China Spares Cancer Drugs From Trade War in Relief to Big Pharma
China Spares Cancer Drugs From Trade War in Relief to Big Pharma
(Bloomberg) --
China is not letting its ongoing trade war with the U.S. get in the way of health care reform.
Twelve cancer drugs are among a short list of U.S. goods to be exempted from the 25% retaliatory tariffs levied by China last year, the Ministry of Finance announced on Wednesday. It’s the first time China has granted tariff relief since the trade war started more than a year ago. The 16 categories of products range from fish food to pesticides, and exemption will last a year starting Sept. 17.
While the monetary value of these drug imports is likely to be minimal, the exemptions will come as a relief for global drugmakers like AstraZeneca Plc and Pfizer Inc., which are investing heavily in the Chinese market and expect it to be a driver of growth for their innovative medicines. It also signals Beijing’s commitment to its health care reform agenda, as it aims to provide China’s 1.4 billion citizens access to quality affordable medicines.
The exempted drugs include AstraZeneca’s lung cancer therapy Iressa, a blood cancer drug by Pfizer and a rectal cancer medicine by Roche Holding AG, according to the list on the ministry’s website.
Move the Needle
While the exemption is helpful for drugmakers and patients, the gesture is unlikely to move the needle much for the two nations’ current accounts.
Imports for this entire class of products -- called ‘heterocyclic compounds’ -- was just $162 million in 2018 out of the total $155 billion imports from the U.S., according to China’s custom data. The cancer drugs, being a subset of this category, would account for even less, although the official data doesn’t give that breakdown.
Also, domestic drugmakers are allowed to manufacture their own generic versions of some of these cancer drugs, which means reliance on U.S. imports is unlikely to be substantial. Still, the inclusion of the drugs in the exemption list is likely to signal that global drugmakers need not worry about getting swept up in the trade war, which shows no signs of moving toward a resolution.
The U.S. Trade Representative’s Office has announced six rounds of exclusions for the punitive tariffs on $34 billion in Chinese goods since December. While this is the first time China has announced exclusions, the finance ministry has said further rounds of exemptions will be given in due course.
--With assistance from Miao Han and Jinshan Hong.
To contact Bloomberg News staff for this story: Dong Lyu in Beijing at dlyu3@bloomberg.net
To contact the editors responsible for this story: Rachel Chang at wchang98@bloomberg.net, Bhuma Shrivastava
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With assistance from Bloomberg