U.S. Onshoring Debate Exposes API Raw-Material Gap

The U.S. push to reshore pharmaceutical manufacturing is becoming more urgent, but the latest policy discussion shows why the task is far more complicated than simply building more domestic plants. A new analysis from the American Action Forum argues that U.S. onshoring policy remains constrained by a basic problem: the country may want domestic API capacity, but it still lacks enough upstream raw-material, KSM, solvent and reagent infrastructure to support it at scale. The report notes that India remains a major API manufacturing base, while China is the sole supplier of key starting materials used in a significant share of APIs. 

That point matters because the weakest link in pharmaceutical security often sits several steps before the finished drug. Governments can fund finished-dose production, support domestic formulation sites, or encourage API plants, but API production itself depends on a deeper chemical chain. If those inputs still come from a narrow group of offshore suppliers, the supply chain remains exposed. The strategic issue is no longer only “where are medicines made,” but “where does the chemistry begin.”

For generic medicines, this is especially sensitive. Low-margin products cannot easily absorb expensive domestic sourcing without price or subsidy support. The U.S. may therefore face a difficult trade-off between supply security and affordability. A faster reshoring push could strengthen resilience but also increase costs unless upstream chemistry capacity is built in parallel.