Why does China control the pharmaceutical supply chain while India struggles to catch up?

China dominates global pharmaceutical raw materials because it built massive, low-cost manufacturing infrastructure over decades starting from the 1950s. The country now controls 45% of active pharmaceutical ingredient filings with US regulators and serves as the exclusive supplier of chemicals used in nearly 700 crucial medicines. China produces 90-95% of ibuprofen imports for the US and EU, 70% of global paracetamol supply, and over 80% of critical antibiotics like azithromycin. This dominance emerged through sustained state support, integrated industrial parks with utilities and waste management, and economies of scale that make replicating these supply chains 50% more expensive elsewhere.

India relies on China for 70-80% of its active pharmaceutical ingredients despite being the world’s largest generic medicine manufacturer. This dependence creates vulnerabilities because Indian pharmaceutical exports depend on imported raw materials from the same country. The reliance extends beyond finished APIs to key starting materials, so India’s 19% share of US regulatory filings masks deeper dependency on Chinese upstream inputs. The COVID-19 pandemic exposed these risks when supply disruptions from China delayed medicine production and threatened India’s export commitments. 

India launched initiatives to reduce this dependency through the Production-Linked Incentive scheme with ₹15,000 crore allocated for domestic API manufacturing and three Bulk Drug Parks in Himachal Pradesh, Gujarat, and Andhra Pradesh. Early results show investments exceeding targets and import savings of over ₹1,300 crore by March 2025. The challenge remains that China’s technological edge, supply chain integration, and control over upstream resources continue providing strategic advantages.