Group 186
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Report at a Glance

In Generic Drug Manufacturing and Biotechnology Innovation, BENS provides a comprehensive assessment that:

Examines

the critical role pharmaceutical supply chains play in U.S. national security

Identifies

major chokepoints that threaten supply chain resilience

Assesses

current and emerging vulnerabilities

 

Outlines

policy recommendations to strengthen U.S. pharmaceutical infrastructure and mitigate strategic risks

Executive Summary

While defense equipment and semiconductor manufacturing have long been recognized as vital sectors for U.S. commerce and national security, the U.S. pharmaceutical supply chain - more specifically, the production of generic drugs and their underlying chemical components - has atrophied domestically while flourishing in adversarial states.

As the United States has grown increasingly reliant on the People’s Republic of China (PRC) for a significant amount of its pharmaceutical imports and other raw materials vital to U.S. economic competitiveness, the PRC has emerged as a top geopolitical competitor. A 2019 report from the U.S.-China Economic and Security Review Commission sounded the alarm that “should Beijing opt to use U.S. dependence on China as an economic weapon... it would have a serious effect on the health of U.S. consumers”.1 This divergence - growing economic dependence amid intensifying strategic competition - creates a profound, existential threat that transcends public health.

China, which began heavily investing in the biotechnology sector in the 1980s, is now a biopharmaceutical powerhouse and has strategically positioned itself throughout the global supply chain. Today, the United States is heavily dependent on PRC-made active pharmaceutical ingredients (APIs) and key starting materials (KSMs), the critical components and raw materials in pharmaceutical products. One of the most significant vulnerabilities for the U.S. biotechnology sector stems from the extensive offshoring of APIs and KSMs, which are the backbone of the generic drug supply chain. Although the United States manufactures a portion of its finished-dose generic drugs domestically, this capacity is often illusory in terms of security, as it relies heavily on overseas suppliers for the APIs and KSMs needed to produce them.

The following statistics highlight this vulnerability:

  • In 2023 approximately 91 percent of drugs prescribed by physicians in the United States were generic drugs.2
  • In 2021, an estimated 87 percent of U.S. generic drug manufacturing facilities were located abroad.3
  • In 2019, the FDA estimated that nearly 40 percent of finished drugs and approximately 80 percent of APIs were manufactured overseas.4
  • The United States imports many of its APIs from China, with estimates varying from 8 percent to as high as 47 percent.5
  • The United States is heavily reliant on India for APIs, KSMs, and finished drug products, while India imports 80 percent of its APIs from China.6

This web of foreign dependencies centered around China has contributed to frequent drug shortages in the United States. In 2024, the United States recorded its highest number of drug shortages to date, affecting 323 medications.7 Many of these shortages were linked to delays or interruptions in obtaining APIs and KSMs essential for generic drug manufacturing. Antibiotics have proven especially vulnerable, experiencing shortages at a rate 42 percent higher than other generics.8

Persistent shortages not only limit access to essential medicines but also place national stockpiles at risk. Strengthening U.S. generic pharmaceutical supply chains is crucial to ensure national security, economic competitiveness, and the health of the American people. The findings and recommendations of this report highlight the urgency to address these vulnerabilities through coordinated policy action, targeted investments, and enhanced transparency across these supply chains.

01 Introduction
01 Introduction

Global Biotechnology Competition and Implications for U.S. National Security

02
02

U.S. Health Security & Pharmaceutical Vulnerabilities

03
03

Situation Analysis

04
04

Risk Assessment

05 Conclusion
05

Recommendations to Mitigate Risks and Strengthen U.S. Pharmaceutical Leadership

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The Path Forward

Implementing these recommendations will require coordinated action across government, industry, and academia. By investing in domestic pharmaceutical manufacturing capacity, enhancing supply chain transparency, diversifying API and KSM sources, and fostering biotechnological innovation, the United States can build a more resilient pharmaceutical supply chain that will protect public health as well as national and economic security.

A coordinated national effort that combines policy reform, strategic investments, and cross sector collaborations can achieve a secure, sustainable, and competitive supply chain for the future while ensuring the United States remains the global leader in secure, domestic pharmaceutical manufacturing.

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Bibliography