Outsourced pharmaceutical manufacturing exposes America’s weak supply chain during health crisis

Many industries that were originally based in the United States have been moved to other nations. Technology companies like Apple have moved elements of their manufacturing to China while clothing and accessories, such as Nike, have moved their manufacturing to India. Other major corporations like Wal-Mart, Cisco-Systems and IBM all outsource production to other countries. Companies outsourcing  their operations are fairly common, with roughly 68% of consumer product companies outsourcing from the U.S., according to a PwC Retail & Consumer Product Practice report. However, the coronavirus pandemic has brought a single key industry to the forefront of the argument against outsourcing: pharmaceuticals. 

Like other major industries, pharmaceutical companies have been outsourcing manufacturing in other countries, with only 28% of active ingredient manufacturing for medicines being located domestically. It may be easy to consider this outsourcing as a common occurrence, but under the circumstances of the virus, two serious issues have come to light. 

The first issue is sending critical parts of the pharmaceutical supply chain overseas. During the climax of the outbreak, borders and air traffic were closed off to international travel, making it impossible or extremely difficult for goods to pass between countries. This includes medical supplies that were, and still are, in high demand. In an interview with Sen. Chris Coons by NPR, he voiced his concern about how the United States is in such a vulnerable position due to its reliance on international supply chains.

“If we have another global pandemic that leads the world to close borders and leads global supply chains to shatter or to break down, we are distinctly vulnerable because we are now so dependent upon globally integrated supply chains,” Coons said.

This dependency not only poses a serious danger to getting the much-needed medical supplies and pharmaceuticals needed by patients during a pandemic, but it can also cause a weakness in national security as well. 

The United States being reliant on a global supply system that can fail when countries close their borders is already a serious problem, but having the majority of pharmaceutical manufacturing in a few countries is an even greater risk. According to NPR, the main suppliers of pharmaceutical ingredients are China and India. Having multiple outsourced facilities around the globe would be far less dangerous to the United States in the event of a global shutdown, as certain countries or areas would still be able to ship medicine and medical supplies. But having the majority sourced in just two countries poses a serious threat to the United States, not only by limiting our options for finding medical supplies in the event of border closures, but by countries using this fact to their advantage. While this point seems unethical, almost inhumane in certain cases, it can’t be put past hardliners like the Chinese Communist Party. Leaving the majority of our medical manufacturing in a hostile state just doesn’t seem smart, especially when they have shown hostility to us when we confront them, such as the trade war that occurred during the first half of Trump’s presidency. 

As a country, we should take the close call that we had with COVID-19 and begin to bring back key elements within our pharmaceutical industries. Leaving them overseas is leaving us open to an even greater threat the next time a major disease spreads across the globe. With time and incentivization, we can bring American pharmaceuticals back to America, and be sure that when the next crisis hits, we’ll be ready.