIs include some widely used antibiotics, as well as medicines used to treat heart disease, epilepsy, cancer, and AIDS. The most well-known antihistamine, diphenhydramine, is also among them.

As many as 58% of the KSMs required for APIs are supplied by a single country, concentrated in China (purple) and India (orange).

USP's analysis shows that even medicines that appear to have a wide range of origins may still rely on China.

For example, amoxicillin, a widely used antibiotic, is sold by many different generic drug manufacturers. Factories located around the world (such as India, Jordan, Canada) handle the later stages of the drug's production.

However, the analysis found that the two raw materials used to produce amoxicillin are only produced in China.

Additionally, 17% of the KSMs required for APIs are entirely dependent on a single country. Specifically, 12% (211 types) are entirely dependent on China, 5% (93 types) are entirely dependent on India, and less than 1% (10 types) are entirely dependent on other countries (Indonesia, EU, etc.).

211 APIs approved in the U.S. have their KSMs entirely dependent on China.

This study urges the U.S. federal government to promote diversification of pharmaceutical raw material production bases, bringing more critical drugs and components back to the U.S. and its allies. It also calls for developing new synthetic paths, innovative chemical processes, and advanced continuous flow production technologies to enhance rapid response capabilities, reduce supply chain vulnerabilities, and strengthen public health and national security safeguards.

"We hope that with more comprehensive data and higher transparency, we can provide a basis for targeted interventions to ensure patient medication safety and enhance supply chain resilience," said Kelly Harni, a representative from USP.

The New York Times pointed out that drug production is a multi-step process, with factories in different countries typically responsible for different production stages. The pharmaceutical process starts with the production of raw materials. A factory usually located in India imports these raw materials and uses them to produce active ingredients, which are then used in the formulation of drugs.

However, the U.S. has almost no factories producing these chemicals because the production process pollutes the environment, and the high labor and other costs in the U.S. make it unprofitable. China, on the other hand, can produce these raw materials at a low cost.

The report expressed concerns that with President Trump's renewed threats of tariffs on China, if implemented, this could mean that at least some pharmaceutical companies would have to pay significant tariffs on raw materials imported from China.

Trump had previously threatened to impose a maximum 15% tariff on branded drugs imported from the EU and a 100% tariff on drugs from other regions worldwide, but these measures have been postponed.

Most major pharmaceutical companies stated that they reached drug price agreements with the U.S. government by investing in new factories in the U.S., thereby obtaining tariff exemptions. A government official said that the Trump administration has no plans to impose tariffs on generic drugs.

Since the beginning of this year, due to concerns about Trump's tariffs, almost all major brand pharmaceutical companies in the U.S. have announced plans to invest billions of dollars in building or expanding factories in the U.S.

However, these pharmaceutical companies do not produce raw materials; they only handle the later stages of production for popular drugs.

Experts who study the pharmaceutical supply chain say there is no economic incentive to bring raw material production back to the U.S.

Chinese pharmaceutical company production line IC Photo

In recent years, American politicians have repeatedly shown concern over the reliance on China for pharmaceutical production, which has been seen as a weak point in the U.S.-China rivalry.

Cameron Johnson, a partner at Shanghai consulting firm Tidalwave Solutions, said that China has already taken strong measures against rare earths, but has not yet taken similar actions in the pharmaceutical, biotechnology, or chemical industries.

He frankly admitted, "If China were to take action in these areas tomorrow, the U.S. economy might be paralyzed, and we would be completely powerless."

In June this year, CNN also published an article pointing out the U.S.'s heavy reliance on China for drug supplies.

The article stated that China holds a dominant position in the global pharmaceutical supply chain. Due to China's near-control over the "lifeblood" of U.S. drug supplies, Trump's tariff threats not only fail to achieve the goal of onshore pharmaceutical production, but could also lead some pharmaceutical companies to abandon the U.S. market.

USP CEO Ronald Piergiorgi warned that Trump cannot achieve the goal of onshore pharmaceutical production through tariffs, and even "moderate tariffs" could disrupt the supply of generic drugs in the U.S.

"This industry has lower profits, and any tariffs would only put pharmaceutical companies in a difficult situation," he said.

It is worth noting that even the world's largest supplier of generic drugs, India, also relies on Chinese-produced APIs and other key components.

A report commissioned by the Indian government in 2023 stated that 70% of India's API imports come from China. Dinesh Takur, an Indian public health expert, said that China's emerging pharmaceutical industry has made progress in the low-cost production of APIs, and China's mature chemical industry has given pharmaceutical companies an advantage in chemical production.

Zhang Qingpeng, associate professor at the Lui Che Woo School of Public Health, The University of Hong Kong, said that since the early 2000s, China's incentive and subsidy policies have greatly promoted the development of the pharmaceutical industry, leading to the emergence of clusters of pharmaceutical industries like mushrooms after rain.

"These industrial clusters help maintain quality while reducing overall costs, ultimately making China an ideal location for producing APIs and generic drugs in a free trade environment," he said.

This article is an exclusive piece by Observer News. Reproduction without permission is prohibited.

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