News and Insights
Coronavirus: Strategic Questions Underlying the Outbreak
News of the coronavirus has been front and center since word about it became known. While the focus has understandably been on its public health impact, coronavirus also raises important strategic business considerations.
Coronavirus broke out in China. Since China is the world’s largest supplier of APIs (active pharmaceutical ingredients) including penicillin, statins, and even vitamins, the outbreak sparked renewed fears of global supply chain disruption. According to some reports, China accounts for approximately 40% of global API production, surpassing India as the largest API exporter, and the Chinese market is growing at approximately 14% per year. The World Health Organization and the Food and Drug Administration have pointed to China’s growing position in the sector. In October 2019, the FDA noted that only 28% (510) of the manufacturing facilities making APIs for all regulated drugs to supply the U.S. market are actually located in this country. The vast majority of these manufacturers — 72% — are located overseas including India; 13% (230) were in China. On the surface this could look like balanced diversification, but the registered facilities making APIs in China more than doubled between 2010 and 2019. The breakdown for the WHO list of ‘essential medicines’ points to a potentially disturbing trend.
This article was originally published on Forbes.com.