The pharmaceutical industry faces unprecedented challenges as quality and compliance issues intensify across global supply chains. Despite the critical importance of pharmaceutical quality to public health, failure incidents have steadily increased—a troubling trend running counter to improvements in other regulated industries. Today, the sector grapples with supply chain disruptions, geopolitical tensions, reshoring mandates, and heightened regulatory enforcement.

The generic drug quality challenge

Research examining quality risks between generic and branded drugs reveals a critical distinction: generic medicines manufactured in non-advanced economies have a reportedly 156% higher rate of serious recalls than branded equivalents from similar locations. This finding carries significant weight given that nearly 90% of US prescriptions are generic drugs, with approximately half manufactured in countries classified as non-advanced by the International Monetary Fund—predominantly India and China.¹

The root causes stem from limitations in knowledge transfer and misaligned market incentives. Generic manufacturers reverse-engineer processes from published information, producing less effective knowledge transfer than original development. Intense cost competition provides limited incentives for quality investment when buyers perceive generics as perfect substitutes.

Recent evidence confirms quality concerns

The 2024-2025 landscape validates these concerns. In April 2025, Glenmark Pharmaceuticals recalled nearly 40 generic medications following an FDA inspection of a facility in Madhya Pradesh, which revealed current good manufacturing practice (cGMP) violations, including cross-contamination failures, inadequate quality control, and gaps in testing method validation.^2,3 This same facility faced multiple 2024 recalls for extended-release potassium chloride, with three reported deaths.³

The FDA’s FY2024 Report on the State of Pharmaceutical Quality found that sites responsible for recalls were concentrated in the US (48%) and India (41%).⁴ The FDA issued 105 warning letters for quality issues in FY2024, the highest in five years—with inspection-based letters rising 21% from FY2023.⁴ In September 2025, the agency released approximately 80 warning letters in one week.⁵

Expanding regulatory oversight

On May 6, 2025, the FDA announced the expansion of unannounced inspections at foreign manufacturing facilities.⁶ This followed President Donald J. Trump’s May 5 executive order directing regulatory relief for domestic pharmaceutical manufacturing while enhancing oversight of foreign facilities. As of September 2024, about 160 plants in India were reportedly overdue for inspection—some unchecked since 2015—while 185 Chinese factories were past due.⁶

In September 2025, the FDA issued a “Green List” import alert targeting GLP-1 active pharmaceutical ingredients (APIs).⁷ This list identifies manufacturers inspected or evaluated as compliant with cGMP standards; APIs from unlisted sources face automatic detention.

The FDA’s Quality Management Maturity (QMM) program encourages manufacturers to exceed basic cGMP requirements. The 2025 QMM initiative directly addresses findings that organizational learning and quality culture significantly influence compliance outcomes.⁸

The API dependency crisis

More than 80% of APIs are produced overseas, primarily in China and India. India is now 70% to 80% dependent on Chinese APIs.^9,10 Chinese APIs appear in approximately 40% of US generic drugs, creating significant supply vulnerability.¹⁰

In February 2025, the FDA issued warning letters to Chinese API manufacturers Nuowei Chemistry and Innovation Pharmaceutical, citing testing methods based on Chinese rather than US Pharmacopoeia standards, inadequate oversight of quality units, and missing stability data.¹¹

Tariffs and reshoring

In April 2025, the US imposed tariffs ranging from 25% to 245% on Chinese imports, including 125% reciprocal tariffs and 20% penalties on fentanyl-related imports. The administration proposed pharmaceutical-specific tariffs of up to 150% by 2026 and up to 250% by 2027.

Eli Lilly announced a $27 billion investment—the most significant pharmaceutical manufacturing investment in US history—adding four facilities, including three focused on API production, and creating 13,000 jobs.¹² Since early 2025, more than $3 trillion in reshoring investments have been announced across sectors.¹²

Drug shortages and supply chain challenges

As of late 2024, 277 active drug shortages persisted, only slightly below a record 323 in Q1 2024.¹³ These shortages disproportionately affect critical medications, including sterile injectables, antibiotics, hormones, chemotherapies, and intravenous fluids.

Root causes remain structural: outdated manufacturing infrastructure, reliance on offshore suppliers, economic incentives that favor low-cost generics over redundancy, and a lack of supply chain transparency.¹³ The Drug Supply Chain Security Act, designed to improve transparency through electronic, interoperable product tracing, continues phased implementation.¹⁴

Technology and quality evolution

Artificial intelligence technologies transform pharmaceutical quality management through capabilities in deviation and CAPA management, change control, audit tracking, and risk management. Natural language processing enables pattern detection in deviations and the generation of corrective action recommendations, while predictive modeling supports proactive risk identification. Computer vision systems identify defects in real time, thereby improving first-pass yields.¹⁵

Batch-based manufacturing is gradually transitioning to continuous manufacturing, enabling real-time monitoring, consistent quality, and reduced batch-to-batch variation.¹⁶ This shift directly addresses process control challenges by using physical sensors to monitor critical parameters and their effects on product quality.¹⁶

The biosimilars dimension

The biosimilars market reportedly reached approximately $25 billion in 2024, projected to expand to $60 billion to $176 billion by 2034.¹⁷ Biosimilar manufacturers must demonstrate similarity to reference products through extensive clinical studies—requirements that are more rigorous than those for traditional generic drugs. The FDA has approved more than 60 biosimilars, all subject to the same high biosimilarity standards.¹⁷

Conclusion and recommendations

The heightened enforcement environment demands continuous inspection readiness across all manufacturing sites. With 62% of FY2024 drug quality assurance inspections conducted at foreign sites—an all-time high—global quality oversight requires proportional investment.⁴

As the industry transforms through technological innovation, geopolitical pressures, and intensifying regulation, cultivating learning organizations capable of continuous improvement remains fundamental. Nearly 70% of Americans take at least one prescription medication regularly; their health depends on an industry that consistently delivers products exactly as labeled.

The views expressed in the article are those of the authors and not of the organizations they represent.

About the Authors

Partha Anbil is senior vice president of life sciences, Prashant Deshpande is vice president of life sciences, and Partha Khotis the life sciences practice lead; all with Corforge Limited.

References

1. A report on generic drug quality and manufacturing location risk factors, noting 156% higher serious recall rates in non-advanced economies.

2. AARP. (2025, April 16). Dozens of Generic Medications Recalled Due to Quality Issues.

3. FDA Health. (2025, April 16). Nationwide Recall Hits Dozens of Generic Drugs.

4. FDA. (2024). FY2024 Report on the State of Pharmaceutical Quality.

5. FDA Law Blog. (2025, September 18). FDA Unleashes Wave of Enforcement: The Industry Faces a Crackdown on Drug Advertising.

6. Cooley. (2025, May 13). FDA Expands Unannounced Inspections at Foreign Manufacturing Facilities.

7. Safe Medicines. (2025, September 16). September 8, 2025: FDA launches an import alert listing safe GLP-1 APIs.

8. FDA. (2025, July 28). CDER Quality Management Maturity.

9. Drug Patent Watch. (2025, August 27). The Pharmaceutical Gambit: An Analysis of Why India Lags China.

10. Delve Insight. (2025, September 9). Navigating U.S. Tariffs in 2025: Impacts on Pharma & Healthcare Strategies.

11. Fierce Pharma. (2025, February 10). FDA hands out warning letters to 2 Chinese API manufacturers.

12. Inotek. (2025, September 9). How Eli Lilly's $27B Investment Is Reshaping the Future of Pharma Manufacturing.

13. Prosperous America. (2025, September 22). America's Drug Shortage Isn't a Supply Problem—It's a Production Crisis.

14. DLA Piper. (2025, January 12). Certain DSCSA deadline extensions set to eclipse in 2025.

15. Bioprocess International. (2025, August 3). Artificial Intelligence in Biopharmaceutical Quality Management.

16. ValGenesis. (2025, May 21). Real-Time Monitoring: Why Have It and How to Get It.

17. Precedence Research. (2025, August 12). Biosimilars Market Size to Hit USD 175.99 Billion by 2034.