The Commission – which reports to Congress on the national security implications of trade between the two countries – made the suggestion in a report this week also citing analysis by the US Department of Commerce.
Barriers to entry
The authors explained that although drugs are the US’ second largest and second fastest growing export to China – the value of pharmaceutical shipments increased from $402m in 2007 to $2.2bn in 2016 – the country still accounts for a relatively small amount of US sales.
“In 2016 China was the second-largest pharmaceutical market globally, but only the ninth-largest export market for the United States, accounting for 4 percent of U.S. pharmaceutical preparation exports” they said.
The authors attributed the disparity to barriers to entry that hamper US firms.
“China uses an asynchronous review process to approve foreign pharmaceutical products that requires safety trials of foreign drugs to be at an advanced stage in other countries before Chinese regulators begin their own review process.
“This significantly slows the introduction of new foreign drugs into China’s market, essentially doubling review times for foreign pharmaceuticals” they said, adding that in some cases US drugs have been held up by as much as seven years.
Other barriers include the requirement that drugs are tested in China (a workaround for which was introduced in October), the chronic shortage of Chinese regulatory staff as well as shortcomings in the country’s IP system.
Despite these hurdles, the authors suggest there are opportunities for US drug and active pharmaceutical ingredient (API) firms in China.
“Chinese consumers may prefer US pharmaceutical products due to concerns over the quality of domestic drugs. China has been a prolific source of counterfeit and defective medicine” according to the authors.
They cite the seizure of tainted gel capsules in 2012 as an example of issues that have damaged the reputation of China’s drug industry in China, also pointing to its reputation as a source for fake products as another factor.
“According to the Office of the United States Trade Representative, in 2016, 90 percent of all counterfeit pharmaceuticals seized at the U.S. border were from China, Hong Kong, India, or Singapore.
“Quality concerns may boost US pharmaceutical sales to China” according to the Commission.