Study Finds Over 90% of all Generic Drugs Dependent on Imports

Patients absorb 100% of the risk associated with the nation’s weak pharmaceutical supply chain. The Food and Drug Administration maintains a list of drugs in perennial short supply, including important drugs like amoxicillin, used primarily for patients with pneumonia. There is only one lab in the U.S. that makes the drug at this time, and it is only one type of amoxicillin. 

APIIC said in their report that “improving our national health security requires significant mitigation of risk by creating a diversified manufacturing base and distributed buffer inventories that will guarantee Americans reliable access to essential medications.”

Although it is not known as a generic drug manufacturer, Pfizer’s CenterOne lab in Kalamazoo, MI manufactures API for Pfizer, and for other companies, as well. CenterOne has labs around the world, including in India and China. 

Of the 103 sites worldwide that manufacture and sell over 30 API products, just four are in the U.S. and only 15 sites in the U.S. make more than ten API products versus nearly 350 outside the U.S. In comparison, India has more than 60 API sites capable of producing 30 or more APIs and China has more than 10 such sites. These foreign sites enjoy both a scale and cost advantage and a factor cost advantage over their U.S. competitors.

Stephen Schondelmeyer, a professor with the College of Pharmacy at the University of Minnesota stated in the report, “When I looked at the number of new API-facility

locations built to make API molecules in the world in the past decade, Taiwan had the

largest percentage growth with 326% (189 new API-facilities). India was second with

254% growth (3,676 API-facilities). Israel was third with 131% growth (142 new API-facilities).

China was fourth, having grown by 55% (531 API-facilities). Think about just these four countries with the largest percentage growth in new API-facilities: Taiwan, China, India, Israel. Do you see any geopolitical risks there?”

In the past decade, the number of U.S. API-facility locations has decreased by 61% (1,951 API-

facilities) in favor of contract manufacturers abroad, or turning over the market to Indian drug makers, primarily, in the case of generics. 

“Other countries have made investments in API facilities; the U.S. is falling further behind,” said Schondelmeyer. “These countries present geopolitical uncertainties and concerns, leaving the U.S. vulnerable if we are dependent on their API production for our domestic pharmaceutical needs. We are moving in the wrong direction.”

Although the report singled out APIs, no API can be made without the key starting materials. These raw materials can be defined as a basic chemical compound that is used in the production of a drug substance and incorporated into the API itself. 

But if the U.S. lacks API labs, KSM availability is in even worse shape.

Key starting materials almost exclusively use flow chemistry for their manufacture. The U.S. definitely has this technology and can produce KSM’s efficiently, but the infrastructure we once had to produce key starting materials in the U.S. sixty years ago has been offshored completely, said Matt Hancock, Director of Business Management API at Thermo Fisher Scientific. “Even if we focus on making APIs in the U.S., for the vast majority, it is only those last three to five steps in making APIs that would be done here. The key starting materials are still coming from outside the U.S. We really have even less momentum to produce key starting materials than we have in reshoring APIs.”