From painkillers to antibiotics, China has been a major supplier of active pharmaceutical ingredients (APIs) for a range of medicines. In this established supply system, companies have become increasingly reliant on lower-cost manufacturers in China.
But the current outbreak could prompt overseas drug makers to consider diversifying their source of supply.
“The trade-off between concentration risk and low prices was accepted by the world for many years, but I suspect COVID-19 will force a rethink of national strategies for pharmaceutical procurement,” said Associate Professor Jeremy Lim, Co-Director of the Leadership Institute for Global Health Transformation (LIGHT).
Besides APIs, the US import value of other pharmaceutical products from China has also continued to grow, including tablets in boxes, vaccines and plasma.
“Countries will increasingly look at pharmaceutical and medical device — including masks and sanitisers — supply chains as strategic and elect to manufacture in-country despite higher costs and subsequently price to purchasers,” he said, adding that US imports 95 per cent of its ibuprofen and 80 per cent of its antibiotics from China.
Media coverage:
- Coronavirus outbreak drives drugmakers to weigh more diverse supply chains, S&P Global Market Intelligence, 20 March 2020