International Supply Chains and the Growing Risk of Drug Shortages in 2025

When you pick up your prescription at the pharmacy, you probably don’t think about where the medicine came from. But more than 80% of the active ingredients in U.S. drugs are made overseas-mostly in China and India. That’s not just a detail; it’s a vulnerability that’s now causing real shortages of life-saving medications. In 2024, the FDA reported over 300 drug shortages, many tied to disruptions in foreign manufacturing. And with global supply chains still stretched thin, this isn’t going away anytime soon.

How Did We Get Here?

The shift to foreign manufacturing didn’t happen overnight. For decades, pharmaceutical companies chased lower costs. Making active pharmaceutical ingredients (APIs) in China or India cost a fraction of what it did in the U.S. or Europe. Factories there could produce massive volumes, and labor was cheaper. By 2025, 94% of multinational drugmakers rely on foreign suppliers for at least one critical ingredient. It made sense-until it didn’t.

Then came the pandemic. Ports shut down. Shipping delays stretched from weeks to months. A single factory in China that made a key antibiotic ingredient went offline for 120 days in 2024. The result? Hospitals rationed doses. Patients waited. Some couldn’t get their medication at all.

It wasn’t just COVID. Trade wars, tariffs, and geopolitical tensions added pressure. The U.S. added 12 new tariff categories between 2024 and 2025, hitting $340 billion in imported goods-including pharmaceuticals. Companies that didn’t plan for this saw their costs jump 200-300% overnight. Many passed those costs to consumers. Others cut back production.

Why Foreign Manufacturing Is Still the Norm

Even with all the risks, most drugmakers haven’t moved production back home. Why? Because it’s still cheaper overseas. Manufacturing wages in the U.S. are 4.8 times higher than in China for the same type of work. Building a new API plant in the U.S. costs $500 million or more. In India, it’s under $100 million. That’s not just a difference-it’s a dealbreaker for profit margins.

There’s also expertise. China and India have spent 30 years perfecting the scale and precision needed for pharmaceutical manufacturing. They’ve built supply chains for raw materials, chemicals, and packaging that no other country can match yet. Even if the U.S. wanted to reshore everything, it would take 18 to 24 months just to get a new facility up and running-and that’s assuming you can find the skilled workers.

And here’s the catch: 33% of companies in 2025 still report being understaffed in global trade and logistics roles. Finding people who understand FDA regulations, international shipping, and customs compliance isn’t easy. So even if you want to bring production home, you can’t always find the team to run it.

What’s Being Done to Fix It?

Companies aren’t sitting still. In 2025, 78% of pharmaceutical firms are using inventory buffers and supplier diversification-up from just 35% in 2020. That means keeping extra stock on hand and working with multiple suppliers across different countries. One Fortune 500 medical device maker cut its drug shortage risk by 90% by shifting key components to Mexico. Transportation costs dropped 30-40%, and lead times shrank from 45 days to 12.

Others are turning to nearshoring. Mexico and Eastern Europe are becoming popular alternatives to China. The U.S.-Mexico-Canada Agreement (USMCA) renegotiation in early 2025 is helping stabilize tariffs between these countries. That’s giving companies more confidence to invest there.

Technology is playing a bigger role too. AI-driven forecasting now helps predict demand spikes and supply gaps before they happen. Digital twins-virtual models of supply chains-are being used to simulate disruptions. One company reduced inventory waste by 22% and improved delivery accuracy to 99.2% using these tools.

Blockchain is also gaining traction. It’s being used to track ingredients from factory to pharmacy, reducing quality disputes by 65%. That’s huge when you’re dealing with sterile injectables or cancer drugs where contamination can be deadly.

The Real Cost of Dependence

The human cost of this dependence is hard to measure, but it’s real. In 2024, a shortage of a common blood pressure medication forced thousands of elderly patients to switch to less effective alternatives. Another shortage of insulin analogs led to rationing in rural clinics. Patients reported skipping doses or using expired vials.

And it’s not just about price. It’s about control. When your medicine comes from halfway across the world, you’re at the mercy of foreign governments, weather events, and political decisions. A flood in India shut down 12 API plants in 2023. A labor strike in China delayed shipments for six weeks in 2024. These aren’t rare events anymore-they’re part of the new normal.

Even small companies are feeling it. Over 90% of global businesses are small or medium-sized. Many don’t have the resources to diversify suppliers or build inventory buffers. They rely on big distributors who, in turn, rely on foreign factories. When those factories slow down, these smaller players get squeezed out first.

What’s Next?

Experts agree: the old model of single-source, low-cost manufacturing is broken. The future is multi-shoring-spreading production across multiple regions so no single disruption can cripple the system. IDC forecasts that by 2025, half of all manufacturers will have adopted this approach. It’s not perfect. It’s more expensive. But it’s more reliable.

Investments in automation and microfactories are also picking up. These small, agile plants can be set up in the U.S. or Europe to make niche drugs quickly. They’re not meant to replace massive overseas factories-they’re meant to fill the gaps when those factories fail.

The government is stepping in too. The FDA has started fast-tracking inspections of foreign suppliers. It’s also offering grants to companies that bring API production back to the U.S. But progress is slow. Building domestic capacity takes years. And without clear, long-term policy, companies won’t risk billions of dollars.

What You Can Do

As a patient, you can’t fix global supply chains. But you can stay informed. Ask your pharmacist: “Is this medication made in the U.S.?” If not, ask if there’s an alternative with a different source. Some generics have multiple manufacturers. Switching might mean avoiding a shortage.

Also, don’t wait until you’re out of medication to refill. Keep a small buffer. If your drug is on the FDA’s shortage list, talk to your doctor early. There may be another option that works just as well.

And if you’re part of a healthcare organization, push for supplier diversity. Don’t rely on one vendor. Build relationships with multiple international and domestic suppliers. Use technology to monitor inventory and lead times in real time.

The truth is, we’re not going to stop importing drugs. We can’t afford to. But we can stop being so fragile. The goal isn’t to bring everything home-it’s to make sure that when something breaks overseas, we have a backup. And that backup needs to be ready before the next crisis hits.

Why This Matters More Than Ever

By 2027, the global pharmaceutical market is expected to hit $1.8 trillion. But if supply chains keep cracking, that growth could stall-or worse, cost lives. Climate change, cyberattacks, and political instability aren’t going away. If we keep treating drug manufacturing like a cost center instead of a public health priority, we’ll keep seeing the same shortages, over and over.

The companies that survive won’t be the ones that cut the deepest. They’ll be the ones that built resilience into their systems. And the patients who get their medicine on time? They’ll be the ones who didn’t wait for the system to fix itself.