Why this matters now
US leaders have spent years worrying about rare earths and microchips, yet a quieter weak link sits at the heart of everyday health care: the chemicals that make medicines work. China has become central to those upstream inputs, from the key starting materials used to synthesize active pharmaceutical ingredients to the solvents and reagents needed for production. A growing body of analysis shows how deep that reliance runs. Nearly 700 medicines used in the United States contain at least one chemical that is sourced only from China. That list spans antibiotics such as amoxicillin and common generics for heart conditions, seizures, allergies, and even some cancer treatments. Supply disruptions would touch everything from routine infections to intensive care.
The strategic worry is more than abstract. Policymakers warn that a future trade fight, sanctions episode, or another major outbreak could disturb flows of ingredients that many US drugmakers, and even India’s generics industry, count on. The US-China Economic and Security Review Commission has pressed Congress to give the Food and Drug Administration wider authority to demand reporting on the volume and origin of these building block chemicals and to steer procurement toward non China sources where risks are concentrated. Some proposals reach beyond oversight to market support for new capacity, borrowing from playbooks used to secure critical minerals. Companies are also rethinking their footprints, with plans for new US facilities, though many of those focus on later steps in manufacturing, not the raw chemicals that remain the tightest choke points.
How medicines are made, and where China dominates
Most patients encounter a finished pill or vial, not the complex chemical journey that produced it. That journey often begins in large reactors that make basic compounds, which are turned into key starting materials. Those starting materials are refined through multiple steps into intermediates, then into the active pharmaceutical ingredient known as the API, the component that delivers the therapeutic effect. Only after that is the API formulated with excipients into a finished dose, tested, packaged, and shipped.
From chemicals to pills
The FDA tightly regulates API manufacturing sites and finished drug plants. Oversight is less strict for upstream ingredients like starting materials, reagents, and solvents, even though those inputs determine whether downstream plants can run. China’s giant chemical industry, lower production costs, and looser environmental rules gave its producers an early edge in these building blocks. Over decades, that edge hardened into habit. Procurement teams adopted reliable Chinese sources, Indian API facilities integrated Chinese inputs into their recipes, and global distributors built networks around those flows.
Upstream exposure dwarfs API figures
Debates about US exposure often focus on API shares. Different methods produce very different numbers, from single digits to figures closer to a quarter of US drug volume. Those ranges reflect whether one counts by facilities or by volume, and whether indirect exposure through third countries is included. The picture looks more concentrated upstream. China has a far larger role in key starting materials and the auxiliary chemicals required to synthesize APIs, especially for antibiotics and other high volume generics. Even when final production occurs in India, Europe, or North America, those plants may still rely on Chinese inputs to start or sustain production. Amoxicillin illustrates the point. It appears to have a diverse set of API and finished dose producers across multiple countries, yet several of its critical inputs come almost entirely from China.
What do the numbers really show
Facility counts are one lens. In 2019, FDA data showed that about 28 percent of API manufacturing sites that supply the US market were domestic and roughly 13 percent were in China, with the rest spread across Europe, India, and other regions. Facility counts, however, do not reflect actual volumes used in US drugs, and many registered facilities or FDA filings do not correspond to products sold here. Volume based measures matter most for public health planning, and on that basis exposure is concentrated in specific categories. Trade data and independent analyses show extreme reliance on China for some widely used drug inputs: the United States sources the vast majority of ibuprofen and a large share of acetaminophen from China, along with substantial shares of penicillin class antibiotics. The nonprofit US Pharmacopeia has flagged two systemic risks. First, half of the active ingredients used in the United States come from a single source. Second, China is the exclusive supplier of at least one necessary chemical in nearly 700 medicines. Those medicines include daily staples like antihistamines that households keep in their cabinets and low cost drugs that hospitals buy by the case for routine care.
At the same time, China is not the only player. Two way trade in finished pharmaceuticals between the United States and China has grown, and the United States also exports advanced biologics and immunological products to China. For APIs, China’s share of US imports hovers around a fraction of the total, while some categories are far more exposed than others. The risk signal is clearest for upstream inputs and for antibiotics, cancer adjacencies, and other high volume generics where thin margins compress global competition. Measuring the right thing is critical. Counting facilities or the value of imports can underplay risks, since many essential generics are cheap yet vital, and volume based exposure better captures what patients actually need.
Why this dependence persists
The economics are stubborn. Making starting chemicals and commodity APIs brings thin profits, significant environmental compliance costs, and high energy use. China’s scale in basic chemicals, integrated industrial parks, and cost advantages pulled production away from higher cost jurisdictions decades ago. Once suppliers and buyers locked into stable relationships, the network effects grew. Reviving parallel capacity in the United States or allied countries is expensive and slow. Industry executives estimate that replicating some raw ingredient supply chains inside the United States could raise costs by half for certain inputs. That premium is hard to absorb for generic drugs that sell at razor thin margins.
Concentration risk and quality fears
Concentration shows up in the prevalence of single supplier APIs and inputs. When one site closes for maintenance or a regulatory issue, shortages ripple across hospitals and pharmacies. The pandemic made that vulnerability visible, yet supply stress predates 2020. Quality lapses at overseas plants have triggered recalls and temporary closures, and US inspectors still face barriers to frequent, unannounced inspections abroad. Ethical sourcing adds another layer, with watchdogs linking parts of the chemical supply chain in regions such as Xinjiang to forced labor concerns. Those risks extend beyond geopolitics to day to day patient safety, price spikes, and the availability of basic treatments.
National security and public health risks
Analysts describe three kinds of risk. First is coercion, where a government could threaten export curbs on sensitive inputs during a confrontation. China’s export control and biosecurity laws give it broad authority in this space. A blanket cutoff would be extreme and self damaging, yet even targeted pressure could unsettle markets. Second is disruption. Concentration in a few clusters means that a local lockdown, fire, flood, or power shortage can constrict global supply. When one major plant for diagnostic contrast media in Shanghai paused during the pandemic, hospitals worldwide rationed scans for months. Third is capability loss. If the United States and allies cede more upstream and midstream production, they may lose technical know how and the skilled workforce needed to scale advanced manufacturing for newer therapies.
Defense planners take the issue seriously. A recent Pentagon assessment found that more than a quarter of medicines purchased for the US military draw on China dependent supply chains in some way. Those dependencies do not imply imminent cutoff, yet they complicate contingency planning and surge needs.
Leland Miller, a member of the US China Economic and Security Review Commission, captured the anxiety about upstream reliance in blunt terms.
Beijing controls a scary chunk of active drug ingredients.
Data advocates argue that visibility is the first step toward action. Carrie Harney, an official at US Pharmacopeia, explained how transparency can steer targeted fixes.
Our hope is that by having better data and more visibility, that can inform targeted interventions into creating resilience and security for patients.
What is Washington proposing
The near term agenda centers on transparency, diversification, and selective industrial policy. Proposals before Congress would expand FDA authority to require firms to report not just the location of API facilities but also the volume and origin of upstream inputs such as key starting materials, reagents, and solvents. That reporting would give regulators and health systems real time maps of choke points, support smarter purchasing, and guide strategic stockpiles of essential medicines and inputs. Regulators are also encouraging manufacturers to qualify alternative suppliers from trusted jurisdictions and to redesign formulations where that is feasible.
Market structure problems likely require more than reporting. Some ideas look to the rare earths response as a template. The Department of Defense experimented with price support agreements that set a floor under critical mineral prices to anchor domestic investment. Similar tools could help jump start API or key starting material capacity in the United States or allied countries by reducing the risk that new plants are undercut by sudden price plunges. Public financing, long term procurement contracts, and pooled allied stockpiles could reinforce those efforts. Tariffs may deter additional concentration, yet they cannot conjure competing plants where none exist, and for many generics the result would be higher prices or withdrawn products rather than new entrants. The FDA, for its part, continues to promote advanced manufacturing such as continuous flow processing, which can cut costs, improve quality, and shrink the footprint needed for domestic production.
Can allies fill the gap
Diversification will lean on a network of partners. India is the world’s largest supplier of generic finished drugs and APIs, yet many Indian producers still rely on Chinese starting materials. Policies in India are aiming to rebuild domestic chemical capacity, an effort that will take time. Mexico presents a nearshore option, with proximity to US markets, established medical manufacturing, and room to expand API and finished dose production. Deeper US Mexico cooperation could include regulatory harmonization, faster site inspections, and targeted incentives for high priority inputs. Some US policymakers also favor friend shoring in the Middle East, building on recent diplomatic accords to stand up new facilities that serve US hospital systems. Europe remains a key partner with strong quality standards and available industrial parks for specialty chemicals. All of these paths help, yet none erase the core problem if upstream chemistry still depends on Chinese feedstocks. Any strategy must break bottlenecks where they begin.
How to measure and manage risk better
Managing medicine risk starts with measuring the right layers. Public databases of API and finished dose facilities are essential but incomplete for emergency planning. Volume based exposure by drug and by therapeutic class gives a truer picture of vulnerability. Mapping should track indirect exposure where a finished dose made in one country uses an API from another and starting materials from a third. The most critical step is to pull the upstream into view. Lists of essential medicines should be paired with lists of essential inputs. Health systems and group purchasing organizations can then contract for redundant suppliers and inventory buffers at those precise points in the chain, not just for finished drugs.
Technology can strengthen transparency. Digital track and trace tools, supplier attestations on origin and labor practices, and dashboards that fuse customs data with regulatory filings would help buyers and regulators anticipate shortages. On the supply side, public private partnerships can support dual qualified suppliers for key starting materials, build regional stockpiles of high risk inputs, and offer financing that reduces the penalty for building capacity in higher cost jurisdictions. None of these steps remove China from the global pharmacy, and they do not need to. The aim is a resilient network where no single node, region, or firm can halt care for millions of patients.
Key Points
- China plays an outsized upstream role in US medicine production, supplying key starting materials, reagents, and solvents that many APIs depend on.
- US Pharmacopeia identified nearly 700 medicines that use at least one chemical sourced only from China, and half of US APIs come from single sources.
- API exposure varies by method; facility counts understate risk. Volume based measures show concentrated reliance in antibiotics and other high volume generics.
- US imports lean heavily on China for some staples, including most ibuprofen and large shares of acetaminophen and penicillin class drugs.
- FDA data show many API sites are overseas. Gaps in volume data complicate planning, and indirect exposure through third countries often hides true risk.
- Key risks include coercion during crises, accidental disruptions, and long term loss of manufacturing capability and know how.
- Policy steps under debate include expanded FDA reporting on input origins and volumes, price support and procurement guarantees, stockpiles, and advanced manufacturing.
- Diversification through India, Mexico, Europe, and Middle East partners can help, but strategies must target upstream bottlenecks to build real resilience.
