Focus: China pharma projects disrupted by Sino-US tensions
SHANGHAI, June 18 (Reuters) - Drug research and development firms in China including WuXi AppTec (603259.SS), opens new tab and WuXi Biologics (2269.HK), opens new tab are changing project plans, stockpiling supplies and discussing testing locally, said sources with knowledge of the matter, as they seek to mitigate the impact of U.S.-China trade tensions.
China's sprawling pharmaceutical research and manufacturing sector serves global drug giants such as Pfizer (PFE.N), opens new tab and AstraZeneca (AZN.L), opens new tab with a low-cost development model that often uses imported clinical samples, equipment, chemicals and other materials to conduct work.
Fears of delay in access to U.S. supply chains and raised import tariffs are spurring biotech and pharmaceutical companies to avoid, pause or consider delaying the start of projects, according to three sources.
They 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, and requesting additional supplies for backup, three other sources said.
The 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 because of concerns about effects on fundraising plans or they were not authorised 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, U.N. Comtrade data showed.
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 (SHLG.DE), opens new tab were exempted from raised Chinese tariffs, that company said in May.
China raised its tariffs on U.S. imports to as much as 125% though it has since reduced that to 10% while it works out a more permanent trade deal.
WuXi AppTec and a Chinese biotechnology firm that was its research client agreed in May to switch U.S.-made reagents they had been using for a Hepatitis B virus pre-clinical research project into non-U.S. versions due partly to concerns about higher costs from tariffs, a source at the client company said.
The project had been temporarily paused during the discussions, which began prior to May, the source said.
WuXi AppTec said it makes "every effort to avoid disruptions or delays in the delivery of services to customers."
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.
"If they have a product made by us, and we rely on the foreign raw material supply and that raw material will increase in price or is never going to come, obviously it will impact their manufacturing of those life-saving drugs. So obviously, that's their primary concern," Luo 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 (4901.T), opens new tab, 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.
A Fujifilm Holdings America Corporation spokesperson said Fujifilm Biosciences, one of its life science business units, has made significant investments to build a robust global manufacturing network so that it could navigate any challenges or disruptions, without elaborating on its supply issue involving China.
After China announced a large rise in tariffs for U.S. imports in April, WuXi Biologics (2269.HK), opens new tab placed a bigger-than-normal order for reagents made in the U.S. with a supplier because it was not sure how long that policy action would continue, said a source at the supplier.
WuXi Biologics did not respond to requests for comment.
Concerns about the potential for U.S. export restrictions led China's Innovent Biologics (1801.HK), opens new tab and multinational BeOne Medicines (688235.SS), opens new tab to discuss with Massachusetts-headquartered Thermo Fisher Scientific (TMO.N), opens new tab the prospect of not sending U.S. clinical samples to China, said a source at the U.S. company.
Testing U.S. samples in-country instead of in China would be more expensive, the source said.
A spokesperson for BeOne said it does not comment on rumours or speculation. Thermo Fisher and Innovent declined to comment.
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