In a potential threat to foreign drugmakers profiting on innovative drugs, the Chinese government on Tuesday issued a new policy package—including tax breaks—to promote generics.
The package (Chinese) would allow certain qualified generics makers to be designated as high-tech enterprises, a label that comes with a 15% corporate tax rate, compared to 25% for other companies. The policy also makes clear that China considers compulsory patent licensing a bona fide option during public health emergencies or shortages of key drugs.
The government’s health department and recently rebranded drug regulator will compile and actively update a drug list that encourages companies to produce generic versions. That list will include medications for rare diseases, major infectious diseases and pediatric treatments, as well as important drugs that are running scarce.
Trade in chemicals between the U.S. and China is robust and roughly equal. See more details on the following chart.
No one knows yet what products will be hit as part of a Trump administration plan to impose tariffs on Chinese imports, but chemicals are unlikely to emerge unscathed from any U.S.-China trade conflict. Even before the U.S. announcement, chemicals were vulnerable to trade conflicts. President Donald J. Trump announced on March 22 that the U.S. will impose tariffs on about $60 billion worth of Chinese goods to punish the country for technology and trade-secret theft. The White House says it will reveal the list of goods within 15 days of Trump’s announcement.
In response to the March 22 announcement, China threatened a countermeasure that would target about $3 billion worth of American goods, including fresh fruit, nuts, and wine. Officials hinted that a fuller response could follow.
In a statement, the Chinese embassy in the U.S. vowed that “if a trade war were initiated by the U.S., China would fight to the end to defend its own legitimate interests with all necessary measures.”
chemical trade was roughly in balance last year.
Sources: Customs General Administration of the People’s Republic of China, C&EN calculations
Chinese premier Li Keqiang said China will nix import tariffs on foreign anticancer drugs, a plan that could benefit drugmakers like Roche, Novartis and AstraZeneca, while prompting local pharmas to amp up their games.
“We aim to further bring down overall tariffs across the importing process, with tariff rates for important day-to-day consumer goods, including drugs, slashed. And we also plan to phase in zero tariff for the much-needed anti-cancer drugs,” said Li during a televised press conference at the close of the country’s annual congress conference on Tuesday.
Without providing a detailed timeline, Li also said the country will open up further to stimulate market vitality and public creativity.
The U.S. continues to lead the world in science and engineering, but other nations are making quick progress that threatens U.S. supremacy. Science & Engineering Indicators 2018, released earlier this month by the National Science Board (NSB), shows that the U.S. and Europe no longer dominate international science. Instead, many nations are increasingly competing on equal footing, with China leading a pack of countries that see science as a way to build a modern, successful economy.
“It is very clear that China is placing great emphasis on developing its science and technology capabilities,” says University of Oregon chemist Geraldine Richmond, who chaired the NSB committee that created the report. China’s investment is not just financial. China now produces more undergraduate science and engineering majors than any other country worldwide.
The U.S. has had a hard time recruiting more science students internally, especially from minority groups, points out France Córdova, director of NSF, which is overseen by the NSB. To remain successful, she says, “we will need to broaden the participation of our citizens in STEM.”
A Chinese government policy aimed at curbing imports of postconsumer plastic waste went into effect Jan. 1, leaving recyclers in the U.S. and elsewhere without a market for much of their plastic waste and causing material to pile up.
U.S. localities, particularly on the West Coast, have for many years shipped plastics collected in recycling programs to China. Low wages make China an ideal place for the labor-intensive sorting of plastic waste.
China officially notified the World Trade Organization last summer that it would restrict the import of 24 types of waste. It explained that dirty and hazardous substances mixed with plastic and other waste pose a risk to health and the environment.
Although the rules don’t ban the import of recycled plastics outright, they severely limit the practice by keeping the level of contaminants such as food residue and metals to no more than 0.5%.
Concern is growing in India about pharmaceutical companies’ dependence on low-cost bulk drug imports from China to meet escalating demand for pharmaceuticals at home and for export.
Although India is a key supplier of formulated generic and affordable medicines to the world market, it imports bulk active pharmaceutical ingredients (APIs) from China, Germany, Italy, Singapore, and the U.S. China alone accounts for 66% of crucial raw materials, especially antibiotics.
Indian companies are capable of manufacturing the APIs in needed quantities, but the compounds can be imported at lower cost, India’s Minister of State for Chemicals & Fertilizers, Mansukh L. Mandaviya, told India’s Parliament on Dec. 19.
The Indian government had started in 2016 to develop API manufacturing parks with infrastructure such as better power supplies and waste treatment plants. That effort is currently in limbo as the government tries to figure out how to finance the projects.
During the 19th National Congress of the Communist Party of China that took place in Beijing last month, chemists throughout the country noted that three of their peers are now part of the 205-member Central Committee, one of the top ruling bodies of the Chinese Communist Party. All in all, 25 members of the Chinese Academy of Sciences or the Chinese Academy of Engineering are now members of the Central Committee, says Weihong Tan, a professor of chemistry at the University of Florida and Hunan University.
“Scientists in the Central Committee won’t be able to affect fundamental policies, but they will be a major part of the decision-making for science funding, or deciding how to tackle air pollution,” Tan says. “Scientists have definitely gained in influence in China in the past 25 years.”
———By Jean-François Tremblay