Biotech firms assess the impact of Trump's new order on drug pricing
US President Donald Trump's executive order on Monday, aimed at slashing prescription drug prices by as much as 80 percent, sent a wave of anxiety across global Big Pharma and China's emerging biotech sector.
Shares of Chinese mainland pharmaceutical firms, including BeiGene, InventisBio, Biokin Pharmaceutical and InnoCare, initially fell in tandem with those of overseas drug giants, but most clawed back losses after investors scrutinized the contents of the order.
Analysts attributed the recovery to vague implementation details and some relief that the order was less aggressive than feared.
US drug prices are up to five times higher than in other developed nations. Trump's order requires US drug prices to align with the lowest prices paid in those countries. He framed the move as a long-overdue correction to "decades of unfair pricing," claiming that US consumers have been subsidizing drug costs globally.
US drug prices can be as much as five times higher than in other developed countries, while Trump's executive order lacks implementation details.
His announcement follows a separate US investigation ordered into pharmaceutical import dependency, amid earlier Trump threats to impose future tariffs on foreign-made medicines.
Many investors are wary about what a global repricing of innovative drugs might mean for China-US licensing deals.
In recent years, Chinese biotechs have steadily expanded their footprint in the US market, drawn by its scale and high prices. A handful, including BeiGene, Legend Biotech, Hutchmed and Top Alliance, have made significant inroads in the US market.
The BeiGene drug Brukinsa, a BTK inhibitor for blood cancers, generated US$2 billion in US sales last year, contributing over half of the company's global revenue. Legend's CAR-T therapy Carvykti, co-developed with Johnson & Johnson, booked 90 percent of its US$960 million revenue from the US.
Will the future of those earnings come under pressure?
Trump's order could allow US health agencies to benchmark reimbursement against countries like Germany or China, where government drug-procurement programs have driven down prices. China's own procurement system has cut prices for branded and generic drugs by up to 90 percent.
Chinese mainland pharma companies rely on cross-border licensing agreements.
In 2023, Chinese biotechs secured 21 billion yuan (US$2.9 billion) in upfront payments from such deals, more than they raised through public share offerings. But if the US proves less profitable, they may have to rethink marketing strategy.
A warning sign came in 2022, when US-based Eli Lilly pulled out of development of a BCL-2 inhibitor licensed from Shanghai Fosun Pharma, citing uncertainties stemming from US price reforms. The drug can be used in treatment of diseases like lymphoma.
For Chinese companies, access to the US market has been more than just a commercial play. It has served to lift the profile of Chinese biotech and provide sources of investment.
Li Jingshuai of the Pharmaceutical Association Committee told Caixin Weekly that the US accounts for over 60 percent of global revenue and 70 percent of the profits for innovative drugs. By contrast, China represents just 3 percent of that market.
Meanwhile, lower down the pharma supply chain, the new policy may shift procurement dynamics for generic drugs and the raw materials used in making pharmaceutical therapies.
China produces about 40 percent of the world's active pharmaceutical ingredients and is home to large-scale manufacturers like Huahai Pharmaceutical and CSPC Pharmaceutical Group. While US demand for low-cost sourcing may increase, possible new tariffs and intensified price competition could squeeze margins.
Multinational drugmakers face pressure on both sides. Companies like British-Swedish giant AstraZeneca and France's Sanofi already contend with strict price controls in China. If the US follows suit, global pricing models may be forced into reset. Some analysts warn this could lead to reduced drug access for low-income countries or prompt some firms to withdraw from unprofitable markets entirely.
The impact on innovation is another concern. The steep scale of the proposed cuts has raised alarm across the industry, with some executives warning it could damage long-term R&D investment. In the past, the US was seen as the one market no global drugmaker could afford to lose, a mindset that may now be changing.
Despite the risks, some Chinese biotech leaders see opportunity amid all the uncertainty, and remain cautiously optimistic. They argue that global buyers are still seeking differentiated science at reasonable cost, and companies with early-stage pipelines and lean R&D models could remain attractive, even in a more price-sensitive market.
Still, others warn that deal sizes may shrink, licensing timelines may stretch and regulatory uncertainty could rise.
To stay competitive, industry experts suggest Chinese biotech firms diversify away from US reliance, strengthen their presence in Europe and Japan, and prioritize cost control and operational efficiency.
