China dodges pharmaceutical tariffs: “Most Chinese biotech companies are immune to tariffs”
Despite the new 100% US tariff on imported drugs, China’s biotech firms face minimal impact thanks to licensing deals and domestic focus.
Much has been made about President Donald Trump’s tariff hike on patented drugs, but Chinese companies believe they will barely be affected.
Effective Oct. 1, all branded or patented drugs imported by the United States will be subject to a 100 per cent tariff, part of a wider strategy to bring jobs and investment back to the US. The tariffs do not, however, apply to companies building, or planning to build, manufacturing plants in the United States.
Chinese biotech largely insulated
Chinese biotech firms are positioned to largely avoid the impact of the tariffs. Most companies currently focus on research, biotechnology innovation, and domestic sales rather than exporting drugs, which keeps exposure to the United States low. In contrast, countries such as Japan and Australia, which rely heavily on US sales, face far greater risks.
Additionally, many of China’s drug companies are still one to two years away from commercializing products in the United States, meaning their revenue comes mainly from licensing deals and royalties rather than direct shipments that could be targeted by tariffs.
Global partnerships provide a buffer
China’s emergence as a hub of biotechnology innovation has also attracted foreign investment and partnerships. Pharma giants including AstraZeneca, GlaxoSmithKline, and Johnson & Johnson license or acquire drugs from Chinese companies, insulating them from tariffs. Analysts at investment bank Jefferies told clients that most Chinese biotech firms have US partners, making them “immune to tariffs.”
In addition, China remains a key source of active pharmaceutical ingredients and some generic medicines for the US market, underscoring ongoing interdependence despite the trade measures. Stockpiling and planned US-based production by global companies may further reduce the tariffs’ practical impact.
Potential future hurdles
The Trump administration is, though, reportedly considering restrictions on licensing deals with Chinese companies, another effort to slow China’s progress in life sciences. Earlier attempts include the proposed Biosecure Act, which sought to prevent Chinese biotech companies from securing federally funded contracts but failed to pass.
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