Over the past couple of decades, the US pharmaceutical supply chain (USPSC) has progressively leaned on global sources for pharmaceutical products, necessitating pharmacists to devote significant efforts to addressing and minimizing the repercussions of drug shortages, drug recalls, and the adverse effects stemming from substandard medications.

Concurrently, to address the challenges posed by the supply chain, during the inaugural meeting of the White House Council on Supply Chain Resilience last year, President Biden and Secretary of Health and Human Services unveiled fresh initiatives aimed at fortifying the domestic supply chain for critical drugs, Active Pharmaceutical Ingredients (APIs) and medical countermeasures. Now, The Biden administration has embraced a strategy proposed by the Indian government to diminish China's dominance in producing APIs like Valsartan, Levocetirizine, paracetamol, Ibuprofen, Dolutegravir, Azithromycin, etc., crucial for generic medications that are distributed in the U.S. However, a recent report indicates that many of these ingredients likely still originate from China.

The increasing dependence of the United States on China for Active Pharmaceutical Ingredients (APIs) has sparked concerns among members of Congress. In the first half of February 2024, House committees conducted two hearings addressing drug shortages and the U.S. Food and Drug Administration's foreign inspection program. The program has witnessed a significant decline in inspections of Chinese factories in recent years, largely attributed to the COVID-19 pandemic. Before the hearings, a study conducted by the Coalition for a Prosperous America, an advocacy group supporting incentives for domestic manufacturing, found that Aurobindo Pharma in India imports around 55% of its raw materials for ingredients from China. Aurobindo Pharma is a key player in the industry, supplying the highest volume of generic drugs to the U.S. Its revenue of $3.1 billion in 2023 ranked second among Indian pharmaceutical companies. The company's annual report for FY2022-23 highlighted its substantial reliance on the Chinese market for materials and ingredients essential in drug manufacturing. This development has drawn considerable attention from American policymakers, with some characterizing it as a 'Red Flag.' Notably, a significant player in the industry admitted to suspicions regarding India’s ties to China but was unaware of the extent of these connections.

At the moment, the Biden administration has shifted its focus towards strengthening collaboration with India, where diplomatic relations with the United States are more favourable compared to China. As tensions escalate with the Asian superpower, concerns are mounting regarding the heavy reliance of the U.S. and other nations on China for numerous pharmaceuticals, particularly the crucial APIs essential for drug production. According to ChemAnalyst, this strategic shift will not only bolster the Indian active pharmaceutical ingredient (API) market but also enhance the relationship between the two countries. With lower labour costs and relaxed environmental regulations, both China and India dominate the manufacturing of generic drugs. However, companies in these nations often operate with minimal oversight from the FDA. Unlike inspections at U.S. facilities, FDA inspections in China and India are frequently announced in advance, potentially impacting the effectiveness of regulatory oversight. 

Now the question arises – How far in advance do American authorities foresee this scenario unfolding? ChemAnalyst anticipates that given India's reliance on a diverse range of pharmaceutical ingredients from China, the Production Linked Incentive (PLI) Scheme implemented in India is poised to enhance domestic manufacturing of crucial Key Starting Materials (KSMs)/Drug Intermediates, and Active Pharmaceutical Ingredients (APIs). Through this scheme, the increased production of APIs will strengthen the supply chain to the United States, consequently reducing dependence on China even further.