China’s Dominance over Pharmaceutical Industry

China’s Dominance over Pharmaceutical Industry

The national security implications of China’s dominance over the pharmaceutical industry is highlighted by the impacts of the novel coronavirus outbreak.

The dependence on China globally for drugs and medical supplies has come into sharp focus with the coronavirus spreading far and wide. The arguments for restoring some domestic production of pharmaceuticals has strengthened given the shortage of essential drugs to treat the victims in both the US and Europe.

China’s emergence as the most important global source for pharmaceutical products and medical devices was facilitated by drug companies eager to shift production to cheaper destinations in recent decades. Nearly 80 percent of America and Europe’s antibodies are said to be imported from China. To the Western world, India is also an important supplier of generic drugs, however, India itself is dependent on China for the massive imports of active pharmaceutical ingredients (APIs). The recent decision of the Government of India to limit the export of common drugs like paracetamol arose after the reduction in supplies from China due to the virus outbreak.

There has been growing recognition of the need to limit the expansive exposure to China in many different sectors although the current

international focus is on the supply chains in the pharmaceutical sector.

China turning its role as the “world’s factory” into powerful leverage was pointed out by the critics. Many had to put up red flags during 2010 in relation to a minor political dispute as to the Chinese decision to stop rare earth exports to Japan. To regard China as a challenge if not an outright threat, China’s greater political assertiveness and challenge to Western dominance in critical areas have strengthened the case in the West since then. The case for de-coupling has gained much traction as the bipartisan political consensus in the US and Europe in favor of a strong economic partnership with China began to break down in recent years.

“All aspects of the supply chain has been managed to be dominated by China. China is known as the world’s factory for electronics, toys and car parts, but it also churns out much of pain medicines, antibiotics, and penicillin used across the globe, as well as medical devices and surgical masks.

According to a senior fellow for global health at the Council on Foreign Relations, Yanzhong Huang, in recent years, more than 90 percent of U.S. antibiotics, hydrocortisone, ibuprofen, and vitamin C,  as well as 40 to 45 percent of heparin and 70 percent of acetaminophen have been supplied by Chinese pharmaceutical companies.

The coronavirus epidemic has been used to highlight the longstanding vulnerability that could leave the countries depending on China dangerously short od medicines in the event of pandemic, trade conflict or war.

There will always be a significant distribution of global production of critical goods across borders given the uneven dispersal of strategic resources and differences in the levels of development. From the current orthodoxies of uninhibited economic globalization, especially in the strategic sectors, the political pressures to refrain from them have started in the Western world as absolute “self-sufficiency” is impossible to achieve.

Meanwhile, large continental entities in the health sector like India, Europe, and the US are most likely to avoid over-reliance for life-saving drugs on a single source. They are likely to find new ways to explore coordination among like-minded nations, expand domestic production and find ways to shorten the supply chains.

China’s Dominance over Pharmaceutical Industry – Source

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