Biotech industry notches some wins in US-China trade deal

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Trine K. Tsouderos HRI Regulatory Center Leader, PwC US January 24, 2020

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The pharmaceutical patent protections and increased export targets in phase one of the US-China trade deal could benefit drug companies seeking to expand sales in the country of 1.4 billion people. The agreement, signed by President Donald Trump on Jan. 15, calls for “effective protection and enforcement of pharmaceutical-related intellectual property rights, including patents and undisclosed test or other data submitted as a condition of marketing approval.”

China also agreed to provide a system for “timely resolution” of patent disputes; patent extensions when there’s an unreasonable delay in granting the patent or during pharmaceutical product marketing approvals; and enforcement against “counterfeit pharmaceutical and related products containing active pharmaceutical ingredients, bulk chemicals, or biological substances.”

In a statement provided to HRI, Pharmaceutical Research and Manufacturers of America (PhRMA), a trade group representing biotech companies, commended the US government for securing “important intellectual property provisions for the biopharmaceutical industry” and said “the agreement represents important steps forward in pursuing policies that will usher in a more fair and open market in China for innovative treatments and cures that are pioneered in the United States.”

The trade pact also calls for a $77.7 billion increase through 2021 in US exports to China of manufactured goods, including an unspecified amount of pharmaceutical products, and optical and medical instruments. The product descriptions include heparin, vaccines, antibiotics, blood products, medical and surgical instruments, breathing and orthopedic appliances, and imaging apparatus.

However, The New York Times reported that Chinese Vice Premier Liu He, who signed the deal, said that “Chinese businesses will buy American goods and services ‘based on the market demand in China,’ suggesting Beijing may not view the targets as so ironclad.”

Absent from the agreement are drug patent exclusivity and any change in US tariffs on Chinese products used to make pharmaceuticals.

HRI impact analysis

China supplied 13.4 percent – $3.1 billion worth – of the US’ drug imports in 2018, according to the US-China Economic and Security Review Commission’s 2019 annual report to Congress. That figure understates the US’ dependence on China for the majority of active pharmaceutical ingredients, the commission states.

On the flip side, US healthcare exports to China are increasing. The United States exported $3.3 billion in pharmaceuticals and $1.9 billion in medical equipment and supplies to China in 2018, notes the report.

Still, “the vast potential of China’s healthcare market remains out of reach for US and other foreign companies,” according to the commission. Historically, barriers have included China’s lack of intellectual property rights protection and bias toward domestic producers.

China represents a destination for a relatively small slice of US global medical exports: 5 percent for biotech, 6.7 percent for pharmaceuticals and 7.1 percent for medical equipment, the report states.

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Crystal Yednak

Senior Manager, Health Research Institute, PwC US

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