Direct releases of active pharmaceutical ingredients (APIs) at pharmaceutical production sites account for only a fraction of total API pollution but have an outsize environmental impact. Due to high API concentrations, direct releases can have significant local impacts on water quality and health if these discharges are not adequately treated. Over the last two decades, API production has shifted from the EU and North America to regions with high and growing water stress levels. That shift potentially exposes the pharmaceutical sector to increased production, compliance, and reputational risks. This article examines how pharmaceutical companies can enhance their water stewardship efforts to mitigate risks associated with direct API releases within their supply chain.
Direct releases at API manufacturing sites can cause multipronged damage
Active pharmaceutical ingredients (APIs) are the fundamental components used in the production of pharmaceutical products. APIs are released into the environment (to become “pharmaceuticals in the environment”, or PiE) via three main pathways: (i) from the human population via ingested and excreted medicines, (ii) improper disposal of unused medicines, and (iii) from releases into local waterways at pharmaceutical production sites.
Even though patient excretion of drugs accounts for the vast majority of pharmaceuticals in the environment (~88 percent of the load), and improper disposal of unused medicines contributes about 10 percent, direct releases from pharmaceutical manufacturing (point-source pollution) contributes a non-negligible 2 percent. Focusing on such a small 2 percent portion seems counterintuitive.
However, this 2 percent “direct release” can contain high concentrations of APIs, leading to local “hotspots” of contamination in local waterways, causing immediate ecotoxicological effects. These hotspots have also been related to antibiotic resistance in the environment, which poses a significant human health risk, claiming the lives of 1.27 million people each year. The 2 percent, therefore, has outsized importance due to its intense localized impacts, higher concentrations, and its relative ease of control, compared to the diffuse 88 percent and 10 percent from consumers and improper disposal of medicines, respectively.
Geographical shifts in API production have exposed the pharma supply chain to increased water scarcity and quality risks
The primary manufacturing of APIs is increasingly being outsourced to specialized external facilities, thereby allowing the largest pharmaceutical companies to concentrate on the formulation and production of finished pharmaceutical products, using supplied APIs.
Historically, the primary manufacturing of APIs was concentrated in Europe and North America; however, over the past two decades, this trend has shifted towards India and China. This geographical redistribution has implications for water-related risks and impacts across the pharmaceutical supply chain.
Data from the US Pharmacopeia indicate that 25 years ago, approximately 42 percent of APIs were produced in Europe, 19 percent in India, 18 percent in the US, and China accounted for about 5 percent. Today, these figures have dramatically shifted: API production in Europe has decreased to roughly 10 percent, while the US has dropped to 4 percent. Conversely, India’s share has expanded from 19 percent to over 50 percent, and China has increased from 5 percent to approximately 32 percent.
This geographical shift in API manufacturing has coincided with a move into regions where water scarcity is more acute. For example, currently, about 81 percent of basins in India experience medium to extremely high-water stress, compared to 40 percent in Europe and 56 percent in North America. Site-specific data would be required to fully assess the impact on the sector; nevertheless, the move highlights the potential for the pharmaceutical supply chain to be exposed to increased risks related to water supply reliability and operational continuity.
A similar picture emerges when looking at water quality and wastewater treatment. The United Nations’ Sustainable Development Goals (SDGs) program tracks the percentage of wastewater in different countries that is safely treated through efforts to reduce pollution, eliminate dumping, and minimize the release of hazardous chemicals and materials. In European countries, 75 to 100 percent of wastewater is safely treated, whereas the percentage in the United States is close to 100. In contrast, India and China safely treat 21 percent and 62 percent of their wastewater, respectively. However, SDG measurement focuses only on secondary treatment, and global monitoring of Active Pharmaceutical Ingredients (APIs) in wastewater is currently limited to specific research projects and pilot studies, with no country yet implementing routine, nationwide surveillance.
With these geographical shifts, primary API manufacturing is now concentrated in specific regions, and data is emerging that these regions are associated with increased concentrations of PiE. For example, studies in China have linked higher levels of API contamination to specific manufacturing locations, and potential downstream pollution from these manufacturing plants has been observed.
In India, APIs have been detected at high concentrations in surface waters near drug manufacturing hubs. In the Patancheru–Bollaram industrial zone near Hyderabad, India—one of the globe’s major hubs for bulk pharmaceutical production—a centralized wastewater treatment facility was found releasing effluent containing antibiotics at highly elevated levels. The antibiotic ciprofloxacin was detected at 14 mg/liter in the treated discharge, with the pharmaceutical sector being the only possible source, as it is a synthetic drug with no natural occurrence. Seven other pharmaceutical compounds were present in similarly elevated concentrations. Groundwater wells in nearby villages showed multiple active pharmaceutical ingredients (APIs) at concentrations above 1 ug /liter, likely due to contamination from seepage. Concentrations of the antihistamine Cetirizine reached a maximum of 28 ug/l; at this concentration, the paediatric dose of the drug would be reached after consuming 100 liters.
Addressing the API contamination from primary manufacturing sites is complex. Compliance with local effluent discharge standards is largely inadequate for controlling API releases, as in most geographies, industrial effluent permits do not include limits for individual APIs in effluent discharge, only total toxic load limits, if at all, nor do they mandate the monitoring of APIs. Indeed, the environmental risk assessments conducted by the sector for marketing authorization applications for new drugs require the accurate estimation of potential API release concentrations; however, they do not mandate direct API monitoring in effluent streams. Additionally, traditional treatment methods, whether on-site or municipal provisions, do not remove APIs from wastewater. Therefore, quaternary treatment, which focuses on the removal of micropollutants, is required on-site or at the municipal wastewater plant treating the site's discharges to prevent APIs from being released.
The potential for water quality impacts associated with primary API manufacturing and the associated risks to incoming water quality in these areas have therefore increased with geographical concentration.
How is the pharmaceutical sector responding?
The pharmaceutical sector generally has well-established and mature water management practices in its direct operations. All ten of the leading pharmaceutical companies (by revenue in 2024) have numerical water-related sustainability targets outlined in their latest sustainability reports, including various combinations of efficiency, reuse, and replenishment targets, as well as commitments to stewardship.
The sector’s leadership in water management is also reflected in its engagement with leading standards. Sites from the pharmaceutical industry represent 9 percent of those certified under the Alliance for Water Stewardship (AWS) standard , positioning the sector just behind agrifood (40 percent combined), consumer goods (20 percent), and technology (14 percent).
ERM’s Water Maturity Assessments, conducted across multiple sectors, also indicate that pharmaceutical companies generally have a higher level of water risk management maturity than industries such as mining, oil and gas, and chemicals.
“It is a sector that is already aware of the importance water plays within its value chain and is already actively taking action to mitigate its impacts on water globally.
However, these water-related sustainability targets do not include quaternary treatment of wastewater in direct operations for the removal of APIs. Furthermore, the focus of actions on water (i.e., setting and reporting specific targets) is primarily on facilities owned and operated by pharmaceutical companies, particularly those in water-scarce areas. Only 50 percent of the top 30 global pharmaceutical companies publicly disclose that they undertake water activities specifically targeted at API manufacturing in their supply chain.
Are the steps companies are taking to address supply chain API contamination sufficient?
Based on disclosures made to CDP-Water and sustainability reports, activities undertaken in the supply chain include:
(i) numerical water consumption or efficiency targets in supply chain operations;
(ii) requiring suppliers to comply with water-related regulatory requirements; fostering improvement in wastewater management;
(iii) auditing supplier environmental practices and prioritizing those with lower negative impact; and
(iv) encouraging key suppliers to responsibly manage their water use and discharge, particularly in water-stressed areas.
Most pharmaceutical companies also participate in industry-wide initiatives, such as the Pharmaceutical Supply Chain Initiative (PSCI), and some have incorporated the PSCI Principles for Responsible Supply Chain Management into their contractual frameworks. These principles establish expectations for suppliers to operate in a manner that minimizes environmental impacts, including the responsible handling and treatment of wastewater, as well as the assessment and mitigation of API releases.
Focus on anti-microbial resistance
Concerns about antimicrobial resistance (AMR) have triggered an increased focus on discharges containing APIs, and several companies have initiated AMR campaigns aimed at monitoring supply chain effluent for API concentrations more closely.
However, an AMR benchmark study highlighted that the reporting on supplier compliance with discharge limits remains limited. Although several companies have made progress in collaborating with their suppliers to lessen AMR risks, disclosures on the extent of supplier compliance with antibiotic APIs in wastewater are limited in number. One organization in the study disclosed that approximately 86 percent of its over 100 supplier sites adhere to environmental discharge limits, while another reported a compliance rate of 71 percent, compared to 33 percent in 2021.
The ongoing challenge underpinning these disclosures is the absence of specific regulations globally that establish permitted effluent concentrations specifically for API. Without these, contractual provisions are relied upon; however, enforcing them can be difficult due to the limited availability of alternative suppliers.
Enforcement and transparency need to be strengthened
The potential environmental and health impacts of PiE are significant, and API contamination poses a tangible risk to the sector that goes well beyond the direct issue of deteriorating incoming water qualities at manufacturing sites. API contamination could also expose pharmaceutical companies to reputational risk or risk of non-compliance with supply chain regulation, such as the European Union’s Corporate Sustainability Due Diligence Directive (CSDDD). While most companies are taking steps to address API discharges in the pharmaceutical supply chains, successfully shifting the needle on this complex challenge will require additional steps and will rely on the collective skills and experience of the sector and regulators. The following actions support accelerated action:
- Companies can combine a top-down location-based water risk assessment of key API manufacturing locations in the supply chain with the environmental fate and ecotoxicology risk assessment results for pharmaceutical products. This would help prioritize efforts on APIs in the supply chain where the need is greatest, i.e., the sites with most significant potential impact and locations where basinal water risk is most acute.
- At prioritized sites, move towards mitigating direct API release at the source through advanced wastewater management. Investment in quaternary treatment methods is required to improve API removal in onsite wastewater treatment plants and reduce direct releases. Furthermore, Zero Liquid Discharge is being actively promoted by the Indian government, which would not only mitigate API pollution but also support reduced freshwater reliance for sites operating in water-scarce areas. Additionally, it would mitigate the risks posed by poor incoming water quality, as the polished water quality could be of better quality than the supplied water.
- Consider setting and disclosing compliance with target API limits for discharge waters at company operations and at API manufacturing supply chain sites. Enforce these through contractual obligations. At least one company has disclosed its target API concentrations that must not be exceeded in the waters downstream of its production sites; however, disclosure of these targets is not widespread, nor is compliance with them.
- Strengthen monitoring, reporting, and disclosure of water discharges at supply chain sites by connecting environmental risk assessments with monitoring and audit requirements and improving feedback mechanisms to address non-conformances.
- Engage with local regulators and stakeholders to advocate for more vigorous enforcement and transparency.
Implementing comprehensive water stewardship programs that extend beyond owned facilities and include priority supply chain partners would directly support the implementation of these recommendations. Critically, while many companies have taken individual steps to improve their oversight of the API supply chain and reduce potential impacts, company-focused efforts may only go so far. A more coordinated approach could drive a greater impact. So, it may be time to review and align collective industry efforts to ensure they effectively address these shared challenges, strengthening the sector’s ability to solve them together.
