China pharma projects disrupted by Sino-US tensions
By Andrew Silver
SHANGHAI (Reuters) – The escalating trade tensions between the United States and China are having a significant impact on drug research and development firms in China. Companies such as WuXi AppTec and WuXi Biologics are taking proactive measures to mitigate the effects of the trade dispute.
The pharmaceutical research and manufacturing sector in China plays a crucial role in serving global drug giants like Pfizer and AstraZeneca with a cost-effective development model. However, the industry heavily relies on imported clinical samples, equipment, chemicals, and other materials to conduct their work.
In response to fears of delays in accessing U.S. supply chains and increased import tariffs, biotech and pharmaceutical companies in China are reconsidering their project timelines, stockpiling supplies, and exploring the possibility of conducting testing locally. These measures are aimed at minimizing the impact of the trade tensions on their operations.
According to sources familiar with the matter, companies are discussing the option of testing U.S. clinical samples in the U.S. instead of sending them to China for further research. This shift could lead to higher costs and the need for additional supplies as a backup plan.
The uncertainty surrounding the U.S.-China trade tensions is causing concerns within the industry. Chen Gong, co-founder of NeuExcell Therapeutics, expressed caution about investing in clinical trials amidst the ongoing trade disputes. The lack of clarity on long-term policies and tariffs is making many industry players nervous about the future.
The reliance on U.S. imports has become a focal point as trade tensions continue to escalate. Some U.S.-made goods, including diagnostic reagents from companies like Siemens Healthineers, have been exempted from raised Chinese tariffs to prevent disruptions in China’s healthcare industry.
As companies navigate the challenges posed by the trade tensions, they are taking proactive steps to minimize potential disruptions. WuXi AppTec and other firms have shifted to non-U.S. versions of essential materials to avoid higher costs from tariffs. Additionally, Chinese biotech and pharmaceutical clients are requesting locally-made backup raw materials to safeguard against cost increases and supply chain uncertainties.
The trade tensions have also impacted the procurement process for some companies. Delays in obtaining necessary U.S.-made materials have led to project pauses and reevaluations of supply chains. Some firms have opted not to provide quotations to foreign clients due to uncertainties surrounding import timelines and costs.
In an effort to navigate the uncertain trade environment, companies like WuXi Biologics are stockpiling supplies and placing larger orders for essential materials. Discussions are ongoing with suppliers and partners to explore alternative testing options and ensure continuity in operations.
The evolving trade situation between the U.S. and China underscores the importance of proactive risk management strategies for companies in the pharmaceutical industry. As the two countries work towards a resolution, industry players are adapting to the changing landscape to safeguard their operations and ensure the continuity of critical research and development activities.
