Latest news with #JacksonHealthcare
Egypt Independent
2 days ago
- Business
- Egypt Independent
Trump's tariff threat exposes China's tight grip on the global pharmaceuticals industry
Hong Kong/New York CNN — It's the most prescribed antibiotic in the United States, used by tens of millions of people every year to treat bacterial infections including pneumonia, stomach ulcers, and strep throat. Yet, it isn't exactly common knowledge that amoxicillin, a relative of penicillin that has been in chronic short supply, has only one manufacturer in the US, or that China controls 80 percent of the raw materials required for its production. That's a major concern as US President Donald Trump threatens to impose tariffs on pharmaceutical imports, throwing a spotlight on America's dependence on critical drug supplies from abroad. 'Increasing trade hostilities or more protracted conflicts could devastate our access to amoxicillin or the ingredients used to make it should Beijing weaponize its supply chain dominance,' Rick Jackson, founder and CEO of Jackson Healthcare, which owns America's sole amoxicillin manufacturer, told CNN. Last year, 96 percent of US imports of hydrocortisone (the active ingredient in the anti-itch cream), 90 percent of imports of ibuprofen (found in common over-the-counter pain relievers), and 73 percent of imports of acetaminophen (in other kinds of pain relievers) all came from China, according to CNN calculations based on trade data from the Census Bureau. With the US already facing shortages of many essential medications, experts warn that Beijing could potentially exploit this reliance as leverage in an escalating trade war. Tensions between the two sides have soared since Trump unleashed his trade assault on the world's second-largest economy. While the two countries have announced a temporary truce that rolled back the three-digit tariffs for 90 days, relations remain tense with ongoing feuding over chip restrictions imposed by the US. Leland Miller, a commissioner at the US-China Economic and Security Review Commission, said the 'chokepoints' that China holds over the US pharmaceutical supply are 'detrimental to American security.' 'Simply by having this leverage … whether or not they ever pull the trigger, causes us to change our policy positions on a lot of things, and that's not good,' he said. So far, China has made no official public threat about weaponizing its dominant position in this segment of the pharmaceutical industry. But Trump's tariffs on the sector, if imposed, could worsen existing drug shortages and drive up prices for Americans, undermining his promise to lower health care costs. Generic drugs, which are designed to provide the same therapeutic effects as brand-name ones and are released after their patents expire, account for 90 percent of all prescriptions in the US. India produces many of those generics, often from ingredients imported from China. Even though industry insiders and experts widely acknowledge America's heavy reliance on Chinese pharmaceuticals, there is little comprehensive data on the full extent of this dependence across the sector, as major pharmaceutical firms have little incentive to disclose such information. That's part of the reason why last month, the Trump administration launched a probe into pharmaceuticals imports as part of efforts to impose tariffs on the sector on national security grounds. A 'catastrophic' interruption With China making 80 percent of the world's raw materials for amoxicillin, according to Jackson, it's a clear example of just how vulnerable the world could be to 'Chinese political or economic whims.' 'Any interruption by China along the lengthy amoxicillin supply chain could be catastrophic, particularly in the face of a potential bacterial epidemic,' he said. In 2021, Jackson purchased a bankrupt manufacturing site located in Bristol, Tennessee, and renamed it USAntibiotics. The facility, built in the 1970s, used to produce enough amoxicillin for the whole country at the time. After the amoxicillin patent expired in 2002, the Tennessee facility began to make generic equivalents. At that point, it began facing lower-cost competition from overseas and eventually went bankrupt. Concerns about America's dependence on Chinese pharmaceuticals aren't new. As early as 2019, the US-China Economic and Security Review Commission recommended that Congress assess America's pharmaceutical vulnerabilities. Two years later, when Jackson bought the amoxicillin factory, he cited national security and the need to ensure a steady supply of antibiotics as a major reason for the purchase. China controls 80 percent of the raw materials required for amoxicillin's production. Fred Tanneau/AFP/Getty Images Still, progress in growing America's pharma supply chain has been slow. In late April, Trump said pharmaceutical companies were 'going to have to' produce drugs in the US or face a 'tariff wall.' A key goal behind Trump's threats of pharmaceutical tariffs is to 'onshore' drug production. An American study in 2021 found that the US imports 72 percent of its essential medicines. But experts said tariffs are unlikely to achieve that goal for generics, which have become commodities, with price being the main differentiator. So-called brand-name drugs, by contrast, are protected by patents and therefore command higher prices and bigger profit margins. Instead, tariffs would not only drive up medical costs for patients, but they could also exacerbate ongoing drug shortages by pushing generic drug makers out of the American market. Even if they are willing to build drug-making facilities in the US, the process could take years. Reliance on China China's dominance in the global drug supply chain is part and parcel of its position as the world's factory. Over decades, the pursuit of lower production costs has prompted drug makers to shift production from Western countries to places like China and India. China plays an outsize role in the drug supply chain for its significant production of the critical chemical compounds, called key starting materials or KSM, which are necessary to produce active ingredients, called active pharmaceuticals ingredients or API. China and India dominate the global manufacturing capacity for API. Together, they account for 82 percent of all API manufacturer filings to the US Food and Drug Administration, according to United States Pharmacopeia (USP), a nonprofit that sets official quality standards for medicines. The filings contain detailed information about the facilities and manufacturing processes submitted by API manufacturers. In the two years after 2021, according to the most recent data, India's share of the filings dropped to 50 percent, while China's surged to 32 percent. Chinese manufacturers have also benefited from Beijing's policy incentives and subsidies for the pharmaceutical sector since the early 2000s, which led to industry clusters springing up in the country, said Qingpeng Zhang, an associate professor at the University of Hong Kong's LKS Faculty of Medicine. 'These industry clusters, which help drive down overall costs while maintaining quality … ultimately made China an ideal location for the production of generics and APIs within a free trade environment,' he said. Besides lower costs, the environmental impact of drug production also contributed to China's rise in this sector, as the US and European Union often have stricter environmental regulation, according to Ronald Piervincenzi, CEO of USP. Even India, the world's top supplier of generics, relies on China for APIs and other key ingredients. In fact, 70 percent of India's API imports come from China, according to a 2023 report commissioned by the Indian government. Dinesh Thakur, a public health expert and author of 'The Truth Pill,' a book on Indian drug regulations, said that India's reliance on China for drug materials reflected the 'natural evolution' of the industry. At the time when Indian drug companies moved up the value chain toward higher-margin products like formulations and injectables, China's nascent pharmaceutical sector made inroads with API production at a lower price point, he said. The Indian companies then 'bought the API for a lesser cost from China and focused their money and their capacity in India on building competence for developing more complex finished formulations,' Thakur said. He added that China's well-established chemicals industry, built independently of pharmaceuticals, also gave its manufacturers a head start in producing drug-related chemicals. Major policy push Besides its cost advantage, China's pharmaceutical industry also got a boost from the government. In 2015, Chinese leader Xi Jinping unveiled his signature 'Made in China 2025' industrial strategy, which identified biopharma and advanced medical products as key sectors for development in its broader push to reduce the country's reliance on foreign technology. The Covid-19 pandemic further exposed global dependence on China for pharmaceutical supplies – and served as a reminder to Beijing of the strategic advantage that that dominance provides. In a state-run magazine in 2020, Xi said China must consolidate its leadership in its advantageous industries, and 'tighten global industrial chains' dependence on China to build strong countermeasures and deterrent capabilities against deliberate external supply cutoffs.' In 2015, Chinese leader Xi Jinping unveiled his signature 'Made in China 2025' industrial strategy, which identified biopharma and advanced medical products as key sectors for development in its broader push to reduce the country's reliance on foreign technology. Tingshu Wang/Pool/Getty Images In 2021, during the height of the epidemic, China's National Development and Reform Commission, the state planner, highlighted APIs as a 'key strength in China's pharmaceutical industry's participation in global competition.' Li Daokui, a professor of finance at Tsinghua University in Beijing and a Beijing adviser, even suggested that China, given its strategic position in the production of raw materials for vitamins and antibiotics, could limit drug supplies to the US as 'countermeasures' against American sanctions. 'Not effective' While Trump is not the first US president to push for onshoring drug production, he is the first to attempt it through the threat of sweeping tariffs. Some companies have fallen in line. British firm AstraZeneca, for instance, is shifting production of certain medicines from Europe to the US, following a $3.5 billion investment plan announced late last year. Similarly, companies including Johnson & Johnson and Eli Lilly have pledged to expand their US operations. But these companies primarily focus on patented drugs. Stephen Farrelly, global head of pharma and healthcare at Dutch bank group ING, noted that the US accounted for 44 percent of global pharmaceutical sales in 2023, making it imperative for makers of patented drugs to maintain a presence in the country. The story is different for generics because their margins are often half those of branded ones. 'Given their margin profiles, they can't afford to make long-term investment decisions with so much uncertainty around,' he said. 'If even possible, it would take in excess of five years to begin reshoring.' Tariffs on pharmaceuticals would eventually fall on patients, experts say, widening health disparities in an already strained health care system. Because generics are as much as 85 percent cheaper than branded drugs, low-income patients and those without health insurance rely on them disproportionately. An April study commissioned by the main American pharmaceutical lobby group, the Pharmaceutical Research and Manufacturers of America, revealed that a 25 percent tariff will increase costs of imported pharmaceuticals by $50.8 billion annually, causing prices to rise by 12.9 percent if passed to consumers. ING also found that a 25 percent tariff on a common generic cancer medication could raise its price by up to $10,000 for a 24-week prescription. Rather than achieving the intended goal of onshoring production, experts said the tariffs could risk pushing generics manufacturers to abandon the US market altogether. Piervincenzi warned that even modest tariffs could disrupt the supply of generics. 'There's very little profit there and any tariff would just result in [generic drug makers] being underwater and just exiting,' he said. Incentives other than tariffs are necessary to create a resilient drug supply chain, Piervincenzi said. And unlike with other industries, drug supply disruption or shortages could have life-threatening consequences. 'Each of these drugs, people's lives depend on them, and a single drug goes into shortage and a child can't get their cancer therapy, and it becomes a disaster, which you don't see if your favorite brand of ketchup's out of stock,' he said. 'You may be annoyed, but your life is not in danger.'
CNN
3 days ago
- Business
- CNN
Trump's tariff threat exposes China's tight grip on the global pharmaceuticals industry
It's the most prescribed antibiotic in the United States, used by tens of millions of people every year to treat bacterial infections including pneumonia, stomach ulcers, and strep throat. Yet, it isn't exactly common knowledge that amoxicillin, a relative of penicillin that has been in chronic short supply, has only one manufacturer in the US, or that China controls 80% of the raw materials required for its production. That's a major concern as US President Donald Trump threatens to impose tariffs on pharmaceutical imports, throwing a spotlight on America's dependence on critical drug supplies from abroad. 'Increasing trade hostilities or more protracted conflicts could devastate our access to amoxicillin or the ingredients used to make it should Beijing weaponize its supply chain dominance,' Rick Jackson, founder and CEO of Jackson Healthcare, which owns America's sole amoxicillin manufacturer, told CNN. Last year, 96% of US imports of hydrocortisone (the active ingredient in the anti-itch cream), 90% of imports of ibuprofen (found in common over-the-counter pain relievers), and 73% of imports of acetaminophen (in other kinds of pain relievers) all came from China, according to CNN calculations based on trade data from the Census Bureau. With the US already facing shortages of many essential medications, experts warn that Beijing could potentially exploit this reliance as leverage in an escalating trade war. Tensions between the two sides have soared since Trump unleashed his trade assault on the world's second-largest economy. While the two countries have announced a temporary truce that rolled back the three-digit tariffs for 90 days, relations remain tense with ongoing feuding over chip restrictions imposed by the US. Leland Miller, a commissioner at the US-China Economic and Security Review Commission, said the 'chokepoints' that China holds over the US pharmaceutical supply are 'detrimental to American security.' 'Simply by having this leverage … whether or not they ever pull the trigger, causes us to change our policy positions on a lot of things, and that's not good,' he said. So far, China has made no official public threat about weaponizing its dominant position in this segment of the pharmaceutical industry. But Trump's tariffs on the sector, if imposed, could worsen existing drug shortages and drive up prices for Americans, undermining his promise to lower health care costs. Generic drugs, which are designed to provide the same therapeutic effects as brand-name ones and are released after their patents expire, account for 90% of all prescriptions in the US. India produces many of those generics, often from ingredients imported from China. Even though industry insiders and experts widely acknowledge America's heavy reliance on Chinese pharmaceuticals, there is little comprehensive data on the full extent of this dependence across the sector, as major pharmaceutical firms have little incentive to disclose such information. That's part of the reason why last month, the Trump administration launched a probe into pharmaceuticals imports as part of efforts to impose tariffs on the sector on national security grounds. With China making 80% of the world's raw materials for amoxicillin, according to Jackson, it's a clear example of just how vulnerable the world could be to 'Chinese political or economic whims.' 'Any interruption by China along the lengthy amoxicillin supply chain could be catastrophic, particularly in the face of a potential bacterial epidemic,' he said. In 2021, Jackson purchased a bankrupt manufacturing site located in Bristol, Tennessee, and renamed it USAntibiotics. The facility, built in the 1970s, used to produce enough amoxicillin for the whole country at the time. After the amoxicillin patent expired in 2002, the Tennessee facility began to make generic equivalents. At that point, it began facing lower-cost competition from overseas and eventually went bankrupt. Concerns about America's dependence on Chinese pharmaceuticals aren't new. As early as 2019, the US-China Economic and Security Review Commission recommended that Congress assess America's pharmaceutical vulnerabilities. Two years later, when Jackson bought the amoxicillin factory, he cited national security and the need to ensure a steady supply of antibiotics as a major reason for the purchase. Still, progress in growing America's pharma supply chain has been slow. In late April, Trump said pharmaceutical companies were 'going to have to' produce drugs in the US or face a 'tariff wall.' A key goal behind Trump's threats of pharmaceutical tariffs is to 'onshore' drug production. An American study in 2021 found that the US imports 72% of its essential medicines. But experts said tariffs are unlikely to achieve that goal for generics, which have become commodities, with price being the main differentiator. So-called brand-name drugs, by contrast, are protected by patents and therefore command higher prices and bigger profit margins. Instead, tariffs would not only drive up medical costs for patients, but they could also exacerbate ongoing drug shortages by pushing generic drug makers out of the American market. Even if they are willing to build drug-making facilities in the US, the process could take years. China's dominance in the global drug supply chain is part and parcel of its position as the world's factory. Over decades, the pursuit of lower production costs has prompted drug makers to shift production from Western countries to places like China and India. China plays an outsize role in the drug supply chain for its significant production of the critical chemical compounds, called key starting materials or KSM, which are necessary to produce active ingredients, called active pharmaceuticals ingredients or API. China and India dominate the global manufacturing capacity for API. Together, they account for 82% of all API manufacturer filings to the US Food and Drug Administration, according to United States Pharmacopeia (USP), a nonprofit that sets official quality standards for medicines. The filings contain detailed information about the facilities and manufacturing processes submitted by API manufacturers. In the two years after 2021, according to the most recent data, India's share of the filings dropped to 50%, while China's surged to 32%. Chinese manufacturers have also benefited from Beijing's policy incentives and subsidies for the pharmaceutical sector since the early 2000s, which led to industry clusters springing up in the country, said Qingpeng Zhang, an associate professor at the University of Hong Kong's LKS Faculty of Medicine. 'These industry clusters, which help drive down overall costs while maintaining quality … ultimately made China an ideal location for the production of generics and APIs within a free trade environment,' he said. Besides lower costs, the environmental impact of drug production also contributed to China's rise in this sector, as the US and European Union often have stricter environmental regulation, according to Ronald Piervincenzi, CEO of USP. Even India, the world's top supplier of generics, relies on China for APIs and other key ingredients. In fact, 70% of India's API imports come from China, according to a 2023 report commissioned by the Indian government. Dinesh Thakur, a public health expert and author of 'The Truth Pill,' a book on Indian drug regulations, said that India's reliance on China for drug materials reflected the 'natural evolution' of the industry. At the time when Indian drug companies moved up the value chain toward higher-margin products like formulations and injectables, China's nascent pharmaceutical sector made inroads with API production at a lower price point, he said. The Indian companies then 'bought the API for a lesser cost from China and focused their money and their capacity in India on building competence for developing more complex finished formulations,' Thakur said. He added that China's well-established chemicals industry, built independently of pharmaceuticals, also gave its manufacturers a head start in producing drug-related chemicals. Besides its cost advantage, China's pharmaceutical industry also got a boost from the government. In 2015, Chinese leader Xi Jinping unveiled his signature 'Made in China 2025' industrial strategy, which identified biopharma and advanced medical products as key sectors for development in its broader push to reduce the country's reliance on foreign technology. The Covid-19 pandemic further exposed global dependence on China for pharmaceutical supplies – and served as a reminder to Beijing of the strategic advantage that that dominance provides. In a state-run magazine in 2020, Xi said China must consolidate its leadership in its advantageous industries, and 'tighten global industrial chains' dependence on China to build strong countermeasures and deterrent capabilities against deliberate external supply cutoffs.' In 2021, during the height of the epidemic, China's National Development and Reform Commission, the state planner, highlighted APIs as a 'key strength in China's pharmaceutical industry's participation in global competition.' Li Daokui, a professor of finance at Tsinghua University in Beijing and a Beijing adviser, even suggested that China, given its strategic position in the production of raw materials for vitamins and antibiotics, could limit drug supplies to the US as 'countermeasures' against American sanctions. While Trump is not the first US president to push for onshoring drug production, he is the first to attempt it through the threat of sweeping tariffs. Some companies have fallen in line. British firm AstraZeneca, for instance, is shifting production of certain medicines from Europe to the US, following a $3.5 billion investment plan announced late last year. Similarly, companies including Johnson & Johnson and Eli Lilly have pledged to expand their US operations. But these companies primarily focus on patented drugs. Stephen Farrelly, global head of pharma and healthcare at Dutch bank group ING, noted that the US accounted for 44% of global pharmaceutical sales in 2023, making it imperative for makers of patented drugs to maintain a presence in the country. The story is different for generics because their margins are often half those of branded ones. 'Given their margin profiles, they can't afford to make long-term investment decisions with so much uncertainty around,' he said. 'If even possible, it would take in excess of five years to begin reshoring.' Tariffs on pharmaceuticals would eventually fall on patients, experts say, widening health disparities in an already strained health care system. Because generics are as much as 85% cheaper than branded drugs, low-income patients and those without health insurance rely on them disproportionately. An April study commissioned by the main American pharmaceutical lobby group, the Pharmaceutical Research and Manufacturers of America, revealed that a 25% tariff will increase costs of imported pharmaceuticals by $50.8 billion annually, causing prices to rise by 12.9% if passed to consumers. ING also found that a 25% tariff on a common generic cancer medication could raise its price by up to $10,000 for a 24-week prescription. Rather than achieving the intended goal of onshoring production, experts said the tariffs could risk pushing generics manufacturers to abandon the US market altogether. Piervincenzi warned that even modest tariffs could disrupt the supply of generics. 'There's very little profit there and any tariff would just result in [generic drug makers] being underwater and just exiting,' he said. Incentives other than tariffs are necessary to create a resilient drug supply chain, Piervincenzi said. And unlike with other industries, drug supply disruption or shortages could have life-threatening consequences. 'Each of these drugs, people's lives depend on them, and a single drug goes into shortage and a child can't get their cancer therapy, and it becomes a disaster, which you don't see if your favorite brand of ketchup's out of stock,' he said. 'You may be annoyed, but your life is not in danger.'
CNN
3 days ago
- Business
- CNN
Trump's tariff threat exposes China's tight grip on the global pharmaceuticals industry
It's the most prescribed antibiotic in the United States, used by tens of millions of people every year to treat bacterial infections including pneumonia, stomach ulcers, and strep throat. Yet, it isn't exactly common knowledge that amoxicillin, a relative of penicillin that has been in chronic short supply, has only one manufacturer in the US, or that China controls 80% of the raw materials required for its production. That's a major concern as US President Donald Trump threatens to impose tariffs on pharmaceutical imports, throwing a spotlight on America's dependence on critical drug supplies from abroad. 'Increasing trade hostilities or more protracted conflicts could devastate our access to amoxicillin or the ingredients used to make it should Beijing weaponize its supply chain dominance,' Rick Jackson, founder and CEO of Jackson Healthcare, which owns America's sole amoxicillin manufacturer, told CNN. Last year, 96% of US imports of hydrocortisone (the active ingredient in the anti-itch cream), 90% of imports of ibuprofen (found in common over-the-counter pain relievers), and 73% of imports of acetaminophen (in other kinds of pain relievers) all came from China, according to CNN calculations based on trade data from the Census Bureau. With the US already facing shortages of many essential medications, experts warn that Beijing could potentially exploit this reliance as leverage in an escalating trade war. Tensions between the two sides have soared since Trump unleashed his trade assault on the world's second-largest economy. While the two countries have announced a temporary truce that rolled back the three-digit tariffs for 90 days, relations remain tense with ongoing feuding over chip restrictions imposed by the US. Leland Miller, a commissioner at the US-China Economic and Security Review Commission, said the 'chokepoints' that China holds over the US pharmaceutical supply are 'detrimental to American security.' 'Simply by having this leverage … whether or not they ever pull the trigger, causes us to change our policy positions on a lot of things, and that's not good,' he said. So far, China has made no official public threat about weaponizing its dominant position in this segment of the pharmaceutical industry. But Trump's tariffs on the sector, if imposed, could worsen existing drug shortages and drive up prices for Americans, undermining his promise to lower health care costs. Generic drugs, which are designed to provide the same therapeutic effects as brand-name ones and are released after their patents expire, account for 90% of all prescriptions in the US. India produces many of those generics, often from ingredients imported from China. Even though industry insiders and experts widely acknowledge America's heavy reliance on Chinese pharmaceuticals, there is little comprehensive data on the full extent of this dependence across the sector, as major pharmaceutical firms have little incentive to disclose such information. That's part of the reason why last month, the Trump administration launched a probe into pharmaceuticals imports as part of efforts to impose tariffs on the sector on national security grounds. With China making 80% of the world's raw materials for amoxicillin, according to Jackson, it's a clear example of just how vulnerable the world could be to 'Chinese political or economic whims.' 'Any interruption by China along the lengthy amoxicillin supply chain could be catastrophic, particularly in the face of a potential bacterial epidemic,' he said. In 2021, Jackson purchased a bankrupt manufacturing site located in Bristol, Tennessee, and renamed it USAntibiotics. The facility, built in the 1970s, used to produce enough amoxicillin for the whole country at the time. After the amoxicillin patent expired in 2002, the Tennessee facility began to make generic equivalents. At that point, it began facing lower-cost competition from overseas and eventually went bankrupt. Concerns about America's dependence on Chinese pharmaceuticals aren't new. As early as 2019, the US-China Economic and Security Review Commission recommended that Congress assess America's pharmaceutical vulnerabilities. Two years later, when Jackson bought the amoxicillin factory, he cited national security and the need to ensure a steady supply of antibiotics as a major reason for the purchase. Still, progress in growing America's pharma supply chain has been slow. In late April, Trump said pharmaceutical companies were 'going to have to' produce drugs in the US or face a 'tariff wall.' A key goal behind Trump's threats of pharmaceutical tariffs is to 'onshore' drug production. An American study in 2021 found that the US imports 72% of its essential medicines. But experts said tariffs are unlikely to achieve that goal for generics, which have become commodities, with price being the main differentiator. So-called brand-name drugs, by contrast, are protected by patents and therefore command higher prices and bigger profit margins. Instead, tariffs would not only drive up medical costs for patients, but they could also exacerbate ongoing drug shortages by pushing generic drug makers out of the American market. Even if they are willing to build drug-making facilities in the US, the process could take years. China's dominance in the global drug supply chain is part and parcel of its position as the world's factory. Over decades, the pursuit of lower production costs has prompted drug makers to shift production from Western countries to places like China and India. China plays an outsize role in the drug supply chain for its significant production of the critical chemical compounds, called key starting materials or KSM, which are necessary to produce active ingredients, called active pharmaceuticals ingredients or API. China and India dominate the global manufacturing capacity for API. Together, they account for 82% of all API manufacturer filings to the US Food and Drug Administration, according to United States Pharmacopeia (USP), a nonprofit that sets official quality standards for medicines. The filings contain detailed information about the facilities and manufacturing processes submitted by API manufacturers. In the two years after 2021, according to the most recent data, India's share of the filings dropped to 50%, while China's surged to 32%. Chinese manufacturers have also benefited from Beijing's policy incentives and subsidies for the pharmaceutical sector since the early 2000s, which led to industry clusters springing up in the country, said Qingpeng Zhang, an associate professor at the University of Hong Kong's LKS Faculty of Medicine. 'These industry clusters, which help drive down overall costs while maintaining quality … ultimately made China an ideal location for the production of generics and APIs within a free trade environment,' he said. Besides lower costs, the environmental impact of drug production also contributed to China's rise in this sector, as the US and European Union often have stricter environmental regulation, according to Ronald Piervincenzi, CEO of USP. Even India, the world's top supplier of generics, relies on China for APIs and other key ingredients. In fact, 70% of India's API imports come from China, according to a 2023 report commissioned by the Indian government. Dinesh Thakur, a public health expert and author of 'The Truth Pill,' a book on Indian drug regulations, said that India's reliance on China for drug materials reflected the 'natural evolution' of the industry. At the time when Indian drug companies moved up the value chain toward higher-margin products like formulations and injectables, China's nascent pharmaceutical sector made inroads with API production at a lower price point, he said. The Indian companies then 'bought the API for a lesser cost from China and focused their money and their capacity in India on building competence for developing more complex finished formulations,' Thakur said. He added that China's well-established chemicals industry, built independently of pharmaceuticals, also gave its manufacturers a head start in producing drug-related chemicals. Besides its cost advantage, China's pharmaceutical industry also got a boost from the government. In 2015, Chinese leader Xi Jinping unveiled his signature 'Made in China 2025' industrial strategy, which identified biopharma and advanced medical products as key sectors for development in its broader push to reduce the country's reliance on foreign technology. The Covid-19 pandemic further exposed global dependence on China for pharmaceutical supplies – and served as a reminder to Beijing of the strategic advantage that that dominance provides. In a state-run magazine in 2020, Xi said China must consolidate its leadership in its advantageous industries, and 'tighten global industrial chains' dependence on China to build strong countermeasures and deterrent capabilities against deliberate external supply cutoffs.' In 2021, during the height of the epidemic, China's National Development and Reform Commission, the state planner, highlighted APIs as a 'key strength in China's pharmaceutical industry's participation in global competition.' Li Daokui, a professor of finance at Tsinghua University in Beijing and a Beijing adviser, even suggested that China, given its strategic position in the production of raw materials for vitamins and antibiotics, could limit drug supplies to the US as 'countermeasures' against American sanctions. While Trump is not the first US president to push for onshoring drug production, he is the first to attempt it through the threat of sweeping tariffs. Some companies have fallen in line. British firm AstraZeneca, for instance, is shifting production of certain medicines from Europe to the US, following a $3.5 billion investment plan announced late last year. Similarly, companies including Johnson & Johnson and Eli Lilly have pledged to expand their US operations. But these companies primarily focus on patented drugs. Stephen Farrelly, global head of pharma and healthcare at Dutch bank group ING, noted that the US accounted for 44% of global pharmaceutical sales in 2023, making it imperative for makers of patented drugs to maintain a presence in the country. The story is different for generics because their margins are often half those of branded ones. 'Given their margin profiles, they can't afford to make long-term investment decisions with so much uncertainty around,' he said. 'If even possible, it would take in excess of five years to begin reshoring.' Tariffs on pharmaceuticals would eventually fall on patients, experts say, widening health disparities in an already strained health care system. Because generics are as much as 85% cheaper than branded drugs, low-income patients and those without health insurance rely on them disproportionately. An April study commissioned by the main American pharmaceutical lobby group, the Pharmaceutical Research and Manufacturers of America, revealed that a 25% tariff will increase costs of imported pharmaceuticals by $50.8 billion annually, causing prices to rise by 12.9% if passed to consumers. ING also found that a 25% tariff on a common generic cancer medication could raise its price by up to $10,000 for a 24-week prescription. Rather than achieving the intended goal of onshoring production, experts said the tariffs could risk pushing generics manufacturers to abandon the US market altogether. Piervincenzi warned that even modest tariffs could disrupt the supply of generics. 'There's very little profit there and any tariff would just result in [generic drug makers] being underwater and just exiting,' he said. Incentives other than tariffs are necessary to create a resilient drug supply chain, Piervincenzi said. And unlike with other industries, drug supply disruption or shortages could have life-threatening consequences. 'Each of these drugs, people's lives depend on them, and a single drug goes into shortage and a child can't get their cancer therapy, and it becomes a disaster, which you don't see if your favorite brand of ketchup's out of stock,' he said. 'You may be annoyed, but your life is not in danger.'
CNN
3 days ago
- Business
- CNN
Trump's tariff threat exposes China's tight grip on the global pharmaceuticals industry
It's the most prescribed antibiotic in the United States, used by tens of millions of people every year to treat bacterial infections including pneumonia, stomach ulcers, and strep throat. Yet, it isn't exactly common knowledge that amoxicillin, a relative of penicillin that has been in chronic short supply, has only one manufacturer in the US, or that China controls 80% of the raw materials required for its production. That's a major concern as US President Donald Trump threatens to impose tariffs on pharmaceutical imports, throwing a spotlight on America's dependence on critical drug supplies from abroad. 'Increasing trade hostilities or more protracted conflicts could devastate our access to amoxicillin or the ingredients used to make it should Beijing weaponize its supply chain dominance,' Rick Jackson, founder and CEO of Jackson Healthcare, which owns America's sole amoxicillin manufacturer, told CNN. Last year, 96% of US imports of hydrocortisone (the active ingredient in the anti-itch cream), 90% of imports of ibuprofen (found in common over-the-counter pain relievers), and 73% of imports of acetaminophen (in other kinds of pain relievers) all came from China, according to CNN calculations based on trade data from the Census Bureau. With the US already facing shortages of many essential medications, experts warn that Beijing could potentially exploit this reliance as leverage in an escalating trade war. Tensions between the two sides have soared since Trump unleashed his trade assault on the world's second-largest economy. While the two countries have announced a temporary truce that rolled back the three-digit tariffs for 90 days, relations remain tense with ongoing feuding over chip restrictions imposed by the US. Leland Miller, a commissioner at the US-China Economic and Security Review Commission, said the 'chokepoints' that China holds over the US pharmaceutical supply are 'detrimental to American security.' 'Simply by having this leverage … whether or not they ever pull the trigger, causes us to change our policy positions on a lot of things, and that's not good,' he said. So far, China has made no official public threat about weaponizing its dominant position in this segment of the pharmaceutical industry. But Trump's tariffs on the sector, if imposed, could worsen existing drug shortages and drive up prices for Americans, undermining his promise to lower health care costs. Generic drugs, which are designed to provide the same therapeutic effects as brand-name ones and are released after their patents expire, account for 90% of all prescriptions in the US. India produces many of those generics, often from ingredients imported from China. Even though industry insiders and experts widely acknowledge America's heavy reliance on Chinese pharmaceuticals, there is little comprehensive data on the full extent of this dependence across the sector, as major pharmaceutical firms have little incentive to disclose such information. That's part of the reason why last month, the Trump administration launched a probe into pharmaceuticals imports as part of efforts to impose tariffs on the sector on national security grounds. With China making 80% of the world's raw materials for amoxicillin, according to Jackson, it's a clear example of just how vulnerable the world could be to 'Chinese political or economic whims.' 'Any interruption by China along the lengthy amoxicillin supply chain could be catastrophic, particularly in the face of a potential bacterial epidemic,' he said. In 2021, Jackson purchased a bankrupt manufacturing site located in Bristol, Tennessee, and renamed it USAntibiotics. The facility, built in the 1970s, used to produce enough amoxicillin for the whole country at the time. After the amoxicillin patent expired in 2002, the Tennessee facility began to make generic equivalents. At that point, it began facing lower-cost competition from overseas and eventually went bankrupt. Concerns about America's dependence on Chinese pharmaceuticals aren't new. As early as 2019, the US-China Economic and Security Review Commission recommended that Congress assess America's pharmaceutical vulnerabilities. Two years later, when Jackson bought the amoxicillin factory, he cited national security and the need to ensure a steady supply of antibiotics as a major reason for the purchase. Still, progress in growing America's pharma supply chain has been slow. In late April, Trump said pharmaceutical companies were 'going to have to' produce drugs in the US or face a 'tariff wall.' A key goal behind Trump's threats of pharmaceutical tariffs is to 'onshore' drug production. An American study in 2021 found that the US imports 72% of its essential medicines. But experts said tariffs are unlikely to achieve that goal for generics, which have become commodities, with price being the main differentiator. So-called brand-name drugs, by contrast, are protected by patents and therefore command higher prices and bigger profit margins. Instead, tariffs would not only drive up medical costs for patients, but they could also exacerbate ongoing drug shortages by pushing generic drug makers out of the American market. Even if they are willing to build drug-making facilities in the US, the process could take years. China's dominance in the global drug supply chain is part and parcel of its position as the world's factory. Over decades, the pursuit of lower production costs has prompted drug makers to shift production from Western countries to places like China and India. China plays an outsize role in the drug supply chain for its significant production of the critical chemical compounds, called key starting materials or KSM, which are necessary to produce active ingredients, called active pharmaceuticals ingredients or API. China and India dominate the global manufacturing capacity for API. Together, they account for 82% of all API manufacturer filings to the US Food and Drug Administration, according to United States Pharmacopeia (USP), a nonprofit that sets official quality standards for medicines. The filings contain detailed information about the facilities and manufacturing processes submitted by API manufacturers. In the two years after 2021, according to the most recent data, India's share of the filings dropped to 50%, while China's surged to 32%. Chinese manufacturers have also benefited from Beijing's policy incentives and subsidies for the pharmaceutical sector since the early 2000s, which led to industry clusters springing up in the country, said Qingpeng Zhang, an associate professor at the University of Hong Kong's LKS Faculty of Medicine. 'These industry clusters, which help drive down overall costs while maintaining quality … ultimately made China an ideal location for the production of generics and APIs within a free trade environment,' he said. Besides lower costs, the environmental impact of drug production also contributed to China's rise in this sector, as the US and European Union often have stricter environmental regulation, according to Ronald Piervincenzi, CEO of USP. Even India, the world's top supplier of generics, relies on China for APIs and other key ingredients. In fact, 70% of India's API imports come from China, according to a 2023 report commissioned by the Indian government. Dinesh Thakur, a public health expert and author of 'The Truth Pill,' a book on Indian drug regulations, said that India's reliance on China for drug materials reflected the 'natural evolution' of the industry. At the time when Indian drug companies moved up the value chain toward higher-margin products like formulations and injectables, China's nascent pharmaceutical sector made inroads with API production at a lower price point, he said. The Indian companies then 'bought the API for a lesser cost from China and focused their money and their capacity in India on building competence for developing more complex finished formulations,' Thakur said. He added that China's well-established chemicals industry, built independently of pharmaceuticals, also gave its manufacturers a head start in producing drug-related chemicals. Besides its cost advantage, China's pharmaceutical industry also got a boost from the government. In 2015, Chinese leader Xi Jinping unveiled his signature 'Made in China 2025' industrial strategy, which identified biopharma and advanced medical products as key sectors for development in its broader push to reduce the country's reliance on foreign technology. The Covid-19 pandemic further exposed global dependence on China for pharmaceutical supplies – and served as a reminder to Beijing of the strategic advantage that that dominance provides. In a state-run magazine in 2020, Xi said China must consolidate its leadership in its advantageous industries, and 'tighten global industrial chains' dependence on China to build strong countermeasures and deterrent capabilities against deliberate external supply cutoffs.' In 2021, during the height of the epidemic, China's National Development and Reform Commission, the state planner, highlighted APIs as a 'key strength in China's pharmaceutical industry's participation in global competition.' Li Daokui, a professor of finance at Tsinghua University in Beijing and a Beijing adviser, even suggested that China, given its strategic position in the production of raw materials for vitamins and antibiotics, could limit drug supplies to the US as 'countermeasures' against American sanctions. While Trump is not the first US president to push for onshoring drug production, he is the first to attempt it through the threat of sweeping tariffs. Some companies have fallen in line. British firm AstraZeneca, for instance, is shifting production of certain medicines from Europe to the US, following a $3.5 billion investment plan announced late last year. Similarly, companies including Johnson & Johnson and Eli Lilly have pledged to expand their US operations. But these companies primarily focus on patented drugs. Stephen Farrelly, global head of pharma and healthcare at Dutch bank group ING, noted that the US accounted for 44% of global pharmaceutical sales in 2023, making it imperative for makers of patented drugs to maintain a presence in the country. The story is different for generics because their margins are often half those of branded ones. 'Given their margin profiles, they can't afford to make long-term investment decisions with so much uncertainty around,' he said. 'If even possible, it would take in excess of five years to begin reshoring.' Tariffs on pharmaceuticals would eventually fall on patients, experts say, widening health disparities in an already strained health care system. Because generics are as much as 85% cheaper than branded drugs, low-income patients and those without health insurance rely on them disproportionately. An April study commissioned by the main American pharmaceutical lobby group, the Pharmaceutical Research and Manufacturers of America, revealed that a 25% tariff will increase costs of imported pharmaceuticals by $50.8 billion annually, causing prices to rise by 12.9% if passed to consumers. ING also found that a 25% tariff on a common generic cancer medication could raise its price by up to $10,000 for a 24-week prescription. Rather than achieving the intended goal of onshoring production, experts said the tariffs could risk pushing generics manufacturers to abandon the US market altogether. Piervincenzi warned that even modest tariffs could disrupt the supply of generics. 'There's very little profit there and any tariff would just result in [generic drug makers] being underwater and just exiting,' he said. Incentives other than tariffs are necessary to create a resilient drug supply chain, Piervincenzi said. And unlike with other industries, drug supply disruption or shortages could have life-threatening consequences. 'Each of these drugs, people's lives depend on them, and a single drug goes into shortage and a child can't get their cancer therapy, and it becomes a disaster, which you don't see if your favorite brand of ketchup's out of stock,' he said. 'You may be annoyed, but your life is not in danger.'
Associated Press
02-04-2025
- Business
- Associated Press
Jackson Healthcare Named One of the '100 Best Companies to Work For®' by Fortune® Media and Great Place To Work®
Jackson Healthcare ®, one of the nation's premier providers of healthcare workforce services, today announced that it has been recognized on the 2025 Fortune ® 100 Best Companies to Work For ® list based on survey data from its associates. This marks the organization's second consecutive appearance. The annual 100 Best Companies to Work For list celebrates organizations that create exceptional, high-trust workplace cultures where associates thrive. Rankings are determined by Great Place To Work ®, the global authority on workplace culture, using its Trust Index ™ survey, which captures data from more than a million employees across the United States. Through its For All ® methodology, Great Place To Work measures whether every employee is having a consistently positive experience at work, regardless of who they are or what their role is. 'As we celebrate 25 years in business, it's an incredible honor for Jackson Healthcare to once again be named among the nation's 100 Best Companies to Work For,' said Shane Jackson, president, Jackson Healthcare. 'From the beginning, our vision has been to cultivate a strong workplace culture rooted in our core values of Others First, Wisdom and Growth and to make a meaningful difference in the lives of others. This commitment starts with our associates and extends to the healthcare providers, clients and communities we serve. Earning this recognition in such a milestone year is a testament to the culture we've built together.' To qualify for the 100 Best Companies to Work For list, organizations must be Great Place To Work Certified ™ and demonstrate consistently high employee satisfaction across the 60 survey statements. In Jackson Healthcare's most recent Trust Index survey, 90% of participating associates rated the company as a great place to work. Additionally, associates scored Jackson Healthcare significantly above the national average in key areas such as productivity, recruitment, retention, customer service and agility – exceeding Great Place To Work benchmarks by more than 20 percentage points. Jackson Healthcare has been Great Place To Work Certified for eight consecutive years and has appeared on prior Fortune best workplace lists for healthcare, women and millennials. About the Fortun e 100 Best Companies to Work For Great Place To Work selected the 100 Best list by gathering and analyzing more than 1.3 million confidential survey responses representing the experiences of more than 8.4 million U.S. employees. Of those, over 670,000 responses were received from employees at eligible companies, and this list is based on that feedback. Organizations are assessed on their efforts to create generous, supportive, high-performance work experiences for every employee in the organization. Companies must be Great Place To Work Certified ™ with 1,000 or more employees in the U.S. and cannot be a government agency. To be considered, all companies use the Great Place To Work Trust Index ™ survey. About Great Place To Work As the global authority on workplace culture, Great Place To Work brings 30 years of groundbreaking research and data to help every place become a great place to work for all. Its proprietary platform and Great Place To Work Model help companies evaluate the experience of every employee, with exemplary workplaces becoming Great Place To Work Certified and receiving recognition on a coveted Best Workplaces ™ list. Follow Great Place To Work on LinkedIn, X, and Instagram or visit and sign up for the newsletter to learn more. About Fortune Fortune upholds a legacy of award-winning writing and trusted reporting for executives who want to make business better. Independently owned, with a global perspective and digital agility, Fortune tells the stories of a new generation of innovators, builders, and risk-takers. Online and in print, Fortune measures corporate performance through rigorous benchmarks and holds companies accountable. Fortune creates communities by convening true thought leaders and iconoclasts – those who shape industry, commerce, and society – through powerful and prestigious lists, events, and conferences, such as the iconic Fortune 500, the CEO Initiative, and Most Powerful Women. For more information, visit About Jackson Healthcare Jackson Healthcare ® is one of the nation's premier providers of healthcare workforce services and the parent company of more than 20 businesses that share a common mission: to improve the delivery of patient care and the lives of everyone it touches. Powered by expert associates and tens of thousands of clinician providers, it delivers quality care when and where it's needed in communities across the country – helping thousands of health systems, hospitals and medical facilities serve over 20 million patients a year. Jackson Healthcare – which marks its 25 th anniversary in 2025 – is Great Place To Work ® Certified ™ and appears on the latest Forbes ® list of America's Top Private Companies; Fortune ® lists of the 100 Best Companies to Work For ® and Best Workplaces in Health Care ™; and PEOPLE ® list of Companies that Care. Learn more at From Fortune. ©2025 Fortune Media IP Limited. All rights reserved. Used under license. Fortune and Fortune 100 Best Companies to Work For ® are registered trademarks of Fortune Media IP Limited and are used under license. Fortune and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, Jackson Healthcare, LLC. SOURCE: Jackson Healthcare Copyright Business Wire 2025. PUB: 04/02/2025 08:09 AM/DISC: 04/02/2025 08:09 AM
