One of China’s largest drug manufacturers may be reducing investment in the U.S. biotech space amid the ongoing trade war between the two countries, but several attendees from Chinese biotechnology firms at a trade show expressed mixed opinions about what the current impasse means for them and for the industry as a whole.
The attendees, who represented both large and small firms involved in biopharma development and related services, all spoke on condition of anonymity, as they were not authorized to speak to the press and were providing personal opinions.
In an interview with Bloomberg last week, Kevin Xie, president of Fosun Healthcare Holdings and the Shanghai-based conglomerate’s chief representative in the U.S., told Bloomberg that the company was planning to limit its American biotechnology investments to small holdings in order to avoid regulatory scrutiny.
Xie’s remarks came amid increased scrutiny by the Trump administration on Chinese investment in the U.S., particularly in areas of strategic and economic importance like biotechnology. In January, Silicon Valley Bank’s annual biotechnology report indicated that Chinese investors “were a significant part of the ecosystem” of biopharma funding, participating in syndicates that invested more than $4.5 billion last year, a 50 percent increase over 2017.
However, the Treasury Department has begun to restrict that investment, a move that reportedly has already scared off some Chinese investors. In October, the department issued an interim rule for a pilot program whereby anyone who buys a non-controlling stake in a company and gains access to material, non-public information would fall under the scrutiny of the department’s Committee on Foreign Investment in the United States.
At the Biotechnology Innovation Organization’s annual conference in Philadelphia Tuesday, some attendees representing companies in the Chinese biopharma industry did not appear very worried about the situation as it pertains to the industry, while others were more concerned.
One attendee, who works for a large Chinese pharmaceutical services firm, said the trade war does not affect his company’s business overall. However, because of the nature of its business, it must acquire a lot of sophisticated equipment from abroad, particularly the U.S., and the company has been preparing to encounter difficulties procuring it, though it has not yet decided on a course of action.
Another, who manages research and technology for a biotechnology company, said his company had not encountered any particular difficulties, but from his personal perspective, he was not concerned, as it appeared to be mainly a political conflict. “I think it’s temporary,” he said.
An attendee who works for a Chinese contract research organization with international operations said that his company was not yet affected, but could be. While it is difficult to predict what could happen – in part because it is hard to know what President Donald Trump is thinking – difficulty procuring equipment similar to what the aforementioned pharmaceutical services firm foresees was a possibility.
It is unlikely that pharmaceutical firms in particular will be affected by the trade war, said another attendee, who was at the conference on behalf of a Chinese biopharma company. But biotechnology companies are more likely to be, and he anticipated that Chinese biotechs will turn more of their attention to Europe.
Photo: Alaric DeArment, MedCity News
