US drug supply chain alternative to China might run through Canada, Latin America
- Centre for Strategic and International Studies panellists from Canada, Mexico, Brazil and Colombia discuss speeding pharmaceutical production and trade with US
- About 80 per cent of all fine chemicals come from China, according to one estimate, leading to a medical supply chain vulnerability
Representatives of Canada and three Latin American nations said on Tuesday that they welcomed US efforts to reduce its dependence on China for pharmaceuticals by building supply chain alternatives with them.
Canadian authorities are working with US counterparts on “regulatory cooperation and flexibility, which is going to limit undue regulatory barriers in pharmaceutical trade”, John Layton, trade counsellor at Ottawa’s US embassy, said at a virtual panel discussion held by the Centre for Strategic and International Studies (CSIS).
Carlos De Costa of Brazil’s Washington embassy noted that Brasilia had set up “special economic zones” to encourage investment in pharmaceutical plants, among others, “without any kind of economic complexity, without any kind of taxes, to supply the whole world”.
Largely aimed at countering China’s growing influence in Latin America, Biden’s “Americas Partnership for Economic Prosperity” is to initially focus on “like-minded partners” that already have trade accords with the US. It also stops short of offering tariff relief and other terms that the administration intends to firm up over time.
Much like Biden’s Indo-Pacific Economic Framework – another initiative that aims to counter China’s economic integration with an entire region – the plan emphasises better coordination on environmental goals and labour standards instead of trade agreements that clear the way for better market access.
After a review of American supply-chain vulnerabilities, the Biden administration reported in June 2021 that more than half the manufacturing facilities for dispensary-ready medications registered with the Food and Drug Administration were outside the US. Nearly three-quarters of all registered facilities producing APIs were in foreign jurisdictions, it said – primarily China and India.
Of all FDA-registered generic drug facilities making dispensary-ready medications, 63 per cent were outside the US, and 87 percent of FDA-registered facilities making APIs used in generic products were overseas, the report found.
And the full extent of the supply-chain vulnerability remains unclear, the report said, so the reliance might even be higher.