By the PharmaTradz BD Team. Published November 2026.
A finished medicine is only as secure as the least visible chemical in its supply chain. Most buyers check the manufacturer of the tablets and, if they are careful, the maker of the active ingredient. Far fewer look one or two steps further back, at the key starting materials, intermediates, solvents and excipients. That is where many of today's supply risks sit.
This guide is for procurement, supply chain and business development teams at pharmaceutical companies, distributors and tender suppliers. It explains where the concentration risk lies, how new rules in Europe and the United States are changing the picture, and what a practical sourcing strategy for critical materials looks like in 2026.
Where the risk really sits
The headline numbers are striking. In 2025 the US Pharmacopeia mapped the key starting materials behind every API approved for the US market and found that:
- 58% of those starting materials come from a single country: 41% are made in China alone and 16% in India;
- half of US-approved APIs depend on a single country for at least one starting material;
- for 17% of APIs, every starting material comes from one country.
USP gave amoxicillin as an example: its synthesis depends on four starting materials, each made almost entirely in one country. Analysts have also pointed out that reagents, solvents and catalysts are often left out of vulnerability studies, even though a plant cannot run without them.
The lesson for buyers is simple. Two API suppliers in two countries are not real diversification if both buy the same starting material from the same region. Resilience has to be checked at the level of the chemistry, not the invoice.
What is changing in 2026
European Union. In May 2026 the European Parliament and Council reached a provisional political agreement on the Critical Medicines Act. As agreed, public buyers will have to apply resilience criteria when purchasing critical medicines, and may reward suppliers in proportion to how much of the medicine and its active ingredients is made in the EU where supply depends heavily on outside countries. Collaborative procurement between member states becomes easier, and a Union list of critical medicines is being assessed. Formal adoption and publication were expected towards the end of 2026, with application dates still to be confirmed. For suppliers to European tenders, where the API and starting materials are made will increasingly affect the score.
United States. A presidential proclamation under Section 232, effective from 31 July 2026, imposed tariffs of up to 100% on imported patented medicines and their APIs and starting materials, with lower rates for some trading partners and deferrals for companies with US manufacturing plans. Generics, biosimilars and their ingredients were excluded at the time, as were several specialty categories, but the Department of Commerce was asked to advise within a year whether to extend tariffs to generics. Anyone supplying the US market should watch that review closely.
India and others. India's incentive schemes for domestic API and starting-material production have added capacity, but public reports in 2026 still described heavy reliance on imported inputs for many molecules. Several other countries are running similar programmes. The direction everywhere is the same: more questions about origin, and more value placed on traceable, diversified supply.
A practical sourcing strategy for critical materials
- Map one level deeper. For your top products by value and by patient impact, ask each API supplier which starting materials they use and where they come from. A short questionnaire, repeated every year, is enough to see the concentration.
- Qualify a second source before you need it. Adding an API source to a registered product takes a variation, stability data and often months of regulatory review. Start that work while supply is normal, not during a shortage.
- Prefer documented sources. A CEP, an open-part DMF, a recent GMP inspection by a recognised authority and a clear change-control commitment are worth paying for. They protect your registrations.
- Look at the whole bill of materials. Critical excipients, functional coatings, primary packaging, glass vials and stoppers can stop a line as surely as an API.
- Write resilience into contracts. Notification of starting-material changes, safety stock commitments, allocation rules in shortages and price-adjustment formulas tied to input costs.
- Hold strategic stock for the riskiest items. Three to six months of API or intermediates for single-source products is often cheaper than one lost tender.
- Track regulation as a sourcing input. EU resilience criteria and US tariff reviews will change the economics of where materials are made. Build that into your supplier scoring.
How PharmaTradz helps
We work with manufacturers of APIs, intermediates and finished products across Europe, Asia and the Americas. When you send us a requirement we ask for the documents that matter (GMP status, CEP or DMF, starting-material origin where available) and compare suppliers on resilience as well as price.
- Need an alternative API or intermediate source? Smart drug and API sourcing.
- Checking a supplier's credentials before you qualify them? Verify a supplier.
- Already facing a gap in supply? Our drug shortage radar shows current shortages by country, and you can send your requirement for a matched quote.
The bottom line
Supply security in 2026 is decided upstream. Buyers who know where their starting materials come from, qualify second sources early and write resilience into contracts will spend less time firefighting and will score better as European and US rules put more weight on origin.
This article is general business information, not legal, trade or regulatory advice. Rules and tariff measures change; check the current position with the relevant authority or a qualified adviser.
Frequently Asked Questions(FAQs)
What is a key starting material?
A raw material, intermediate or API precursor that is built into the structure of the active ingredient. Under GMP guidance, production steps from the starting material onward must follow API GMP, so its choice and source matter for regulators.
Why are critical materials a supply risk?
Production of many starting materials is concentrated in one or two countries. A disruption there can stop several API makers at once, even if they are in different countries.
What is the EU Critical Medicines Act?
An EU law agreed provisionally in May 2026 to improve the security of supply of critical medicines. It brings resilience criteria into public procurement, supports strategic manufacturing projects and makes joint purchasing between member states easier.
Do the 2026 US pharmaceutical tariffs apply to generics?
At the time of the July 2026 measures, generics, biosimilars and their ingredients were excluded, while patented medicines and their APIs were covered. The US Department of Commerce was asked to review whether to extend tariffs to generics within a year.
How do I add a second API source?
Qualify the new supplier's quality and documentation, run comparability and stability work, and file a variation with each regulator where the product is registered. Plan for several months, so start before supply becomes tight.
