European pharma jeopardized by Trump policies, China’s biotech boom
Boxes of medication are seen on the shelves of the Keencare pharmacy, a member of the Green Light Group, on September 19, 2024 in London, England.
Leon Neal | Getty Images News | Getty Images
Once the go-to location for global drugmakers, Europe is now being squeezed by President Donald Trump’s aggressive trade and drug-pricing policies on one side, and China’s explosive biotech boom on the other.
The pharma industry is a cornerstone of Europe’s economy, but the continent’s declining competitiveness has companies looking elsewhere to place investments. And the issue isn’t just economic. New launches of critical medicines are at stake, as prices and regulations discourage companies from launching them on the continent.
Uncertainty in the U.S. and threat of most-favored-nation pricing “has given pharma companies a lever to pull the negotiations with European governments or European regulators,” ING healthcare analyst Diederik Stadig told CNBC, referring to a Trump policy where the price of a drug in the U.S. is set to the lowest price paid by another comparable country.
Meanwhile, China has emerged as a leader in biotech — the innovation engine of pharma. Global pharmaceutical companies are increasingly looking to the country for innovation and to potentially source their next blockbuster drug.
From leading to lagging
For decades, Europe was the world’s undisputed laboratory. In 1990, nearly half of global research and development took place in Europe, and about a third in the U.S., according to research by ING. Today, the U.S. share of R&D has jumped to 55%, while Europe’s has plummeted to 26%.
For decades, companies have lamented Europe’s fragmented capital markets, single-market adoption on pricing and clinical trials, and uneven reimbursement policies.
U.S. tariffs and most favored nation drug pricing have “injected urgency into the debate in a way we haven’t really seen before,” said Stadig.
Washington is increasingly viewing biotech and supply chains as a national security issue, emphasizing the importance of medicine supply chains remaining on American soil.
Meanwhile, China has evolved into an innovation leader, scoring major deals with global pharma companies to access the country’s early-stage science.
Ten years ago, Chinese-developed molecules accounted for just 4% of the global pipeline. Today, they represent nearly a third, according to ING.
“Continued licensing, targeted fundraises, and differentiated science suggest China’s biopharma advantage will likely persist despite rising geopolitical friction,” a January PitchBook report found.
A paper published earlier this year by researchers at Bocconi University found that the U.S. “is consistently more successful than the EU in attracting and retaining R&D activity within its territory, while China emerges as the largest net recipient of foreign R&D worldwide.”
Aggressive U.S. policies
Last week, the U.S. imposed new tariffs on branded drugs of up to 100%. They would only, however, apply to…
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