Two-Thirds of API Suppliers Are in Asia: The Structural Problem Europe's Reshoring Plan Faces

Europe is taking significant steps to strengthen its pharmaceutical supply chain through the Critical Medicines Act (CMA), which aims to encourage the regional production of Active Pharmaceutical Ingredients (APIs) and essential medicines. However, one major structural challenge remains: approximately two-thirds of API suppliers for generic medicines are based in Asia, particularly in China and India.

This concentration has developed over decades due to large-scale manufacturing capacity, cost competitiveness, and well-established pharmaceutical ecosystems. While Europe's reshoring initiatives represent an important move toward greater supply security, industry experts believe that shifting a substantial share of API production back to Europe will require significant investment, time, and collaboration across the pharmaceutical sector.

For API manufacturers, procurement professionals, and healthcare companies, understanding these structural realities is essential for building resilient long-term sourcing strategies.

Why Asia Dominates API Manufacturing

China and India have become the world's leading API manufacturing hubs through continuous investment and production expansion.

Key advantages include:

• Large-scale manufacturing infrastructure

• Competitive production costs

• Integrated chemical supply chains

• Skilled pharmaceutical workforce

• Strong export capabilities

• Extensive supplier networks

These factors have made Asia a critical supplier of APIs used in both generic and branded medicines worldwide.

Alongside API production, Asian pharmaceutical manufacturers supply essential excipients and processing chemicals such as Propylene Glycol (USP Grade), Polyethylene Glycol (PEG), Mannitol, Citric Acid, Sorbitol, Glycerin, and Isopropyl Alcohol (IPA). These ingredients play an important role in pharmaceutical formulation and continue to support global medicine manufacturing.

Europe's Reshoring Challenge

The Critical Medicines Act aims to strengthen domestic pharmaceutical manufacturing, but rebuilding API production capacity is a long-term process.

Key challenges include:

• High capital investment requirements

• Lengthy facility construction timelines

• Regulatory approvals

• Higher manufacturing costs

• Workforce development

• Existing dependence on global suppliers

While regional production may increase over time, imported APIs are expected to remain an important part of Europe's pharmaceutical supply chain.

Procurement Considerations

Pharmaceutical procurement teams should balance regional sourcing initiatives with established global supplier relationships.

Important considerations include:

• Supplier diversification

• Long-term API supply agreements

• Regulatory compliance

• Manufacturing quality standards

• Supply chain risk management

• Business continuity planning

A diversified sourcing strategy helps reduce supply chain risks while maintaining procurement flexibility.

Looking Ahead

Europe's pharmaceutical reshoring efforts mark an important step toward improving healthcare resilience, but transforming decades of established global manufacturing patterns will take time. Regional investment, policy support, and industry collaboration are expected to strengthen European API production, while Asia will likely remain a major supplier for the foreseeable future.

For procurement professionals, maintaining a balanced sourcing strategy that combines reliable global suppliers with emerging regional manufacturing opportunities will be essential for ensuring long-term supply security.

Key Takeaways

• Asia currently supplies approximately two-thirds of the world's generic medicine APIs.

• Europe is investing in reshoring pharmaceutical manufacturing through the Critical Medicines Act.

• Building regional API production capacity will require long-term investment and planning.

• Procurement teams should maintain diversified supplier networks.

• A balanced regional and global sourcing strategy supports long-term pharmaceutical resilience.