The coronavirus outbreak has exposed the United States’ dangerous dependence on China for pharmaceutical as well as medical supplies, including an estimated 97 percent of all antibiotics as well as 80 percent of the active pharmaceutical ingredients needed to produce drugs inside the United States.
The economic repercussions of the coronavirus reveal the dangers of allowing one country to have a near monopoly on global manufacturing, David Dayen explains in an article at the American Prospect:
China is usually a source of not only finished goods, nevertheless also of input parts as well as raw materials. A substantial number of the materials needed for defense as well as electronic systems come by China, as well as of which nation is usually “the single or sole supplier for several specialty chemicals,” according to a recent Defense Department report. Rare earth minerals, which are critical to electronics, are largely mined in China. As a result, Chinese disruptions don’t just hit Chinese manufacturing, they hit everyone’s. Automakers have already had to slow or shut down factories globally due to supply shortages.
Perhaps the biggest concern is usually over medical supplies. China produces as well as exports a large amount of pharmaceuticals to the U.S., including 97 percent of all antibiotics as well as 80 percent of the active ingredients used to make drugs here. Penicillin, ibuprofen, as well as aspirin largely come by China. Last month, the medical supply firm Cardinal Health recalled 2.9 million surgical gowns “cross contaminated” at a plant in China; the blood pressure drug valsartan also saw shortages recently, thanks to tainted active ingredients at one Chinese plant. The combination of supply chain disruptions as well as increased demand at hospitals if coronavirus spreads to the U.S. could prove devastating.
In a dark irony, most of the entire world’s face masks—right now ubiquitous in China as a precaution—are made in China as well as Taiwan, as well as even for those made elsewhere, some component parts are Chinese-sourced. Shortages have led China to declare the masks a “strategic resource,” reserving them for medical workers. U.S. hospitals are “critically low” on respiratory masks, according to medical-supply middlemen. Lack of protective gear could increase vulnerability to the virus, as well as the one place on earth suffering by production shutdowns is usually the one place where most of the protective gear originates [emphasis added].
In testimony yesterday before the Senate Committee on Homeland Security as well as Governmental Affairs, Scott Gottlieb, a physician as well as the former Food as well as Drug Administration commissioner inside the Trump administration, explained in detail the extent of the U.S. pharmaceutical industry’s dependence on China:
About 40 percent of generic drugs sold inside the U.S. have only just one producer. A significant supply chain disruption could cause shortages for some of many of these products.
Last year, manufacturing of intermediate or finished goods in China, as well as pharmaceutical source material, accounted for 95 percent of U.S. imports of ibuprofen, 91 percent of U.S. imports of hydrocortisone, 70 percent of U.S. imports of acetaminophen, 40 to 45 percent of U.S. imports of penicillin, as well as 40 percent of U.S. imports of heparin, according to the Commerce Department. In total, 80 percent of the U.S. supply of antibiotics are made in China.
While much of the fill finishing work (the actual formulation of finished drug capsules as well as tablets) is usually done outside China (as well as often in India) the starting as well as intermediate chemicals are often sourced in China. Moreover, the U.S. generic drug industry can no longer produce certain critical medicines such as penicillin as well as doxycycline without these chemical components.
According to a report by the US-China Economic as well as Security Review Commission, China’s chemical industry, which accounts for 40 percent of global chemical industry revenue, provides a large number of ingredients for drug products. of which’s these source materials — where in many cases China is usually the exclusive source of the chemical ingredients used for the manufacture of a drug product — of which create choke points inside the global supply chain for critical medicines.
Moreover, when of which comes to starting material for the manufacture of pharmaceutical ingredients, a lot of This specific production is usually centered in China’s Hubei Provence, the epicenter of coronavirus. Most drug makers have a one to three-months of inventory of drug ingredients on hand. nevertheless these supplies are already being drawn down. Among big [active pharmaceutical ingredient] makers in Wuhan are Wuhan Shiji Pharmaceutical, Chemwerth, Hubei Biocause, Wuhan Calmland Pharmaceuticals. [emphasis added]
Gottlieb notes of which “80 percent of the U.S. supply of antibiotics are made in China.” The sourcing of This specific estimate is usually explained in greater detail in section three of the U.S.-China Economic as well as Security Review Commission’s 2019 report to Congress, titled “ Growing U.S. Reliance on China’s Biotech as well as Pharmaceutical Products.”
The report notes of which China is usually “the entire world’s largest producer of active pharmaceutical ingredients (APIs). The United States is usually heavily dependent on drugs of which are either sourced by China or include APIs sourced by China.” The report further explains of which although India is usually the entire world’s leading supplier of generic drugs, India gets 80 percent of its active pharmaceutical ingredients directly by China. The United States also imports 80 percent of its APIs by overseas (primarily by India as well as China) as well as “a substantial portion” of its generic drugs “either directly by China or by third countries like India of which use APIs sourced by China.”
In some other words, almost all pharmaceutical roads lead to China.
Furthermore, the report notes of which China’s dominance of the chemical industry as well as global manufacturing of active pharmaceutical ingredients means of which “the entire world is usually becoming increasingly dependent on China as the single source for life-saving drugs.”
“The U.S. generic drug industry can no longer produce certain critical medicines such as penicillin as well as doxycycline, as well as the APIs needed to make these antibiotics are sourced by China,” the report states.
China achieved This specific dominance inside the pharmaceutical industry by the same methods of which employed to dominate the steel industry – through anti-competitive trade practices of which dumped cheap state-subsidized products on foreign markets to drive competitors out of business.
The report states:
Rosemary Gibson, senior advisor at the Hastings Center as well as author of China RX, noted in her testimony before the Commission of which the United States is usually losing its ability to produce generic drugs because Chinese drug companies dumped low-cost products into the global market, which in turn pushed U.S., European, as well as Indian producers out of the generic drug manufacturing business. According to Ms. Gibson, China is usually seeking to disrupt, dominate, as well as displace U.S. pharmaceutical as well as some other medical companies, as well as in doing so limit the United States’ ability to produce its own medicines, including critical antibiotics such as penicillin as well as even generic aspirin. She believes the United States could see its generic drug industry made uncompetitive within 5 to ten years due to the Chinese government’s policies (including subsidies as well as export incentives) of which allow Chinese pharmaceutical firms to undercut prices as well as drive U.S. firms out of business. [emphasis added]
Ironically, China’s success in monopolizing the U.S. drug market with these anti-competitive trade practices was reportedly cited by President Trump’s former economic adviser Gary Cohn as an argument against Trump’s efforts to fight back against China’s trade violations.
In his book Fear: Trump inside the White House, Bob Woodward describes a heated discussion among Trump administration officials about the repercussions of a trade war with China. Cohn, who disagreed with the president’s decision to impose tariff’s on Beijing, reportedly invoked a Commerce Department study showing of which 97 percent of all U.S. antibiotics come by China. “‘If you’re the Chinese as well as you want to truly just destroy us, just stop sending us antibiotics,’ he said.”
Globalist critics like Cohn of Trump’s trade policies “fretted of which turbulence by the Trump administration’s tariffs would likely have catastrophic results on the global economy,” Curtis Ellis wrote last week in an op-ed for Breitbart News. These critics were proven wrong.
However, the virus itself will cause economic disruptions because of which “has exposed the frailty of global supply chains as well as the fallacy of the management theory calling for intercontinental supply chains as well as just-in-time inventory management,” Ellis writes.
Or, to put of which another way, the tariffs did not hurt the U.S. economy, nevertheless the current virus outbreak in China could due to the very problem of which the tariffs were enacted, in part, to address. In This specific sense, the virus has vindicated the Trump’s administration’s tough trade stance as well as affirmed the necessity of moving the entire world’s supply chains out of China. If anything, Trump’s tariffs may have actually made the U.S. economy somewhat more resilient because they encouraged companies to begin the process of moving production out of China.
nevertheless This specific vindication will be of little consolation to Trump if the virus’s ripple effects hurt the economy during an election year. The political repercussions could be significant for a president who has touted the strong economy as a major selling point for his re-election.
Economists are already expecting the virus to have a major impact on China’s economy. Breitbart News’s John Carney reports of which HSBC “lowered its estimate for the first quarter growth by an annualized rate of 5.8 percent to 4.1 percent” for China. “The bank’s estimate for full year growth was lowered by half a percentage point by 5.8 percent to 5.3 percent.”
As for the global economic impact, Dayen quotes Washington University in St. Louis professor Panos Kouvelis who estimates $300 to $400 billion in supply chain damage over a period of up to two years.
“of which’s actually manageable as a share of the global economy,” Dayen writes. “nevertheless as brand new cases pop up in Singapore, an important financial hub, as well as as the head of the entire world Health Organization warns of which we could be seeing only the ‘tip of the iceberg,’ those numbers could already be out of date.”
Those numbers may indeed be overly optimistic. In his testimony before the Senate yesterday, Gottlieb warned of the potential for the coronavirus epidemic to become a full pandemic–as well as maybe even endemic–right now of which of which has spread to Singapore, Hong Kong, as well as Japan. “of which could take a brand new position as a more sinister member of the seasonal pathogens of which circulate each year as well as infect humans,” he said, noting of which “the next month is usually critical.”
“We must prepare for the prospect of which the virus evaded our border protections as well as was already introduced into the U.S. in late December or early January — when of which first appears to have become epidemic in China’s Hubei province. Those index cases could have seeded community spread, as well as eventually, outbreaks could emerge in America,” Gottlieb stated.
Whatever the economic impacts of the coronavirus, the current dependence on an authoritarian communist regime for vital necessities is usually an indictment of globalist neoliberal economic policies of which have endangered U.S. national security as well as long-term prosperity.
“[T]he economic threats to locating so much of the global supply chain in one part of the entire world were eminently predictable,” writes Dayen. “Neoliberal dogma about ‘comparative advantage’ as well as a concomitant preference for mass outsourcing put the entire world on a tenuous path.”
There is usually a growing consensus among populists on the right as well as left about the need to address the neoliberal trade as well as economic policies of which gave China a monopoly on the entire world’s supply chains.
Gottlieb urged Congress to empower the Food as well as Drug Administration (FDA) “to look not only at the supply of finished products nevertheless to also identify circumstances where key components may have only just one source across an entire category of products.”
Matt Stoller, author of Goliath: The 100-Year War Between Monopoly Power as well as Democracy, writes of which Gottlieb is usually essentially asking for the FDA “to possess the authority to uncover hidden monopolies.”
“The Federal Trade Commission already has This specific research authority, of which just doesn’t use of which very often,” Stoller explains. “as well as the United States Trade Representative has information on our dependencies on China, because when they threatened tariffs large numbers of companies came to them during a notice as well as comment period whining about how such dependencies would likely hurt their business. So we have some information about the scale of the problem. Just not enough.”
“The strongest reason to address monopolies isn’t because monopolies are unjust, nevertheless because they are dangerous,” Stoller notes. “as well as we may be about to find out just how dangerous they are.”
If nothing else, the coronavirus offers business as well as government leaders another reason to continue the process of decoupling the U.S. economy by China. as well as of which also offers a warning for those who seek to simply relocate production to another developing country in order to exploit cheap labor as well as lax regulations. All of these short-term money-saving decisions come with long-term risk.
“If there’s a silver lining, of which’s of which This specific threat could inspire more diversification of supply chains,” Dayen writes. “The race to the bottom in manufacturing clearly features a cost, as well as countries must learn of which self-preservation demands maintaining some semblance of an industrial base. The U.S.-China trade war did lead to some companies moving their work out of China, nevertheless only to cheaper countries where multinationals will likely conglomerate, to build economies of scale. We know the dangers inherent in of which. Rebuilding domestic manufacturing is usually not just a question of jobs; of which’s a question of safety.”
Rebecca Mansour is usually Senior Editor-at-Large for Breitbart News as well as the host of Breitbart News Tonight on SiriusXM Patriot channel 125, which broadcasts live weeknights by 9:00 p.m. to midnight Eastern (6-9:00 p.m. Pacific). Follow her on Twitter at @RAMansour.