America’s pharmaceutical industry has relied for too long on economic globalization to source its active pharmaceutical ingredients (APIs). As the COVID pandemic wanes and the war in Ukraine rages at the time of this writing, the industry is coming to realize just how unwise it is to rely on overseas sources. For that reason alone, domestic API production should be Big Pharma’s top priority moving forward.
Without a reliable API supply, already approved drugs cannot be manufactured in a consistent manner. New drugs in the pipeline end up being stalled as well. It’s not a good position to be in. And yet, continuing to source large volumes of APIs from overseas is current status quo. It shouldn’t be.
Domestic Production vs. Imports
Data suggests that U.S. pharmaceuticals have gradually been reducing their reliance on imported APIs in recent years. So much so, that 54% of all APIs utilized in this country are produced domestically. But that means we still import 46%. A large portion of those imports come from China and India. Therein lies the big problem.
China is the world’s biggest exporter of some of the most commonly used APIs. Manufacturers rely on Chinese exports for the ingredients needed to make common medications like antibiotics and statins. That leaves countries like the U.S. having to tiptoe around political issues to maintain good ties with China or face being cut off from a readily available supply of APIs.
The World Is a Changing Place
The inconvenient truth about globalization is that it has lost its luster. The world is a changing place. We saw that all too clearly at the start of the COVID pandemic and in the months following. Right from the start, China stopped exporting large volumes of PPE because they needed what they made for themselves. The rest of the world quickly found itself wanting.
More than two years later, Russia is facing crippling economic sanctions as a result of its invasion of Ukraine. The sanctions are likely to disrupt multiple markets around the world for the remainder of the year, if not longer. What would happen if China decided to put similar sanctions on the U.S. and Europe?
Global commerce only works when countries get along. Fortunately, we have enjoyed nearly 40 years of mostly friendly global relations that have fueled cross-border commerce and made the world a smaller place. But the world is getting bigger again, with contentious relationships leading to a globe that hasn’t been this fractured since World War II.
We Need More Self-Reliance
The long and short of it is that the U.S. needs more self-reliance in terms of APIs. We need to increase domestic production well beyond the current 54%. Otherwise, our pharmaceutical industry risks serious harm as a result of global tensions.
Big Pharma can post all the job listings it wants on the PharmaDiversityJobBoard.com. It can build new facilities and launch recruiting drives to hire the best available talent. They can initiate clinical studies and get new drugs into the pipeline. But it all comes to a screeching halt if China and India cut off access to APIs.
If it helps, think of APIs like oil. The U.S. depends on foreign oil to the extent that we would be in pretty rough shape if imports were cut off. We know we need to get back to a place of energy independence. Likewise, we need to find a way to achieve API independence. Failing to do so means remaining beholden to foreign interests who may actually want to see Big Pharma fail in this country.
