This blog is part of a series on the geographic concentration of pharmaceutical manufacturing. Using USP’s Medicine Supply Map, we analyzed the manufacturing of the upstream building blocks used in the manufacturing of APIs, known as Key Starting Materials (KSMs). For prior blogs from this series, please refer to the blogs on API manufacturing and FDF manufacturing.
Authors: Gabriela Grasa Mannino, PhD; Shreyash Suryavanshi; Erkan Duman, PhD; Rohit Lokhande; Evgenia Razumovski PhD; Vimala Raghavendran; Marissa Malta
In a complex and often opaque environment, it is crucial to have visibility into the upstream pharmaceutical supply chain so that risks can be identified and addressed before patients and the healthcare system feel the consequences.
A newly released module on the USP Medicine Supply Map gives a comprehensive view of KSMs associated with US-approved APIs. KSMs are the foundational chemicals necessary to commercially synthesize APIs. Understanding trends like where KSMs are made, and where they are solely sourced from a single jurisdiction, can help decision-makers take action to address vulnerabilities in our supply chain.
Key Findings:
- Most KSMs depend on single-country sourcing
- 58% of KSMs used for US-approved APIs are sole sourced from a single country. 1, 2 (Figure 1)
- Sourcing clusters in China and India
- 41% of KSMs used in US-approved APIs are sole sourced from China.
- 16% of KSMs used in US-approved APIs are sole sourced from India.
- Many APIs rely on one country for a key ingredient
- 50% of US-approved APIs rely on a single country for at least one KSM. (Figure 3)
- China is the sole supplier of at least one KSM for 679 APIs, accounting for 37% of all APIs in the analysis. (Figure 3, right panel)
- India is the sole supplier of at least one KSM for 402 APIs accounting for 22% of all APIs in the analysis. (Figure 3, right panel)
- 50% of US-approved APIs rely on a single country for at least one KSM. (Figure 3)
Figure #1: 58% of KSMs used for U.S.-approved APIs are sole sourced from a single country.3
Specifically, USP found:
- 41% of KSMs used in US-approved APIs are sole sourced from China
- 16% of KSMs used in US-approved APIs are sole sourced from India
- 42% of KSMs used in US-approved APIs are sourced from multiple countries, including 314 KSMs for which the United States is one of the manufacturing countries.
- 1% of KSMs used in US-approved APIs are sole sourced from countries other than India or China. This includes a disproportionately small share from the United States, with only 4 KSMs exclusively produced domestically.
Figure #2: 17% of US-approved APIs rely on a single country for all their KSM sourcing.4,5
- 12% of APIs (211) rely on China for all their KSMs
- 5% of APIs (93) rely on India for all their KSMs
- Less than 1% of APIs (10) rely on other countries (Indonesia, Taiwan, EU) for all their KSMs
- 61% of APIs (1,124) source their KSMs from more than one country.
Figure #3: Over 50% of US-approved APIs rely on a single country for at least one KSM6
- China is the sole supplier of at least one KSM for 679 APIs, accounting for 37% of all APIs in the analysis.
- India is the sole supplier of at least one KSM for 402 APIs, accounting for 22% of all APIs in the analysis.
- The EU, US and other regions are sole suppliers of at least one KSM for 44 APIs, accounting for 2% of all APIs in the analysis.
Case in Point: Amoxicillin’s Upstream Dependency
A clear example of upstream dependency is amoxicillin, the second most prescribed oral antibiotic in the US. At first glance, its US supply appears diversified – numerous manufacturers around the world, including India, China, Austria, Spain, Italy, and Singapore produce amoxicillin API and formulate it into finished oral dosage forms in India, Canada, Jordan, Slovenia, Austria, and the US. Some of the intermediate KSMs are made in India and elsewhere. However, its synthesis ultimately depends on four KSMs—each produced almost entirely in China. The most critical, 6-aminopenicillanic acid (6-APA), is also essential for other penicillin-based antibiotics such as Ampicillin, Dicloxacillin, Nafcillin, Oxacillin, and Piperacillin.
As a result, China effectively holds the key to amoxicillin production, and the production of several other essential penicillin-based antibiotics. Any disruption—such as a factory shutdown or export restriction—could quickly cascade through the global supply chain. This case shows that diverse API or FDF manufacturing offers little protection when all depend on the same upstream source. And amoxicillin is not unique – 17% of U.S.-approved APIs rely on a single country for all KSMs.
Innovative and scalable solutions can support greater domestic production of pharmaceutical ingredients.
Policymakers in federal agencies and Congress should take action to address KSM sourcing vulnerabilities. To strengthen Americas medicine supply chain, we should incentivize geographically diverse manufacturing through onshoring and friend-shoring and modernize procurement practices to prioritize reliability and resilience alongside cost.
Bringing more production of essential medicines and ingredients to America and its allies requires more than just mapping key ingredients. New approaches like alternate synthesis pathways and innovative chemical processes, as well as advanced continuous flow manufacturing, can help make production economically viable at scale. These approaches strengthen rapid response capabilities, reduce supply chain vulnerabilities, and enhance our ability to safeguard public health and national security.
The USP Medicine Supply Map shows that geographic concentration of pharmaceutical manufacturing anywhere in the world – including within the United States – increases the risk for drug shortages. Promoting geographic diversity of the manufacturing base of U.S. drug products can help to reduce supply chain vulnerabilities.
Methodology
USP’s manufacturing scientists identified all KSMs likely used in the commercial production of all U.S.-approved APIs. Using USP proprietary and public trade data, USP’s data scientists applied natural language processing and other data curation techniques to build a comprehensive KSM module linking KSM supply, purchasing, and trade flows from KSMs to APIs across more than 22 countries, including major pharmaceutical and chemical manufacturing countries such as India, China, U.S., and Europe. While some countries (e.g., Japan) do not report trade data directly, their activity is captured through partner records. Trade volumes exclude intra-country transactions, such as KSMs converted to APIs within the same country.
APIs included in USP’s analysis
For more analysis of KSM supply chain concentration, see the full report here.
1 KSM counts are based on the subset of US-approved APIs with commercially available KSMs. USP was able to map 78% of APIs to at least one KSM source (see Figure 3).
2 In the current context, sole-sourcing from a single country refers to single-country sourcing; there may be multiple KSM suppliers within the country.
3 KSM counts are based on U.S.-approved APIs with commercially available KSMs; see the methodology section for API categorization details.
4 Each API may have multiple KSMs, and alternative synthesis routes mean not all are essential for its manufacture.
5 APIs with no identified KSMs include Natural APIs (directly extracted form plants or made through fermentation processes) and APIs with no commercial KSMs (made in-house). For additional details, see the Methodology section.
6 Country totals exceed 934—the number of APIs with at least one KSM solely sourced from a single country—because some APIs have multiple KSMs solely sourced from different countries, resulting in duplicates. Percentages in parentheses show each country’s share of the 1,839 APIs analyzed.
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