The overall costs of generic drugs for the US consumers is likely to increase in short-to-medium term because of China being the primary supplier of their ingredients to their global manufacturers, particularly India, a Congressional report has said.
China’s role as the primary supplier of Active Pharmaceuticals Ingredients to global manufacturers of the generic pharmaceuticals, particularly in India, is likely to increase overall costs of the generic pharmaceuticals for consumers in the United States in the short-to-medium term, Congressional Research Service or CRS said in one of its latest report.
The outbreak of COVID-19 in India could also affect the availability of generic pharmaceuticals in the United States. India, which supplies approximately 40 percent of generic pharmaceuticals used in the United States, imports nearly 70 percent of its APIs from China, CRS said.
CRS is the independent and bipartisan research wing of the US Congress which prepares periodic reports for lawmakers to take informed decisions. Its report are not an official view point on the Congress,
In March, the CRS said India imposed export restrictions on several drugs whose supply chains rely on China, leading to fears of potential global shortage of generic drugs that have since escalated after India announced a nationwide 21-day lockdown.
India, however, has started allowing export of some of the key drugs like hydroxychloroquine to countries like the US and Brazil on a case by case basis. US President Donald Trump has thanked people of India and Prime Minister Narendra Modi for his decision to allow HCQ’s export.
According to the CRS, in 2019, India with total export worth USD 8.3 billion was the eighth largest exporter of pharmaceuticals, medical equipment, products and supplies. Ireland with 35 billion tops the list followed by Germany (USD 25 billion) and China (USD20 billion).
In its report dated April 6, the CRS said the COVID-19 outbreak, first in China and then globally, including in the United States, is drawing attention to the ways in which the US economy depends on manufacturing and supply chains based in China.
An area of particular concern to the Congress is shortages of medical supplies in the US, including those of personal protective equipments and pharmaceuticals, as the United States steps up efforts to contain COVID-19 with limited domestic stockpiles and insufficient US industrial capacity.
Because of China’s role as a global supplier of PPE, medical devices, antibiotics, and active pharmaceutical ingredients, reduced export from China have led to shortages of critical medical supplies in the United States.
Exacerbating the situation, in early February 2020, the Chinese government nationalized control of the production and distribution of medical supplies in China, directing all production for domestic use, and asked the bureaucracy and Chinese industry to secure supplies from the global market.
Now, apparently past its COVID-19 outbreak peak, the Chinese government may selectively release some medical supplies for overseas delivery, with designated countries selected, according to political calculations, it said.
As China’s manufacturing sector recovers, while the United States and other major global markets are grappling with COVID-19, some fear China could overwhelm overseas markets, as it ramps up export-led growth to compensate for the sharp downturn of exports in the first quarter of 2020, secure hard currency, and boost economic growth, CRS noted.
China may also seek to make gains in strategic sectors, such as telecommunications, microelectronics and semiconductors, in which the government undertook extraordinary measures to sustain research and development and manufacturing during the COVID-19 outbreak in China,? it said.