Generic drug mfg leaving U.S

Investment Analysis Clubs Macro Economic Trends and Risks
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The Covid epidemic made Americans realize how vulnerable we are when essential goods are manufactured overseas. I’m sure we would all feel more secure if generic drugs were manufactured in the U.S. But that’s not profitable.

https://www.nytimes.com/2025/11/04/health/generic-drug-manufacturing-trump.html

This Closed Factory Shows How Hard Reviving Drug Manufacturing Will Be

President Trump wants pharmaceutical production to return to the United States. A shuttered factory in Louisiana shows how hard that will be for generic medicines.

By Rebecca Robbins, The New York Times, Nov. 4, 2025

…

President Trump’s drug-manufacturing renaissance in America is largely leaving out the production of generic medicines, which account for 90 percent of Americans’ prescriptions….

U.S. production of pharmaceuticals had peaked, by one measure, in 2006.

States passed a series of clean air and clean water laws that, along with rising U.S. labor costs, helped drive drug manufacturing out of the United States. Around that time, a wave of top-selling medicines were losing patent protection, and overseas factories, particularly in India, were jumping at the opportunity to make generic versions.

The lower overseas production costs provided many foreign generic drugmakers with an advantage over their American counterparts….

The average cost of each U.S. employee can be 10 or more times as high as each Indian worker. Today, India produces about half of the generic drugs that Americans take…

Drug manufacturing is a multistage process, managed by factories in different parts of the world. Raw materials are used to produce active ingredients, which are in turn used by factories to formulate the final product.

The number of U.S. plants handling that stage in the generic drugmaking process has fallen by 38 percent since 2013….

Sandoz, one of the biggest generic drugmakers,recently said it had no plans to manufacture in the United States. “You sell a packet of antibiotics more cheaply than a packet of M&M’s,” the company’s chief executive, Richard Saynor, told The Wall Street Journal. “That’s offensive, and we lose money doing that.”… [end quote]

The entire U.S. chemical industry, including pharmaceutical manufacturing, was driven out of the country by environmental protection laws that mandated expensive treatment of chemical waste. I’m not saying the regulations were wrong. But the reality is that companies moved their manufacturing to India and China which have large, cheap labor forces and no environmental regulations.

Generic drug manufacturing is declining in the U.S. I’m actually rather surprised there are as many factories still operating as there are.

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Wendy

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What we’re saying is we want cheap drugs (or anything) even if that ruins the water and air of OTHER PEOPLE.

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That’s true in semiconductors for sure. I used to work in that industry.

But, more generally, I think it would behoove us to subsidize some manufacturing of critical materials domestically. For example, N95 masks. We didn’t make hardly any. And places like China and Korea, who did make them, were hoarding them for themselves during the pandemic. So doctors on the “front lines” were having to reuse N95s because they couldn’t get replacements.

Medical supplies and pharmaceuticals, military parts of various types (including semiconductors), and numerous other critical products need to have domestic sources so that if there is another plague, or a war (where supply lines to other countries could be compromised), or other calamity, we can still get what we need. “Too expensive” is not a good reason not to do it. It’s a lot more expensive -in many ways- if we need them and can’t get them.

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Not so. 3M makes/made plenty and we had warehouses full in 2019. Then a viral disease (covid-19) spread in China, and we shipped them almost all we had. Then the virus spread and we were short on masks :frowning:

DB2

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Can you provide a link? A quick search turned up “several companies sprang up” when the pandemic hit, implying that there wasn’t a lot of domestic production. The article went on to say that in 2021, with the pandemic waning, many of those companies were in financial distress because demand had dropped. But I didn’t find anything that says what you assert.

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While I don’t disagree with the overall thrust of your argument, the entire U.S. chemical industry has most certainly not been driven out of the country. The U.S. Chemical Council estimates that the chemical industry accounts for $164 billion of U.S. exports- about 10% of all U.S. exports. There are huge chemical plants all over the U.S.- I’ve personally been to several, including in Michigan, Louisiana and Texas.

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Unfortunately, The Fool trashed all of their “legacy” boards, and the one on pandemics is now amongst the missing. I posted on this back in 2020; I’ll see if I can find a reference now.

DB2

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Here’s some links from 2020…

According to official data, China imported 56 million respirators and masks in the first week after the January lockdown of the city of Wuhan where the coronavirus emerged…Global companies and charities donated, too. Honeywell provided 500,000 N95 respirator masks, and 3M donated a million of them.

U.S. sent millions of face masks to China early this year, ignoring pandemic warning signs
https://www.washingtonpost.com/health/us-sent-millions-of-face-masks-to-china-early-this-year-ignoring-pandemic-warning-signs/2020/04/18/aaccf54a-7ff5-11ea-8013-1b6da0e4a2b7_story.html
In those two months [January and February, 2020] the value of protective masks and related items exported from the United States to China grew more than 1,000 percent compared with the same time last year — from $1.4 million to about $17.6 million, according to a Post analysis of customs categories which, according to research by Public Citizen, contain key PPE. Similarly, shipments of ventilators and protective garments jumped by triple digits.

DB2

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Thank you for your information. As a chemist, I’m glad to hear that there are still jobs in chemistry in the U.S.

I remember the closing of many chemical and pharmaceutical plants in northern NJ during the 1980-82 recession when I was working there.

Wendy

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Have a rec for finding it. Thanks.

So we need to have domestic manufacture, AND store it for emergencies. Well, those things that can be stored. Semiconductors don’t wear-out as much as become obsolete. Though the military will stick with tech that has been through the rigors of mil-std testing for as long as possible.

We also store cheese, but that’s a different dynamic (they were trying to prop-up dairy farmers). Same idea, though. Have domestic production on-hand whenever it is needed. “Just in time” (JIT) doesn’t work in a crisis.

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Recall that once Puerto Rico was a major drug manufacturing site. That was due to favorable tax incentives. Then Congress let the incentives expire. Suitable incentives can help. If Congress gets its act together.

Manufacture of active ingredients is extremely competitive. When GD Searle got Nutrasweet approved, dozens of companies developed processes for aspartame. Of course the low cost producer got the business. Everyone else lost their investment. This happens all the time.

Very difficult to justify investing in new capacity. Fully depreciated plant will always win. Low cost labor and weaker environmental laws are clear advantages. Tariffs on imports can help. But will they be effective? And be there for years?

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