Our drug supply chain is not only overreliant on foreign supply, but it is highly concentrated in just a few sources, creating single or choke points of failure with no backup.
India is key here. It supplies about half of U.S. generic finished drugs, while India itself relies on China for up to 80% of their ingredients, according to Exiger, a risk assessment firm specializing in global supply chains of high volume traded goods.
In practical terms, the U.S. lacks a domestic source for over 80% of the active ingredients used in critical medicines, according to a 2021 study out of Washington University’s Olin Business School. In short, if foreign shipments stop, Americans go without. This often means that FDA will allow for drugs to be exported to the U.S. even if their inspectors found that the lab was not following required good practices to be allowed to sell into our market. The FDA is in this conundrum because it does not want to risk drug shortages. We have these shortages, including shortages of essential medications, because we have no local suppliers.
In 2023 the FDA shut down an Indian plant (Intas Pharmaceuticals) that made 50% of America’s supply of the chemotherapy drug cisplatin. Inspectors uncovered a “cascade of failure” in quality control—shredded and acid-doused documents meant to conceal falsified records. With that single foreign plant offline and no U.S. producer to fill the gap, hospitals nationwide were forced to ration cancer treatments and delay cancer care for numerous patients.
American labs have been squeezed out of the local market for a variety of reasons and one of them is import penetration, especially among generics from India.
Of the top FDA listed Essential Medicines, one big sub-category alone – anti-microbial – has no domestic drug makers. Every drug in that segment of the list is imported, or has a very minor local producer.
There has been a long wave of plant closures and bankruptcies among U.S. generic manufacturers. Akorn Pharmaceuticals, once a major domestic generic producer, went bankrupt and closed all four of its U.S. plants in 2023. That same year, Lannett Company went bankrupt and was bought by India pharma-giant Aurobindo in August as a way to maintain market share among serious geopolitical risk to its India-based exporting labs.
As Trump is getting Big Pharma like Pfizer, and likely next Eli Lilly, to invest billions in U.S. expansion in order to avoid 100% tariffs, especially on their licensed China-made drugs, Indian generic giants may end up doing the same thing. Aurobindo has already set the table.
U.S. labs used to be more prevalent in the generic drug space. Those days are long gone, with drug makers more interested in branded drugs like Ozempic. Branded drugs generally take 20 years to go off-patent. That is when generic drug makers can file with the FDA to produce a similar drug for sale here.
In 2002, U.S. manufacturers produced 83.7% of the pharmaceuticals sold domestically. By 2024, the number was around 37%, for a corresponding $157.8 billion loss in potential domestic production value, according to CPA’s economics team.
Pharmaceutical 232 Must Cover Generic Drugs to Fulfill President’s Promise of Reshoring Essential Medicine Production
The Trump administration’s Section 232 investigation into pharmaceutical imports is reportedly close to being final. The final investigation’s success will depend largely on whether or not the Commerce Department determines that there is a crisis in the generics industry — an issue that President Trump highlighted back in 2023. In a video announcement, the President announced his plan to end pharmaceutical shortages and return the manufacture of life-saving drugs to the United States.
“This is not just a public health crisis, it’s a national security crisis,” President Trump said in the video. “As part of my plan to obtain total independence from China, we will phase in tariffs and import restrictions to bring back production of all essential medicines to the United States of America where they belong. I signed an executive order to begin this process in 2020 but Biden has shamefully failed to follow through.”
President Trump took action in 2020 to ensure essential medicines were produced in the United States but Joe Biden reversed the order in 2021. Importantly, this action focused on generic drugs, which account for more than 90% of prescriptions dispensed each day. The only way to address the generic drug crisis and make good on President Trump’s call to reshore essential medicine production is to ensure the pharmaceutical 232 covers generic drugs.
During a speech at the Economic Club of New York on Tuesday, USTR Jamieson Greer said national security was also an issue. For the Trump team, national security is a matter of economic security. And if the pandemic taught Washington one thing about supply chains, it’s that when the world is all sick with the same disease, getting drugs to combat it is difficult when you don’t make them at home any more.
Greer told the Club that the administration “does not like the fact that so much of the pharmaceutical supply chain goes through China and India,” according to a report by International Trade Today, a subscriber-only news publication. Greer then added that the Trump administration wanted “as much as possible” made in the U.S., or “as close as possible.”
“Right now, we’re considering the best way to deploy economic tools with respect to generics,” Greer said. “It’s a complex supply chain; it’s critically important. We have to get it right.”
This suggests that Commerce is not in any hurry to hit the sector with tariffs as it has with the more expensive branded pharmaceuticals. The main focus here should be on the FDA’s Essential Medicines list – which is a list of critical drugs that often face shortages or no supply at all thanks to our dependence on foreign labs.
On Oct. 3, Sen. Rick Scott (R-FL) sent a letter to Commerce Secretary Lutnick, requesting: “the immediate application of Section 232 tariffs on foreign generic medicine.” He gave Lutnick a year to come up with a tariff strategy. He called our dependence on China and India, in particular, “a strategic vulnerability.”
Within the two, if safety is a concern, then India has a problem.
India Leads In Warning Letters. No One Compares.
In 2023, the Food and Drug Administration (FDA) sent out 94 Warning Letters to labs. These letters signify failures of the drug maker to follow Current Good Manufacturing Practices – guidelines for things like lab cleanliness, for example – in order to export drugs to the U.S.
Of that total, just under 10% went to Indian labs. China came in second with three. Other big generic producers like Israel didn’t seem to receive any.
In 2024, the FDA sent out even more Warning Letters to foreign and domestic labs. This time, 18 went to India, or around 17% of the total, more than any other country.
In 2025, Indian labs are still getting Warning Letters. A cursory look at some Warning Letters issued this year reveals at least 9 labs, including powerhouse giants like Glenmark, and lesser known names like Hikal and Shiva Analytics. Hikal is a manufacturer of active pharmaceutical ingredients (APIs), intermediates, and specialty chemicals for Western pharmaceutical companies. It does not make finished drugs like Glenmark. Shiva is a contract manufacturer that works on drugs, including new drugs, for American pharmaceutical companies.
Year
Total Warning Letters (Human drugs)
Letters to India
% to India
2023
94
~7
~7-8%
2024
105
~18
~15-17%
2025
Ongoing
Letters to Granules India, Hikal, Shiva Analyticals
N/A
Warning Letters often lead to temporary import bans and are considered the worst of the worst offenders.
But labs also get written up in official FDA documents for not complying with required manufacturing practices, in what is known as the Form 483.
Six different Indian labs, including well-known and publicly traded labs like Dr. Reddy’s Laboratories, were on the receiving end of six Form 483 letters since April. The Dr. Reddy’s lab was written up for “failure to ensure that equipment surfaces in contact with APIs are maintained in a good state of repair to prevent contamination.”
In July, Lupin Limited, which received FDA approval to sell a generic form of Xarelto on Sept. 30, was written up for not having in place the proper procedures designed to prevent microbiological contamination.
Daily U.S. Generic Drugs: Almost All Imported.
Our drug supply chain is not only overreliant on foreign supply, but it is highly concentrated in just a few sources, creating single or choke points of failure with no backup.
India is key here. It supplies about half of U.S. generic finished drugs, while India itself relies on China for up to 80% of their ingredients, according to Exiger, a risk assessment firm specializing in global supply chains of high volume traded goods.
In practical terms, the U.S. lacks a domestic source for over 80% of the active ingredients used in critical medicines, according to a 2021 study out of Washington University’s Olin Business School. In short, if foreign shipments stop, Americans go without. This often means that FDA will allow for drugs to be exported to the U.S. even if their inspectors found that the lab was not following required good practices to be allowed to sell into our market. The FDA is in this conundrum because it does not want to risk drug shortages. We have these shortages, including shortages of essential medications, because we have no local suppliers.
In 2023 the FDA shut down an Indian plant (Intas Pharmaceuticals) that made 50% of America’s supply of the chemotherapy drug cisplatin. Inspectors uncovered a “cascade of failure” in quality control—shredded and acid-doused documents meant to conceal falsified records. With that single foreign plant offline and no U.S. producer to fill the gap, hospitals nationwide were forced to ration cancer treatments and delay cancer care for numerous patients.
American labs have been squeezed out of the local market for a variety of reasons and one of them is import penetration, especially among generics from India.
Of the top FDA listed Essential Medicines, one big sub-category alone – anti-microbial – has no domestic drug makers. Every drug in that segment of the list is imported, or has a very minor local producer.
There has been a long wave of plant closures and bankruptcies among U.S. generic manufacturers. Akorn Pharmaceuticals, once a major domestic generic producer, went bankrupt and closed all four of its U.S. plants in 2023. That same year, Lannett Company went bankrupt and was bought by India pharma-giant Aurobindo in August as a way to maintain market share among serious geopolitical risk to its India-based exporting labs.
As Trump is getting Big Pharma like Pfizer, and likely next Eli Lilly, to invest billions in U.S. expansion in order to avoid 100% tariffs, especially on their licensed China-made drugs, Indian generic giants may end up doing the same thing. Aurobindo has already set the table.
U.S. labs used to be more prevalent in the generic drug space. Those days are long gone, with drug makers more interested in branded drugs like Ozempic. Branded drugs generally take 20 years to go off-patent. That is when generic drug makers can file with the FDA to produce a similar drug for sale here.
In 2002, U.S. manufacturers produced 83.7% of the pharmaceuticals sold domestically. By 2024, the number was around 37%, for a corresponding $157.8 billion loss in potential domestic production value, according to CPA’s economics team.
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