Lawmakers from member states of the European Union agreed to measures last week to stop drug shortages and fix chronic Asian dependencies for critical medicines, this time spurred by worries over the antibiotics supply chain.
The move is part of last year’sCritical Medicines Act, but the real takeaway here is that Brussels and Washington are jointly concerned about supply constraints and their overdependence on imports. We could be witnessing the early stages of what might become a U.S.-European pharmaceutical ecosystem for critical drugs, which would include support for the domestic production of key precursor ingredients and, of course, the active pharmaceutical ingredient (API) that makes the drug work.
A provisional accord – agreed to on May 12 – was struck between EU countries and their parliament representatives. It will require EU members to diversify supply sources of some 270 active substances on theirUnion List of Critical Medicines.
The deal will allow national governments to apply an “EU preference” to government procurement contracts for medication, protecting the market and – perhaps – sparking investment in low-margin API usually sourced from India and China.
Worth noting, however, Europe and India recently touted the signing of a free trade agreement, meaning it is still unclear if the EU will include India as one of their “international partnership” countries. The U.S., of course, fits perfectly in this camp as both have nearly identical needs and desires whereas India is a stable low-cost producer of low-margin generics and APIs.
Pharmaceutical companies involved in “strategic projects” will get access to national and EU-wide funding with faster and more efficient permitting procedures to get new capacity on line quicker.
The deal only needs one more final endorsement by the European Council. No date has been set at this time.
EU: Same Boat as U.S.
According to a 2025report by the European Court of Auditors (ECA), the EU countries reported running critically short of 136 drugs, including antibiotics, between 2022 and 2024. Asian labs account for at least 70% of API used in Europe, according to the ECA report. Import dependency is worse for painkillers, like paracetamol and over the counter drugs like ibuprofen (mainly sourced from China), and antibiotics.
Meanwhile, the U.S. has Section 232 tariffs on branded drugs(starting July 31 as of this writing), and new programs for stock piling, the CMA is saying to European labs – if you build it, we will finance it and we will buy it.
The section of the CMA that is most interesting for the creation of a Western biotech ecosystem is the provision on international partnerships. Many U.S. and European labs are heavily invested in India, especially across the generics platforms. But with both sides worried about import reliance, the opportunity to build a unified front is all too obvious.
The West is waking up to its core dependencies in key areas of the economy, and pharma is one of those sectors.
Critical medicines are one problem, but another equally worrisome matter is watching multinational labs invest more in India and China than at home. Tax incentives, government purchase agreements, tariffs, and funding will be the only way to keep advanced biotech in the U.S. and Europe in the years ahead. Generic drugs already have the pricing narrative going against them barring government action to correct it.
Europe appears to be redefining pharma not merely as an expensive lab where new drugs are invented and eventually trialed and made off-patent offshore. Their leaders are thinking about active pharmaceutical ingredients and simple generic drugs like antibiotics, let alone the future of advanced biotech. Pharmaceutical goods are one of the biggest globally traded goods. To keep it viable in the West, the U.S. and Europe will need to think more strategically about pharmaceuticals and rebuild that ecosystem, rather than only focus on branded drugs and R&D, which will eventually be a corner of the pharma market the Chinese contract manufacturers can take.
The same concern over shortages is well noted on Capitol Hill.
“Rebuilding domestic and allied pharmaceutical manufacturing capacity is achievable, but it will require decisive action. That means strengthening trade enforcement, reforming procurement policies that prioritize the lowest cost over supply security and creating the conditions necessary for American manufacturers to compete and grow,” said Sen. Rick Scott (R-FL). “It also means working with our allies to build a resilient, diversified supply chain that is not dependent on adversarial nations. This report provides a clear roadmap for doing that.”
CPA’s Antibiotic Study Suggests European-U.S. Tag Team
CPA has beaten this drum before.
Earlier this year, CPA Senior Economist Andrew Rechenberg’s 44-page report titled “Foreign Control of Antibiotic Supply” already noted that the U.S. and Europe were paddling against the tide in the same river.
The U.S. and European Union rely mainly on India and China for finished-dosage antibiotics. It might work to rely less on them, and more on each other.
As it is now, downstream supply is concentrated among a small number of Indian labs. These labs depend almost entirely on China for antibiotic APIs or key starting materials. Within China, antibiotics production is concentrated among a limited set of pharma labs and they are all responsible for the majority of global API output for antibiotic medicines.
The United States and European countries are exposed not only to changes in foreign output, but also to the potentially unforeseen regulatory and industrial shifts of a handful of companies thousands of miles away. This exposure also includes drug quality and safety risks, though Europe does not usually make safety an issue. For them, it seems to be supply of critical drugs first, protection of the biotech ecosystem second.
“The U.S. and European nations face a profound strategic vulnerability, but also a clear opportunity to rebuild leadership in the essential stages of antibiotic manufacturing,” Rechenberg wrote.
Addressing this vulnerability requires a coordinated policy framework that strengthens domestic and allied producers – something the EU seems keen on doing. “Our governments need to ensure that our manufacturers can operate viably at scale,” said Rechenberg.
To get there will take targeted trade tools like tariffs to counter persistent price suppression, procurement reforms that reward reliability over lowest cost, stronger oversight and transparency requirements for foreign supply, and joint U.S.–European Union investment in foundational infrastructure needed to produce the key ingredients at the start of the pharma food chain.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
EU Moves To Protect Antibiotics From Asian Dominance; Aligning More With U.S.
Lawmakers from member states of the European Union agreed to measures last week to stop drug shortages and fix chronic Asian dependencies for critical medicines, this time spurred by worries over the antibiotics supply chain.
The move is part of last year’s Critical Medicines Act, but the real takeaway here is that Brussels and Washington are jointly concerned about supply constraints and their overdependence on imports. We could be witnessing the early stages of what might become a U.S.-European pharmaceutical ecosystem for critical drugs, which would include support for the domestic production of key precursor ingredients and, of course, the active pharmaceutical ingredient (API) that makes the drug work.
A provisional accord – agreed to on May 12 – was struck between EU countries and their parliament representatives. It will require EU members to diversify supply sources of some 270 active substances on their Union List of Critical Medicines.
The deal will allow national governments to apply an “EU preference” to government procurement contracts for medication, protecting the market and – perhaps – sparking investment in low-margin API usually sourced from India and China.
Worth noting, however, Europe and India recently touted the signing of a free trade agreement, meaning it is still unclear if the EU will include India as one of their “international partnership” countries. The U.S., of course, fits perfectly in this camp as both have nearly identical needs and desires whereas India is a stable low-cost producer of low-margin generics and APIs.
Pharmaceutical companies involved in “strategic projects” will get access to national and EU-wide funding with faster and more efficient permitting procedures to get new capacity on line quicker.
The deal only needs one more final endorsement by the European Council. No date has been set at this time.
EU: Same Boat as U.S.
According to a 2025 report by the European Court of Auditors (ECA), the EU countries reported running critically short of 136 drugs, including antibiotics, between 2022 and 2024. Asian labs account for at least 70% of API used in Europe, according to the ECA report. Import dependency is worse for painkillers, like paracetamol and over the counter drugs like ibuprofen (mainly sourced from China), and antibiotics.
The Critical Medicines Act in Europe is arguably the only industrial policy for Western pharmaceuticals at this time.
Meanwhile, the U.S. has Section 232 tariffs on branded drugs (starting July 31 as of this writing), and new programs for stock piling, the CMA is saying to European labs – if you build it, we will finance it and we will buy it.
The section of the CMA that is most interesting for the creation of a Western biotech ecosystem is the provision on international partnerships. Many U.S. and European labs are heavily invested in India, especially across the generics platforms. But with both sides worried about import reliance, the opportunity to build a unified front is all too obvious.
The West is waking up to its core dependencies in key areas of the economy, and pharma is one of those sectors.
Critical medicines are one problem, but another equally worrisome matter is watching multinational labs invest more in India and China than at home. Tax incentives, government purchase agreements, tariffs, and funding will be the only way to keep advanced biotech in the U.S. and Europe in the years ahead. Generic drugs already have the pricing narrative going against them barring government action to correct it.
Europe appears to be redefining pharma not merely as an expensive lab where new drugs are invented and eventually trialed and made off-patent offshore. Their leaders are thinking about active pharmaceutical ingredients and simple generic drugs like antibiotics, let alone the future of advanced biotech. Pharmaceutical goods are one of the biggest globally traded goods. To keep it viable in the West, the U.S. and Europe will need to think more strategically about pharmaceuticals and rebuild that ecosystem, rather than only focus on branded drugs and R&D, which will eventually be a corner of the pharma market the Chinese contract manufacturers can take.
The same concern over shortages is well noted on Capitol Hill.
“Rebuilding domestic and allied pharmaceutical manufacturing capacity is achievable, but it will require decisive action. That means strengthening trade enforcement, reforming procurement policies that prioritize the lowest cost over supply security and creating the conditions necessary for American manufacturers to compete and grow,” said Sen. Rick Scott (R-FL). “It also means working with our allies to build a resilient, diversified supply chain that is not dependent on adversarial nations. This report provides a clear roadmap for doing that.”
CPA’s Antibiotic Study Suggests European-U.S. Tag Team
CPA has beaten this drum before.
Earlier this year, CPA Senior Economist Andrew Rechenberg’s 44-page report titled “Foreign Control of Antibiotic Supply” already noted that the U.S. and Europe were paddling against the tide in the same river.
The U.S. and European Union rely mainly on India and China for finished-dosage antibiotics. It might work to rely less on them, and more on each other.
As it is now, downstream supply is concentrated among a small number of Indian labs. These labs depend almost entirely on China for antibiotic APIs or key starting materials. Within China, antibiotics production is concentrated among a limited set of pharma labs and they are all responsible for the majority of global API output for antibiotic medicines.
The United States and European countries are exposed not only to changes in foreign output, but also to the potentially unforeseen regulatory and industrial shifts of a handful of companies thousands of miles away. This exposure also includes drug quality and safety risks, though Europe does not usually make safety an issue. For them, it seems to be supply of critical drugs first, protection of the biotech ecosystem second.
“The U.S. and European nations face a profound strategic vulnerability, but also a clear opportunity to rebuild leadership in the essential stages of antibiotic manufacturing,” Rechenberg wrote.
Addressing this vulnerability requires a coordinated policy framework that strengthens domestic and allied producers – something the EU seems keen on doing. “Our governments need to ensure that our manufacturers can operate viably at scale,” said Rechenberg.
To get there will take targeted trade tools like tariffs to counter persistent price suppression, procurement reforms that reward reliability over lowest cost, stronger oversight and transparency requirements for foreign supply, and joint U.S.–European Union investment in foundational infrastructure needed to produce the key ingredients at the start of the pharma food chain.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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