China’s Drug Industry Warns National Security Risk Associated With Rising Foreign Takeovers

By Thea Felicity

Aug 06 2024, 18:20 PM EDT

A staff member prepares fever medicine at a pharmacy amid the Covid-19 pandemic in Nanjing, in China's eastern Jiangsu province, on December 19, 2022, as the pharmacy offers six capsules for each client. STR/AFP via Getty Images

Several foreign acquisitions of Chinese pharmaceutical companies has sparked national security concerns among industry experts.

According to SCMP, since December, global pharmaceutical giants have acquired five Chinese biotech firms, raising fears about the potential impact on China's healthcare sector and national security.

John Cai, chairman of the China Healthcare Innovation Platform Academy in Shanghai, warned that these takeovers could jeopardize access to essential medicines for Chinese patients. He emphasized the urgency for Beijing to address these issues to ensure the continued growth and stability of China's biopharmaceutical industry.

Why There's A Foreign Takeover of Chinese Pharmaceutical Companies

The recent changes in ownership of Chinese drug companies are happening as international competition and restrictions are growing. This makes it harder for Chinese companies to do research and develop new products.

Cai pointed out that selling innovative products too early could prevent China from building top-notch pharmaceutical companies. On the other hand, Wang Haoran, the CEO of the biosciences company Neoland, said that it's normal for smaller companies to sell to bigger ones worldwide because drug research is expensive and takes a long time.

One notable transaction was the sale of Gracell Biotechnologies to AstraZeneca last year, marking the first full takeover of a Chinese biotech firm by a multinational. This was followed by Novartis's acquisition of SanReno Therapeutics, a Shanghai-based company specializing in kidney disease therapies.

Recent reports also indicate that Legend Biotech, known for its CAR-T cell therapy, has received a takeover offer from major companies like Johnson & Johnson and Novartis.

Experts are concerned that these acquisitions could drive up the cost of domestically produced drugs.

Despite increased investment in pharmaceutical R&D from both government and private sectors, the industry has faced a slowdown in venture capital activity since 2021.