A Hidden Dependency: American Medicine Relies on Chinese Manufacturing

In 2023, Stanford Medicine was forced to ration cancer drugs. A multi-disciplinary ethics committee was tasked with allocating a limited supply of Cisplatin, a chemotherapy drug. Why did Stanford and other hospitals around the country have this shortage? It was due to quality issues at a single facility—Intas Pharmaceuticals Limited near Ahmedabad, India. The global supply chain broke and America wasn't ready. 

In response, American imports of Cisplatin shifted to the Qilu pharmaceutical company in China, a manufacturer that was not FDA-approved. This shortage is an example of a broader trend: the American medical apparatus has a critical dependency on Chinese chemical manufacturing. 

This dependency extends far beyond a single medication. In October 2022, amoxicillin—a common antibiotic used to treat bacterial infections—was in short supply because of manufacturing issues and increased demand. This shortage caused doctors to ration the antibiotic for children with respiratory illnesses. Some doctors had to prescribe more expensive (and often less effective) alternatives like amoxicillin-clavulanate. 

Supply chain disruptions have similarly affected medical imaging capabilities. In April of 2022, a GE Healthcare facility in Shanghai shut down during government-mandated COVID-19 lockdowns. This facility is the top producer of Omnipaque, a contrast agent for imaging procedures (e.g. CT scans). The shortage led to an estimated 80% reduction in supply, causing hospitals across America to ration CT scans for emergency cases, delaying checkups, and postponing research studies. In June 2022, the Shanghai plant resumed full production, ending the shortage. 

These recurring crises underscore the fragility of our supply chains for these critical resources, which are the foundation of both our essential medical services and research.

Underpinning the American drug R&D effort is the Chinese pharmaceutical manufacturing muscle. Factories in China, such as Zhejiang Huahai Pharmaceutical, Shandong Xinhua Pharmaceutical, and Jiangsu Hengrui Medicine, currently produce over 80% of Active Pharmaceutical Ingredients (APIs) sold to generic drug companies in 2023. 

China also dominates in the production of chemical reagents, compounds used to start or measure chemical reactions. For example, just four Chinese producers (Jiangshan, North China, CSPC, and Northeast) produce 80% of the world’s ascorbic acid (vitamin C) production. This crucial compound serves as both a nutrient supplement and an important laboratory reagent used in cell culture media, protein purification, and as an antioxidant. China also supplies about 90% of the generic antibiotics imported into the US. 

How did we get here? 

Similar to electronics manufacturing, the pharmaceutical industry requires talent and infrastructure that we simply don’t have. In a Senate hearing, Stanford professor Drew Endy testified that those seeking high-scale drug manufacturing in the United States “...cannot find those facilities in the US” and that, “In China, you see significant investments in labs,” which has not been matched in the United States. 

China’s success in chemical manufacturing can most directly be attributed to its success in recruiting talent, prompting growth in manufacturing infrastructure. Since 2008, China’s Thousand Talents Plan has successfully recruited over 7,000 top researchers to the country, including professors at Western universities. 

Simultaneously, China has led an aggressive deregulation effort, with a key goal of achieving international competitiveness. Regulators have also heavily subsidized R&D, which, when combined with lower labor costs, far outstrips the West as a destination for chemical manufacturing. Through this combination of carrots and sticks, the CCP has grown China’s chemical manufacturing industry into a global dependency, especially when competing on “basic” chemicals (e.g. vitamin C). These chemicals (though termed “basic”) can be remarkably difficult to produce, and are essential to innovative research and care. 

American firms have experienced the opposite trend. Over 50% of American biomanufacturers report that a regulatory burden negatively impacts their ability to compete internationally. 

A clear example in the U.S. is the Toxic Substances Control Act, which stipulates that before an American plant can make or import any new molecule, they must file a detailed dossier 90 days in advance (and the EPA often restarts the clock if anything is missing). Additionally, American firms must pay per-chemical user fees, which can exceed $1 million. Due to the EPA’s chronic staff shortage, the 90-day deadline is routinely missed by the government, resulting in a backlog. By contrast, Chinese firms can manufacture chemicals at a low scale (less than one tonne) with minimal paperwork and no waiting period. This regulatory disparity gives Chinese firms a clear competitive advantage. 

Still, Chinese chemical firms are affected by the broader economic challenges facing China. A declining real estate sector, weak domestic demand, deflationary pressures, and increasing debt (both national and local) result in overcapacity due to weak domestic demand. For example, Wanhua Chemical saw its net profit fall by nearly 30% in Q3 2024. However, the entire chemical manufacturing industry has struggled post-pandemic, with combined profits of the world’s top 50 chemical firms falling by 44.1% from 2022. Relatively speaking, Chinese firms have performed well. 

This critical dependency on Chinese chemicals for lifesaving care and research provides immense negotiating leverage for a geopolitical rival. We can do better. Congress has begun to act: the BIOSECURE Act would bar government agencies from directing funds towards manufacturers linked to geopolitical rivals, including China. The bill passed the House of Representatives but has stalled in the Senate. While tariffs or bans (e.g. BIOSECURE) may help, they will be most effective if we can streamline regulatory processes like those in China. In order to rebuild our pharmaceutical manufacturing industry, our labs need an even playing field. The Cisplatin shortage was a warning. We shouldn't need another one.