30th December 2020
The Rise of China’s Pharmaceutical Industry
During the Covid-19 pandemic, the global supply of critical drugs has been limited compared to the increasing demand.
This is because the pharmaceutical industry depends largely on one country, China. Indeed, the latter is one of the greatest suppliers of pharmaceutical ingredients (APIs)—the essential components of antibiotics and other drugs.
India, too, has a very large generic drug industry, but it relies on China for 70 percent of the chemical raw materials necessary for the manufacture of medications.
This Chinese control of the global drug industry constitutes a looming menace to the world in general and for the USA in special. It is the world’s biggest supplier of active ingredients and, in some cases, the only supplier of some vital medicines.
For instance, active ingredients of drugs that treat breast cancer, lung cancer, and antibiotic Vancomycin, the last antibiotic for some antimicrobial infections, are manufactured almost exclusively in China.
More than that, it dominates a large part of the market for heparin, the blood broth used in open-heart surgery, dialysis, and blood transfusions.
China has increased its supply of generic drugs for American hospitals, pharmacies, and home medicine cabinets. As a result, other American and Western manufacturing industries are collapsing.
As a matter of fact, Mylan, a US-based public company, announced last year that it would merge with Pfizer, an American multinational pharmaceutical corporation headquartered in New York City.
Similarly, Pfizer announced the opening of its global general headquarters in China. Sandoz, a European company, and the Israeli company Teva (both operating in the pharmaceutical industry) announced in early 2019 that it would stop making many drugs.
At present, China produces practically all the needed quantity of penicillin G which is necessary for the manufacturing of parenteral antibiotics, injections, and syringes that are vital for infection treatment.
Furthermore, China has a considerable market share of the active ingredients of most generic drugs.
According to health experts, this dominance over the production of drugs creates a threat to global health as China’s manufacturing quality standards are low.
Rosemary Gibson, author, health care expert, and senior advisor at the Hastings Center, noted that the United States is no longer able to manufacture penicillin and that China dominates the supply chain for every major generic drug, including drugs used to treat Alzheimer’s and HIV/AIDS Diabetes, Parkinson’s disease, epilepsy, and all other major diseases.
Gibson explained that if China ends its supplies of medicines, its basic components, and raw materials, America’s hospitals and military clinics will stop operating within months, if not days.
She added that the federal government and the military will be equally in danger, as drugs, in this case, can be manufactured with lethal pollutants or sold without any real medicine in them.
The US has been enduring a medicine shortage. Indeed, based on the information held by the American Society of Health-System Pharmacists, there were already 49 new drug shortages in 2020, some of which are linked to the spread of Covid-19.
This medical shortage has started to affect American hospitals and clinics, especially those in The state of New York, where 188,000 people have been infected. Moreover, federal officials declared on the 1st of April that the nation’s strategic national stockpile was nearly depleted.
When the epidemic reached its peak, governments should have protected their people.
Perhaps, the world will reach a certain stage of the epidemic when China’s stockpile of medicines, medical devices, and other biomedical components would be needed to treat its own people.
While this seems improbable for now, the increasing scope of the disease spread brings it closer to the realm of possibility.
After nearly six weeks of the international recognition of the COVID-19 pandemic in China, there has been a shortage of vital personal protective equipment in both China and the United States.
The United Parcel Service (UPS), an American multinational package delivery company, has transported more than 2 million masks and 11,000 dresses to Wuhan. The latter is certainly an important manufacturer in the field of biotechnology and pharmaceutical industry, as several drug companies are in this city.
Furthermore, the first laboratory for biosafety level BSL 4 in China is in Wuhan. It was opened in 2017 to research SARS and other emerging diseases. It is the only laboratory in China that can safely handle the world’s most dangerous pathogens, which pose a high risk of transmission.
Yet, infection, death, and quarantine in Wuhan and Hubei Province constitute major impediments to all types of trade in the area.
For the time being, the spread of the virus has led to a significant imbalance in China’s supply chain. Medical supply companies will need to work under great pressure to provide for health care workers, laboratory personnel, and ordinary people.
The USA heavily depends on China in the Field of Drug Industry:
According to, Pharma Letter, a news website covering the pharmaceutical and biotechnology industries, China “accounted for 95% of U.S. imports of ibuprofen, 91% of U.S. imports of hydrocortisone, 70% of U.S. imports of acetaminophen, 40% to 45% of U.S. imports of penicillin and 40% of U.S. imports of heparin, according to Commerce Department data.
In all, 80% of the US supply of antibiotics is made” in China.”
Rosemary Gibson, who is also the author of the 2018 book “China Rx: Exposing the Risks of America’s Dependence on China for Medicine,” noted that it was a huge mistake to allow the manufacture of penicillin to leave the United States.
She added that at present, the United States is unable to produce any neither a medicine to treat Covid-19 nor antibiotics for an infection that may accompany the virus such as pneumonia and bronchitis.
For now, health experts have warned that the outbreak of the virus in China and its subsequent repercussions could lead to a major drug shortage in the future, particularly as Chinese factories struggle to continue producing APIs.
Xinhua News published an article in April 2020, suggesting that US medical supplies are “extremely scarce” and that the spread of Covid-19 in the country is “out of control”.
The article maintained that while some drugs are imported into the United States from Europe, their production base relies 90 percent on exports from China, which implies that if China stops such exports, “The United States will fall into a new hell of the Coronavirus.”
As has been discussed before, China dominates the world’s antibiotic supply. It has become the world’s dominant drug supplier and, more importantly, the US’s biggest supplier of medical devices such as MRI equipment, surgical gowns, and equipment that measures blood oxygen levels.
US public health officials should acknowledge the country’s weakness in the area of production of medicines and medical equipment.
It is well-known that the United States and China are competitors in the trade area. In this sense, China’s dominance over the global pharmaceutical industry represents a real threat to the US.
If China is trapped, it will end its exports of vitamins and antibiotics and thus destroy the American healthcare system. Thus, the United States should develop a plan to regain control of its medical supply chain.
President Trump diminishes the possibility that China will blackmail the United States with curbs on drug exports. Nevertheless, some of the president’s senior advisors and US lawmakers are already pushing for major policy change toward the US drug industry and the import laws. Some Republicans on the commission, including Florida. Senator Marco Rubio and Wyoming’s Senator John Barraso, made some statements.
Mr. Barraso declared that the epidemic clearly showed that America depends on China for biomedicine. He suggested that the United States should not be a similar situation in the future.
According to Barraso, to achieve this goal, it needs to start producing its own medical supplies.
A similar opinion was maintained by Mr. Rubio who recalled that he had warned of this situation almost a year ago when. He highlighted that relying on China, especially when it comes to the health sector, is risky.
Likewise, some lawmakers are lobbying for action. For instance, Senator Robert Menendez, a Democrat from New Jersey, and Marsha Blackburn, Tennessee, have introduced legislation in April 2020 to increase US manufacturing of pharmaceutical ingredients.
They mentioned that only 28% of API production facilities are in the United States, while the number of Chinese enterprises has more than doubled since 2010. The bill will save $100 million to develop advanced drug manufacturing centers for research and training.
The Trump administration aspires to press for immediate action.
In fact, the White House chief commercial adviser Peter Navarro announced to CNBC on Monday that he is already preparing for an executive order to return medical supply chains from abroad to the United States.
The executive order is said to repeal provisions that grant US government agencies the power to purchase drugs, protective masks, flippers, and other medical products from foreign suppliers.
In the past, the Pentagon, Veterans Affairs, Health, and Human Services departments have been given exceptions to purchase buy a considerable quantity of drugs and medical equipment annually through supply chains that eventually lead to China.
If this happens, the question is whether American companies can fill the gap in a certain amount of time.
Mrs. Gibson believes the change is likely to happen. Indeed, she asserted that there are talented people in the United States, and they have the competence to launch projects of drug manufacturing in the country, just the way they have already begun to make face masks locally.
However, this remains a major challenge to the US, as the gap cannot be filled this year, and perhaps even next year.
To meet the shortfalls in pharmaceuticals, it may take the United States years to develop the required infrastructure and its manufacturing capabilities and to obtain the FDA license. For years, experts along with some government officials have warned against this looming danger.
For instance, Randall Larsen, a retired Air Force colonel, noted that he had raised the risk of the United States losing its antibiotic-making capabilities repeatedly until he concluded it was futile.
Why did the United States become dependent on China in the manufacturing of pharmaceuticals in the first place?
There is a common view that drug production has moved to China because of lower labor costs and weak regulations. However, there are other reasons.
Generic drugs constitute 90 percent of all that Americans consume. Thousands of them are made of chemical starting materials from China.
In this sense, the US gave China the most-favored-nation trade center. Within three years of the U.S.-China Trade Relations Act in 2000 and China’s accession to the World Trade Organization (WTO), the last US aspirin manufacturing plant closed, along with the last facility making vitamin C and the only remaining penicillin plant.
As a result, the United States lost the capacity to manufacture antibiotics.
Before the COVID-19 pandemic affects the United States, it was in shortage of hundreds of drugs.
At a hearing for the Senate, Small Business Committee chaired by Senator Marco Rubio in March 2020, a professor from Johns Hopkins University pointed out that the hospital lacks 200 to 300 drugs, far more than the 98 officially reported by the Food and Drug Administration.
At the beginning of March, China’s official news agency declared: “If China retaliates against the U.S. at this time, in addition to announcing a travel ban on the United States, it will also announce strategic control over medical products and ban exports to the United States.
If China announces that its drugs are for domestic use and bans exports, the United States will fall into the hell of a new coronavirus epidemic.”
It is not the first for Americans to feel threatened because of China. As Rosemary Gibson has documented, the 2008 fatal crisis over blood-thinning heparin was returned to pollution from Chinese suppliers. Pet food with ingredients made in China appeared to be contaminated and caused the death of many pets.
China leads the global value chains and is the manufacturer of 10 percent of generic drugs available in the United States, the most important of which is HIV/AIDS.
Other medicines produced in China and distributed in the United States include antibiotics, antidepressants, birth control pills, chemotherapy for cancer treatment for children and adults, Alzheimer’s, diabetes, Parkinson’s, and epilepsy, to name a few.
The United States should maintain an industrial base to produce medicines, tools, and medical equipment in the United States. The entire pharmaceutical and medical supply chain must return to the United States to avoid an imminent crisis.
This is a potential silver lining of Covid-19; it has pointed out to vulnerabilities of the system and urged the government to develop plans.
Solutions might be built upon the recognition that there is a fundamental difference between a communist dictatorship and democracy. The dignity of the individual is prioritized overachieving strategic goals.
Communist China has already armed the global supply chain to establish its tyranny and to undermine the power of the United States and its allies.
Washington should never again allow Beijing to use its industrial power to damage Americans and their allies.
This can be achieved by reinforcing trade with America’s allies, with whom she shares the same principles, values, and governance model, and by returning to the American manufacturing base.
