*

China pharma sector seeking to mitigate impact of trade

tensions

- sources

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Fears include access to US supply chains and raised import

tariffs - sources

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WuXi AppTec has paused a research project - source

*

Clients requested Chinese cell culture media manufacturer

keep

backup raw materials made locally

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Innovent Biologics ( IVBXF ), BeOne Medicines discussing local

testing

-source

By Andrew Silver

SHANGHAI, June 18 (Reuters) - Drug research and

development firms in China including WuXi AppTec and

WuXi Biologics ( WXIBF ) are changing project plans, stockpiling

supplies and discussing testing locally, said sources with

knowledge of the matter, as they seek to mitigate the impact of

U.S.-China trade tensions.

China's sprawling pharmaceutical research and manufacturing

sector serves global drug giants such as Pfizer ( PFE ) and

AstraZeneca ( AZN ) with a low-cost development model that often

uses imported clinical samples, equipment, chemicals and other

materials to conduct work.

Fears of delay in access to U.S. supply chains and raised

import tariffs are spurring biotech and pharmaceutical companies

to avoid, pause or consider delaying the start of projects,

according to three sources.

They are also discussing testing U.S. clinical samples in

the U.S., instead of sending them to China for further research,

a move that could increase costs, and requesting additional

supplies for backup, three other sources said.

The six sources who spoke to Reuters are director or

executive-level employees involved in various aspects of the

industry in China including research and development,

manufacturing and supply chains.

All but two agreed to speak only on condition of anonymity

because of concerns about effects on fundraising plans or they

were not authorised to speak to media. The developments have not

been reported previously.

U.S. and Chinese officials said last week they had agreed on

a framework to put a May trade truce back on track and remove

China's export restrictions on rare earths, but offered little

sign of a durable resolution to longstanding trade differences

that have affected products ranging from semiconductors and jet

engines to medical equipment and pharmaceuticals.

"What kind of long-term policy it could be, you know, what

kind of tariff would it be in half a year, in one year... nobody

knows. And that's the problem. That's what makes everybody worry

and nervous," said Chen Gong, co-founder of NeuExcell

Therapeutics, a biotech with its main operations in Suzhou.

He said the U.S.-China trade tensions had made him more

cautious about investing in a clinical trial and the company

would delay its start if it did not have sufficient funding.

Reliance on U.S. imports has come into particular focus as

trade tensions escalate. In 2024, the U.S. exported diagnostic

and laboratory reagents to China valued at about $1.4 billion

and prepared culture media for the development or maintenance of

microorganisms worth about $125 million, U.N. Comtrade data

showed.

In a sign of the importance of some of the imports and the

damaging effect disruption could have on China's healthcare

industry, some U.S.-made goods including diagnostic reagents

from Germany's Siemens Healthineers were exempted from

raised Chinese tariffs, that company said in May.

China raised its tariffs on U.S. imports to as much as 125%

though it has since reduced that to 10% while it works out a

more permanent trade deal.

HIGHER COSTS, DELAYS

WuXi AppTec and a Chinese biotechnology firm that was its

research client agreed in May to switch U.S.-made reagents they

had been using for a Hepatitis B virus pre-clinical research

project into non-U.S. versions due partly to concerns about

higher costs from tariffs, a source at the client company said.

The project had been temporarily paused during the

discussions, which began prior to May, the source said.

WuXi AppTec said it makes "every effort to avoid disruptions

or delays in the delivery of services to customers."

Since April, at least 17 Chinese biotech and pharmaceutical

clients have contacted Chinese cell culture media manufacturer

JS Biosciences asking it to keep locally-made backup raw

materials for production because they were concerned about cost

increases or the inability to access foreign supplies, the

firm's CEO Luo Shun said.

"If they have a product made by us, and we rely on the

foreign raw material supply and that raw material will increase

in price or is never going to come, obviously it will impact

their manufacturing of those life-saving drugs. So obviously,

that's their primary concern," Luo said.

Another Chinese drug research and development firm decided

not to provide a quotation to a foreign pharmaceutical company

interested in hiring it for protein drug manufacturing, due to

delays in obtaining necessary U.S.-made culture medium from a

U.S. subsidiary of Japan's Fujifilm ( FUJIF ), a source at the

Chinese firm said.

The potential client would likely not have accepted waiting

on imports of new supplies into China, which would typically

take two to four months, the source said.

A Fujifilm Holdings America Corporation spokesperson said

Fujifilm Biosciences, one of its life science business units,

has made significant investments to build a robust global

manufacturing network so that it could navigate any challenges

or disruptions, without elaborating on its supply issue

involving China.

STOCKPILING, US TESTING

After China announced a large rise in tariffs for U.S.

imports in April, WuXi Biologics ( WXIBF ) placed a

bigger-than-normal order for reagents made in the U.S. with a

supplier because it was not sure how long that policy action

would continue, said a source at the supplier.

WuXi Biologics ( WXIBF ) did not respond to requests for comment.

Concerns about the potential for U.S. export restrictions

led China's Innovent Biologics ( IVBXF ) and multinational BeOne

Medicines to discuss with

Massachusetts-headquartered Thermo Fisher Scientific ( TMO ) the

prospect of not sending U.S. clinical samples to China, said a

source at the U.S. company.

Testing U.S. samples in-country instead of in China would be

more expensive, the source said.

A spokesperson for BeOne said it does not comment on rumours

or speculation. Thermo Fisher and Innovent declined to comment.