Since Beijing and Washington imposed tariffs on each other’s goods this month, Western media have been closely monitoring whether the trade war will hurt China’s supply of medicines to the United States and result in drug price hikes.
After US President Donald Trump imposed a 10% tariff on all Chinese goods on February 4, China announced that it will impose a 15% tariff on eight types of US energy products, including coal, liquified natural gas and coking coal. It also imposed a 10% tariff on 72 types of US goods, including agricultural machines, crude oil, large displacement cars and electric vehicles, from February 10.
Trump said he will speak to Chinese President Xi Jinping at the appropriate time as he is “in no rush.”
On February 4, the American Hospital Association wrote in a letter to Trump that the new US tariffs will affect the supply of drugs, including cancer and heart medicines and antibiotics like amoxicillin, from China, Reuters reported. The association said nearly 30% of raw ingredients used to make critical drugs come from China.
The Reuters report said four lobbyists and one pharmaceutical executive had urged the Trump administration to exempt essential drugs from new tariffs several weeks ago.
Karen Andersen, a Morningstar analyst, was quoted as saying in the report that although major drug makers source active ingredients from China, they tend to make their foundational blockbuster products in the US or Europe.
She said it would be more alarming for the world’s biggest drug makers if the US imposed tariffs on Europe.
However, Alex Telford, a San Francisco-based biotechnology writer, holds a different view. Last December, he published an article titled, “Will all our drugs come from China?”
Telford says that while many people think that China’s main contribution to the pharmaceutical industry is the raw chemical materials, actually there is a steady rise in Chinese companies’ sourcing of genuinely new drugs.
He points out that Chinese companies are now responsible for 28% of new trial starts, compared with 34% in the US and 23% in Europe; and that they are particularly active in making drugs for early-stage (phase I) clinical trials, oncologt and cell and gene therapy.
Citing a Bloomberg report, he says that:
- US drug firms such as AbbVie Inc and Bristol-Myers Squibb Co have formed partnerships with Chinese companies in Shanghai;
- Roche Holding AG from Switzerland, Bayer AG from Germany and Eli Lilly & Co. from the US have opened or will open incubators for Chinese startups;
- Pfizer will invest US$1 billion in China over the next five years.
He says the main forces that push China to become a source of novel drugs are:
- regulatory reforms,
- returning talent,
- industrial evolution, and
- venture funding.
It has remained unclear whether the US importers of drugs and ingredients will suffer from price hikes caused by Trump’s tariffs or whether they can source the products from elsewhere such as India, Southeast Asia and Europe.
In 2023, the world’s top 10 pharmaceutical exporters were Germany (US$120 billion), Switzerland (US$99 billion), the US (US$90 billion), Belgium (US$83 billion) and Ireland (US$72 billion).
In 2024, China’s total exports of western medicines amounted to US$54 billion, up 5.7% from the previous year, according to the China Chamber of Commerce for Import and Export of Medicines and Health Products.
China’s exports of pharmaceutical goods (drugs and tools) to the US grew 11.7% to US$19 billion last year from 2023. China also exported US$8.4 billion of pharmaceutical goods to India, US$5.5 billion to Japan and US$4.8 billion to Germany.
Biosecure Act
Currently, the US does not forbid American pharmaceutical firms from forming partnerships with Chinese counterparts. It also does not ban US firms and individuals from investing in China’s biotechnology sector.
In early 2023, the Biden administration considered banning US investments from entering China’s biotechnology industry, alongside with semiconductor, AI and quantum sectors. But in August 2023 it excluded biotechnology from the list of targeted industries as it believed that only the chip, AI and quantum sectors in China would threaten the United States’ national security.
Last September, the US House of Representatives passed the Biosecure Act, which would require the US federal government and its agencies not to use equipment or services provided by five Chinese companies, which include BGI, MGI, WuXi Biologics, Wu Xi AppTec and Complete Genomics.
The legislation would also prevent federal funds from going to biotech companies linked to five foreign adversaries: China, Russia, Iran, North Korea and Cuba. The Senate is still discussing the legislation.
“We believe that your agency should examine imposing an export control requirement for US biopharmaceutical entities seeking to work directly with the People’s Liberation Army (PLA) to help ensure US biotechnology does not fall into the hands of the People’s Republic of China,” John Moolenaar, chairman of the House Select Committee on the Chinese Communist Party, said in a letter to then-Commerce Secretary Gina Raimondo on January 9 this year.
Moolenaar said the fierce competition in biotechnology between China and the US will have implications not only for the United States’ national and economic security but also for the future of healthcare and the security of American medical data.
Yong Jian is a contributor to the Asia Times. He is a Chinese journalist who specializes in Chinese technology, economy and politics.
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