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The dispute between the US and China is intensifying and reaching the pharmaceutical industry, with companies breaking off strategic partnerships. This conflict could directly impact consumers, leading to an increase in drug prices and affecting the global supply chain.
Dispute between the US and China: U.S. pharmaceutical and biotechnology companies have turned to Chinese partners for production, research and ingredients. Now, as geopolitical tensions rise, some of them are looking for alternatives, driving up drug prices in the U.S. and China.
Understand the US and China dispute in the pharmaceutical industry
From large pharmaceutical companies like AstraZeneca to small biotechnology companies like Amicus Therapeutics, of New Jersey, which is seeking a non-Chinese partnership to supply raw materials for its rare disease treatment, the companies say it is time to reduce the China risk
Industry officials say one consequence of the U.S.-China dispute is that drug launches are slow and drug prices are rising in the U.S. because the change takes time and money.
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Largely unbeknownst to American patients, U.S. and European companies often rely on China for chemical services and basic pharmaceutical ingredients, which is why the U.S. and China disputes over commercial and military issues in recent years have shaken up the industry. Executives say the cost of high-level Chinese labor is typically lower than in the West.
Second Nello Mainolfi, CEO of Kymera Therapeutics, companies are now making choices focused on reducing the risks of relying on a single country, even if it means higher drug prices. His Massachusetts-based company, which is developing drugs to combat cancer and immune system disorders, relies on Chinese companies for production and manufacturing, but has begun doing more of that work in Europe, India and the United States.
New law for the US and Chinese pharmaceutical industry
One incentive that could impact rising drug prices is the Biosafety Act, which passed the House in September with overwhelming bipartisan support. The legislation bars companies that receive government funds or contracts from doing business with a list of Chinese companies of concern.
The biggest names on the list are WuXi AppTec and WuXi Biologics, two Chinese-affiliated companies that thousands of customers around the world have turned to for research and manufacturing.
WuXi AppTec said in May that the inclusion of its name in the bill is “a preemptive and unjustified designation without due process.”
Both it and WuXi Biologics have said they pose no security risk to the United States or any other country. The Senate Biosecurity Act’s prospects are uncertain this year, and the current version gives companies until 2032 to cut ties with Chinese companies.
US and China can still maintain relations
Even with the potential for higher drug prices, the changes do not mean a complete severing of industrial ties between China and the West. American and European drugmakers still want to sell their products in China, the second-largest drug market after the United States and a country with a rapidly aging population.
Chinese biotech companies have signed billions of dollars in licensing deals that seek to bring home-grown drugs to the world.
The biggest impact is on drug supply chains. One example of an American company that has cut its ties with China is Vir Biotechnology, based in San Francisco, which develops antiviral and cancer treatments.
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