How Chinese Innovation & US Tariffs Could Transform Europe into a Life Science Hub

The life science sector is experiencing seismic shifts that currently seem to be putting Europe and the UK at a disadvantage. In spite of desires to grow the industry and become life science hubs, the increased protectionism of the Trump administration seems likely to foil this effort. Among a long list of tarrifs, a 25% tariff on pharmaceutical products has been touted. This aims to force US pharmacuetical companies to reshore manufacturing and investment in the US. But in the black hole left behind, could China's increasingly innovative life science sector plug the gap?

Trump’s Tariffs: A Catalyst for Change in Global Pharma Investment

There could be a piece exclusively focused on how the Trump administration is reshaping the U.S. relationship with pharma. From a vaccine skeptic Health Secretary to recent meetings with pharma leaders, that dynamic will continue to shift in the coming months and years. However there are a couple of key developments so far which could have a benefit to Europe's ambitions to attract life science investment and innovation.

The first is the cutting of research funding in the US. This may drive talent to Europe where funding is available; with programs like Horizon Europe, the region is well positioned to include more innovative researchers to its network. This pool of talent could be an attractive prospect to pharma companies looking to partner with the most innovative institutions on their R&D efforts.

The other development could fall either way for Europe. As mentioned, the tariffs are looking to encourage companies to return their capabilities (and money) to the U.S. But companies may decide to do the opposite and instead focus on more stable countries for their investment. Regardless of political creed, few would argue Trump is not volatile. In which case, this protectionism has in fact opened the door for European policymakers to position the region as the new global centre for pharmaceutical development. Alternatively, the tariffs could have the desired effect, leaving Europe in the cold. In which case, Europe would need to look beyond U.S. pharma for investment.

China’s Pharma Evolution: From Manufacturer to Innovator

For decades, China's pharmaceutical industry had a clear role as a producer of cheap generics and a key supplier ingredients. But Chinese companies are now beginning to innovate and lead in fields like oncology and immunotherapy, reaping the rewards of the government identifying biotech as a strategic priority decades ago. The impact of this transformation is already being felt in Europe. Companies like BeiGene and Hengrui are establishing European headquarters and conducting clinical trials in the region.

In fact, Chinese-developed drugs are already succeeding in Europe. Fruquintinib, an innovative treatment for metastatic colorectal cancer, and zanubrutinib, a next-generation B-cell cancer therapy, have already gained approval. Immunotherapy drug tislelizumab is also making inroads. This influx of new players challenges long-standing monopolies in these therapy areas.

Europe as the New Global Hub for Life Sciences

Chinese pharmaceutical companies are already demonstrating a level of commitment to Europe, despite China direct investment into the region declining overall. Europe should look to encourage this commitment to strengthen for a litany of reasons. There is signifcant economic benefit from any investment from an industry like pharmaceuticals, from job creation to increased R&D activity. This is particularly the case if they decide to open manufacturing sites. But it could also lead to better patient outcomes. Stronger Chinese firms breaks the monopoly of exisiting pharma giants, inspiring competition that leads to innovation. If Chinese companies can produce safer and more effective treatments, then these are the treatments we want to be reaching patients.

This could be an answered prayer for the UK. AstraZeneca recently pulled planned investment in a UK site worth £450 million, despite Labour wanting to position itself as business friendly to fuel its growth agenda. Despite Brexit, the UK is actually well positioned to be a life science hub: we have world-class research institutions, a highly skilled workforce, and the unique opportunities for clinical trials and reimbursement provided through a national health service.

Of course, there must be a healthy amount of scepticism when it comes to Chinese investment, especially as these companies will have heavy ties to the Chinese government. But if European policymakers did want to take advantage of this opportunity, how would they do so? The primary necessity is streamlining and improving regulatory approvals, a process already underway for the MHRA and NICE in the UK. Through creating better pathways, they can make seeking approval in their country attractive and therefore get access to their citizens first. There is also a need to offer incentives for biotech investment; this is what seems to have cost Labour AZ's investment. The approach would also need to integrate the Chinese firms into our existing systems to create a collegiate environment, encouraging partnership between them and domestic pharmaceutical firms.

A Defining Moment for Europe’s Pharmaceutical Future

Europe has a chance to emerge as the new epicentre of life sciences. The challenge now is whether Europe and the UK decide to make this concerted shift east. It is part of a broader conversation on whether the region waits out Trump, or decides to look elsewhere rather than continuing to economically depend on the nation they have partnered with for the last 70 years.

If Europe takes the right steps and makes the right noises, they can become the driving force of medical innovation moving forward. This would benefit patients, economies, and healthcare systems alike. The life sciences has the potential to re-establish Europe as a region at the forefront of the world - but it will require policymakers see the rise of Chinese pharma and decide to make attracting it a priority.