How to stop China from leapfrogging the U.S. in biotech
Competition, not protectionism, is the answer.
China aims to overtake the United States in biopharma by running the same playbook it has employed in other sectors: a coordinated, state-led strategy that combines subsidies with scale and speed.
The best way to fend off Beijing’s ambitions isn’t to copy its tactics or launch another trade war. It’s to stop punishing U.S. pharmaceutical companies and let them outcompete their rivals.
China has overtaken the U.S. in clinical trials, by some measures. It has more than 7,000 drugs in the development pipeline. Chinese-made medicines cost a fraction of the price of U.S. pharmaceuticals in the global market.
Where China was once seen as the world’s factory for producing drugs, American companies are increasingly looking for licensing agreements with Chinese biotech firms for the rights to bring promising new drugs to the U.S. market.
Since China is also the source for many of the raw materials needed in drug manufacturing, this creates worrisome strategic vulnerabilities. As happened last year with rare earths, this dependence means China could easily block or delay supplies in the case of a dispute, disrupting the flow of staples in American medicine cabinets.
“The United States (and just about every other nation) faces a growing risk that China will deliberately withhold essential pharmaceutical inputs as a tool of economic or political coercion,” the Council on Foreign Relations warned in a recent report.
Beijing’s leaders made biopharma a strategic priority in 2009, when the State Council announced plans to marshal government, industry and universities toward making China a biotech powerhouse. China has, of course, also stolen intellectual property.
But the U.S. has suffered from self-inflicted wounds.
The Food and Drug Administration’s approval process for early-stage clinical research is slow and cumbersome. It can take 10 to 12 years from discovery to final approval of a new drug. China can produce large-scale studies faster, partly because the government can activate its state-run hospital network and recruit patient volunteers more quickly.
American biotech needs predictable, steady funding. It doesn’t help that the Trump administration has tried to reduce funding for the National Institutes of Health. The U.S. needs to modernize its own clinical trial infrastructure to make it more agile and efficient.
The U.S. scientific community is divided over how to deal with China. Some pharma insiders and members of Congress are advocating for more protectionist policies. That would treat biotech like semiconductors, making it subject to trade restrictions based on national security concerns.
The Pentagon recently listed the Chinese drug manufacturer WuXi AppTec as linked to the country’s military. The company is suing to get off the list.
Others warn that allowing U.S. pharmaceutical companies to obtain licenses for groundbreaking Chinese drugs risks further hollowing out the domestic U.S. industry by sending capital to China.
But drugs aren’t like electric vehicles, which are heavily restricted from entering the U.S. market. They save lives, and Americans deserve access to the best medicines. U.S. companies reaching licensing deals with Chinese counterparts, if designed properly, could help ensure they adhere to rigorous standards and protect U.S. intellectual property.
There are opportunities for collaboration that could help patients on both sides of the Pacific. The U.S. retains an edge in the quality of its research on gene editing, cell therapy and RNA therapeutics. American expertise, coupled with China’s advantages in speed, scale and costs, might help more quickly develop the next generation of drugs to treat cancers, Alzheimer’s and other diseases. Both sides have an interest in constructive competition.
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