US-China Tensions: Impact on Chinas Pharma Industry and Strategies for Mitigation
Shanghai (Reuters) - As U.S.-China trade tensions escalate, drug research and development firms in China, including WuXi AppTec and WuXi Biologics, are making changes to their project plans, stockpiling supplies, and discussing testing locally to mitigate the impact on their operations.
China's extensive pharmaceutical research and manufacturing sector provides services to global drug giants such as Pfizer and AstraZeneca using a low-cost development model that often relies on imported clinical samples, equipment, chemicals, and other materials. Fears of delays in accessing U.S. supply chains and increased import tariffs are prompting biotech and pharmaceutical companies to avoid, pause, or consider delaying the start of projects, according to three sources familiar with the industry.
These firms are also discussing testing U.S. clinical samples in the U.S. instead of sending them to China for further research, a move that could increase costs. Additionally, they are requesting additional supplies for backup to ensure continuity of operations.
All six sources who spoke to Reuters are director or executive-level employees involved in various aspects of the industry in China, including research and development, manufacturing, and supply chains. All but two agreed to speak only on condition of anonymity due to concerns about effects on fundraising plans or authorization to speak to media. The developments have not been reported previously.
U.S. and Chinese officials said last week they had agreed on a framework to put a May trade truce back on track and remove China's export restrictions on rare earths, but offered little sign of a durable resolution to longstanding trade differences that have affected products ranging from semiconductors and jet engines to medical equipment and pharmaceuticals.
"What kind of long-term policy it could be, you know, what kind of tariff would it be in half a year, in one year... nobody knows. And that's the problem. That's what makes everybody worry and nervous," said Chen Gong, co-founder of NeuExcell Therapeutics, a biotech with its main operations in Suzhou.
He said the U.S.-China trade tensions had made him more cautious about investing in a clinical trial and the company would delay its start if it did not have sufficient funding.
Reliance on U.S. imports has come into particular focus as trade tensions escalate. In 2024, the U.S. exported diagnostic and laboratory reagents to China valued at about $1.4 billion and prepared culture media for the development or maintenance of microorganisms worth about $125 million, according to UN Comtrade data.
In a sign of the importance of some of the imports and the damaging effect disruption could have on China's healthcare industry, some U.S.-made goods including diagnostic reagents from Germany's Siemens Healthineers were exempted from raised Chinese tariffs, that company said in May.
Since April, at least 17 Chinese biotech and pharmaceutical clients have contacted Chinese cell culture media manufacturer JS Biosciences asking it to keep locally-made backup raw materials for production because they were concerned about cost increases or the inability to access foreign supplies, the firm's CEO Luo Shun said.
Another Chinese drug research and development firm decided not to provide a quotation to a foreign pharmaceutical company interested in hiring it for protein drug manufacturing due to delays in obtaining necessary U.S.-made culture medium from a U.S. subsidiary of Japan's Fujifilm, a source at the Chinese firm said. The potential client would likely not have accepted waiting on imports of new supplies into China, which would typically take two to four months, the source said.