Is China a Threat to Our Healthcare?

I am certainly not an expert in international relations, but it seems to me that U.S. leaders view China and Russia as distinct challenges, with each presenting a different type of strategic concern. Russia’s foray into Ukraine seems to be indicate a thirst for expansion and the willingness to use military power to accomplish their goals. China, on the other hand, seems to be willing to concentrate on becoming an economic power to accomplish their goal of becoming a leading global power. While China has a powerful military and continues to threaten the use of force against Taiwan in the name of reunification, its interest in controlling the world's leading semiconductor manufacturer and gaining access to critical deep-water ports suggests that economic influence is also a significant part of the equation. I go through this review of international politics to give you a sense of why I think China’s push for economic leadership is real and it is driving their dramatic surge in prescription drug discovery and development.

This surge is especially evident in China’s share of worldwide early-stage drug programs, which grew from 8% in 2015 to just over 32% in 2024. It had a direct impact on the U.S. share of these type of programs, which fell from 48% to just over 37% over the same period. The depth of China’s commitment is evident since this represented a  growth of 641% (from 829 to 6,145 programs). This makes China almost co-equal in drug discovery, preclinical work, and early clinical testing. China has more clinical trials than the U.S. and they have a robust and growing biotech supply chain. These are foundational parts of drug development, and China’s growth is reshaping the global pipeline.

It seems that the U.S. is helping China in this early-stage growth. We have recently reduced grants to universities which are the breeding ground for new discoveries. They have been the fertile ground for out-of-the-box thinking and are not as risk adverse as larger commercial enterprises. If we lose out to China in these early-stage discoveries we are less apt to produce first in class discoveries, the types of drugs that turn into block buster drugs and help fuel the R&D for further U.S. drug innovation. It is this type of pay off that encourages investors to accept the risk of investing in drug R&D.

The recent tariffs that have been initiated by the administration have also hindered our ability to compete in this important early-stage discovery race. The facts are that China dominates global production of active pharmaceutical ingredients (APIs), chemical precursors, and biologic raw materials. By forcing tariffs on these ingredients, it reduces margins for U.S. drug developers and makes R&D abroad more cost effective. Our government keeps trying to reduce the costs of medicine yet does the very thing that will increase the cost of goods for domestic manufactures. The administration has signed multiple agreements with drug manufacturers that included pledges to move drug R&D and manufacturing stateside. I’m fearful that this pledge was made as part of the bigger agreement, and it seems pretty obvious to me that the manufacturers would have already moved those parts of the business stateside if they were less costly here. This will only make China’s process cheaper in comparison. It seems to me that tariffs are the wrong medicine for our early-stage problems.

All of these issues are reasons enough to pay attention to China’s resurgence in this area, but what is probably the biggest problem with losing our leadership in bio pharmaceutical innovation is the national security risk that comes with China controlling access to medicines critical for patients in the U.S. This concern mirrors the warnings of the U.S. National Security Commission on Emerging Biotechnology and is especially significant for seniors, who depend heavily on many of these essential medicines. My blog last week talked about Alzheimer’s and what an impact this disease has on all of us, either as one who suffers from it or as one who cares for those trapped by this terrible disease. If China discovers a new medicine that slows or stops the progress or even reverses its destruction or prevents its onset, would that impact access to treatment in other countries. We face the same problem with rare earth minerals, China controls a large portion of the mining and an even larger portion of the refining of these minerals that are key for defense, technology, energy, and medical devices. It’s the same approach as biopharmaceutical innovation . . . control the upstream process and you control access and build political leverage.

The bottom line here is the fact that Medicare age adults are the ones that would be most affected by China’s control of access to life altering and lifesaving medicines. Our government’s uncoordinated attempts at lowering drug prices are threatening innovation but even more concerning is that they have opened the pathway for China and other countries to control future innovation and access. We need a focused plan to regain the momentum for our early-stage drug programs and to protect our seniors’ access to these new life-changing medicines.

Best, Thair