Facilities manufacturing APIs for U.S. pharma market by location 2019

As of August 2019, almost 30 percent of manufacturing facilities producing active pharmaceutical ingredients (APIs) were located in the United States. This relates to the manufacture of human drugs regulated by the U.S. Food and Drug Administration (FDA) for the U.S. market.

FDA warns of possible drug shortage

Due to the outbreak of the coronavirus, which has severely affected China, the FDA has warned of a potential shortage of some human drugs in the United States, particularly those that source their APIs from manufacturing facilities in China. An API is the main ingredient in a drug; it is the part that produces the intended effect. Around 15 percent of APIs are manufactured in China, but due to the necessary quarantine of workers as a result of the virus, the supply chain at several facilities in the country has been adversely impacted.

From domestic to global manufacturing

Pharmaceutical manufacturing has become an increasingly worldwide business. Pharma companies in the United States first started to move their manufacturing plants away from the mainland in the 1970s. The first destination was Puerto Rico in response to tax incentives – the movement of Puerto Rican goods to the United States was tax free. However, as competition and costs increased, manufacturers started to look further afield, to developing nations such as China and India. Manufacturing drugs in developing nations can significantly reduce costs for companies because of significantly lower labor and energy costs.