Wednesday, November 6, 2019

There are more than 20 times as many chemical manufacturers in China as the US

Via a very interesting article in The New York Times Magazine on DEA efforts to stem the fentanyl trade, this remarkable description of the Chinese chemical industry: 
According to the State Department, China has between 160,000 and 400,000 chemical companies operating legally, illegally or somewhere in between — an expansive estimate that reflects both the vastness of the industry and the scarcity of the information available. Some of these facilities manufacture tons of chemicals every week, or more than a million pills per day. In 2016, the industry made up 3 percent of China’s national economy, with over $100 billion in profits annually. Most of these companies are members of the vast pharmaceutical underclass, pumping out huge quantities of inexpensive generic drugs and pharmaceutical ingredients. It’s a low-cost, low-profit business, but the barriers to entry are minimal, and the market is immense: The basic pharmaceutical ingredients that China produces are needed by more advanced drug companies everywhere in the world — including the United States — for synthesis into more complex and profitable medicines. 
The agency responsible for overseeing production of drugs and detecting malfeasance in China is understaffed and overwhelmed: As of 2017, there were around 2,000 inspectors at the agency, and they conducted a total of only 751 inspections that year, a minuscule figure compared with the enormousness of the industry. In the United States, law enforcement and prosecutors have the tools to react quickly to the rise of new copycat drugs that could be used for illicit purposes. Under the Controlled Substance Analogue Enforcement Act, passed in 1986, any new compound that is “substantially similar” to an already banned, or scheduled, drug can be treated as if it were chemically identical. But chemicals banned in the United States often remain legal in China, where the process for controlling chemicals is slow and cumbersome, especially for substances like fentanyl that exist in the purgatory between legitimate pharmaceuticals and illicit drugs.
By comparison, an EPA web page last updated in 2016 indicates there are 13,500 chemical manufacturing facilities, with 9000 companies that own them. That's quite a difference. 


  1. This post brought to mind the 1984 music video of Glenn Frey's  Smuggler's Blues

    The lyrics are here

    Relevant lines are

    "It's  the lure of easy money, it's got a very strong appeal"

    "You ask any D.E.A. man, he'll say there's nothing we can do"

  2. This statement reads like a report about a US government agency: As of 2017, there were around 2,000 inspectors at the agency, and they conducted a total of only 751 inspections that year.

    What were the other 1250 inspectors doing that ENTIRE year?

    1. Just when I thought China was communist in name only and more serious about promoting business growth than the US, they go and do something that sounds like 1980s Soviet Union bureaucracy!

    2. Anon--I've seen both FDA and EPA inspectors in the middle of multi-site inspection weeks; that's a very small sample, but I'd be willing to bet a few bucks that, for both agencies, #/inspections >>> #/inspectors.

  3. Industrial policy would be nice to have, there is no inherent reason why the US shouldn't have a functional supply chain in fine chemicals when China manages just fine.


looks like Blogger doesn't work with anonymous comments from Chrome browsers at the moment - works in Microsoft Edge, or from Chrome with a Blogger account - sorry! CJ 3/21/20