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Black Swan Supply Chain: US Dependence on China for Pharma, Medical Supplies May Lead to Severe Interruptions

Workers produce face masks at a factory in Nantong in China's eastern Jiangsu province on Jan. 27, 2020, to support the supply of medical materials during a virus outbreak that began in Wuhan. PHOTO: ABC/Str/AFP/Getty

Even before a supply line interruption and lockdowns in China, hospitals and doctors nationwide in the U.S. are facing shortages of crucial lifesaving drugs, with 116 drugs currently running low, according to the Food and Drug Administration (FDA).

For example, heperin, which is used as blood thinner used during cardiac surgery, is made from pig intestines. The ingredient source for most of this drug is from China, and 70% of China’s pigs have been destroyed by swine flu.

China is the largest and only global supplier for the active ingredients in many vital medications. Active ingredients for medicines that treat breast cancer and lung cancer, for example, and the antibiotic Vancomycin, which is a last resort antibiotic for some types of antimicrobial resistant infections. They’re made almost exclusively in China.

China is not only the dominant general global supplier of pharmaceuticals, but it’s also the largest supplier of medical devices and parts for the U.S. These include items like MRI equipment, surgical gowns and equipment that measures oxygen levels in the blood.

Wuhan, the epicenter of the coronavirus outbreak, is a significant player in the biotechnology and pharmaceutical industry, with multiple pharmaceutical companies located in the city. What a coinkydink.

Drug shortages were increasing and lasting longer even before the outbreak, according to an FDA report of the 163 drugs that were running low between 2013 and 2017, more than 62 percent were due to manufacturing or product quality problems. Fifty-six percent of U.S. hospitals reported delays or changes to patient care due to drug shortages during between 2015 and 2017, according to a survey cited by the FDA.

In a market the FDA calls “broken,” drug manufacturers have little incentive to produce older drugs that cost less, leaving only a few companies supplying certain drugs. These are Chinese. The last U.S. penicillin plant closed in 2004.

It could take years to redevelop the necessary infrastructure to reestablish U.S. manufacturing capacities and obtain required FDA licencing necessary to overcome the loss of resources from Chinese suppliers.

Amplifying the issue is the prevalence of bottom-line-focused JIT (just in time) inventory systems that provide little or no room for production curtailments or China First policies during a worldwide pandemic. This may happen by force majaere from China’s own national emergency needs to treat millions in the epidemic.

China will face decisions whether to prohibit the export of pharmaceuticals, medical devices and other vital medical components in order to treat or protect its own people. Such scenarios would be the logical outcome of an escalating situation. In the 2009 H1N1 pandemic response, for example, the U.S. was pushed to the back of the queue for vaccine deliveries even though it had existing contracts with a major vaccine manufacturer located in another country.

Bob Woodward’s book, “Fear: Trump in the White House,” pointed out that Gary Cohn, then chief economic adviser to President Trump, argued against a trade war with China by invoking a Department of Commerce study that found that 97 percent of all antibiotics in the United States came from China.

“If you’re the Chinese and you want to really just destroy us, just stop sending us antibiotics,” Cohn reportedly said.

Cohn’s national security warning was ignored and his tenure in the Trojan Horse Trump administration was short lived.

Cohn exaggerated a little, as actually 80 percent of the active pharmaceutical ingredients (APIs) used to make drugs in the United States are said to come from China.

Many Indian pharmaceutical firms are leading API manufacturers, but India depends on China for sourcing nearly three quarters of APIs in generic drug formulations. In fact, epicenter Hubei province accounts for 50-60% of API imported into India. The Modi government published a list of 57 medicines that are likely to go out of stock following a shutdown.


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Even among the drugs that are being imported, there are problems. In the summer of 2018, for example, one of China’s largest domestic vaccine makers sold to the U.S. at least 250,000 substandard doses of vaccine for diphtheria, tetanus and whooping cough. It’s the latest in a slew of scandals caused by poor quality drug products made in China over the last decade.

And now the FDA has pulled its inspectors out of China because of the spreading epidemic. By law U.S. supplies must come from FDA-approved and inspected manufacturers. Even before the coronavirus outbreak, the FDA had told Congress it lacks the staffing needed for oversight in China. It said its work is also hampered by language barriers and its limited ability to conduct surprise inspections there.

Congresswoman Anna Eshoo (D-Calif.), who serves as chairwoman of the House Energy and Commerce Health Subcommittee, said Thursday evening that China’s control of the global supply of many pharmaceutical ingredients is keeping her up at night. She complained she’s not getting answers from U.S. officials on what overseas factories may be shut down amid quarantines.

“We have every reason to worry because we don’t know. Have any of the agencies on behalf of the administration done an inventory?” Eshoo said. “I think they don’t know.”

Even the Pollyanna spinmeister, White House economic adviser Larry Kudlow confirmed in 2020 that the coronavirus could lead to a drop in exports and production in China, particularly in the pharmaceutical sector. And today 40% of China’s GDP is in lockdown.

16 Comments on Black Swan Supply Chain: US Dependence on China for Pharma, Medical Supplies May Lead to Severe Interruptions

  1. Winter Watch is always on the cutting edge. This brings the seriousness of the Corona virus outbreak to another level, even if a single American is not infected with the virus.

  2. Russ, love the site and content. But…I am pretty dense and optimistic or as you say polllyanna-ish. I tend to put my faith in god and not these SOB Globalist leaders from the cult. Having said that, since you are great at pointing out the NWUO and things like that, and exposing sickness in society and the like, can you lead me to any good reading on what we can do about it in the short term and long term? Is there any hope for the average Joe’s family in the next 50 years. Is technology going to save us or destroy us? I believe it is the latter. Need some silver linings ya know. Chow

  3. Funny how the federal government, and all its associated (((captured))) bureaus-departments-administrations, such as the FDA, consistently talk out of their lying asses… The FDA supposedly vigorously regulates food products from China, but it’s fine with China making and importing most pharmaceutical drugs that Americans ingest daily- I guess we’ll just have to apply Hanlon’s razor to this apparent conundrum! Personally I don’t use any medicine that was invented in the past 40 year and can’t be bought over the counter…I avoid pharmaceuticals entirel like the plague for obvious reasons and I expect to be around for many years. Funny how Americans consume the majority (or at least half) of the worlds pharmaceuticals, yet none are made here…I thought the US government was all about industry, and for an industry like this, that supposedly concerns Americans’ health, it’s unconscionable that the lion’s share of pharmaceuticals are made in China or other countries with questionable health/industrial/environmental safety standards. Textbook crime syndicate behavior.

    • Funny how the federal government, …

      Your comment is fine per se, and it is true that politicians are responsible for ‘free trade’ policies (of course it’s not ‘free’, some people pay for it) that made it possible for so much manufacturing to be moved overseas — but you should have also mentioned the venal, mercenary leadership of companies that move this vital activity abroad in order to save money on their costs (i.e. it’s not so they can charge less for their products), which generally boosts profits and stock prices.

  4. It’s the time to bring back the doctor that only gets paid when you are healed. The days when the doctor comes to your house with a black bag full of God given natural remedies. The remedies that actually work and don’t cause horrific side effects and further destruction to the body. Time to get back to nature. Nature that cannot be patented and profited from. Why do you think government and corporations have gone out of their way to discredit? Because anyone can grow and anyone can be cured for next to nothing! There’s no big business in weeds that heal. For every ailment, God has given us the cure growing at our feet, look around, open your eyes and mind.

      • Wake up friend! I am a single mom of 3 kids and have no job. The natural cure is way cheaper than any doctor. And if you can’t afford them, then you’re being ripped off. Buy a couple books and stop killing the weeds in your grass and you’ll have a great start at far cheaper than the legalized murderers charge. I’ll say it once again, God has given us every cure we’ll ever need for every ailment out there. Don’t be scared, if you are, they have you right where you deserve to be. Free your mind.

  5. All you need to make antibiotics is rye and a banana. This China lockdown is the blessing we’ve been waiting for. Media wants to complain if ya can and complain if ya can’t and the alt media is no different

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