Disrupting the Dragon Dance

The dragon dance is a traditional Chinese dance performed during celebrations like Chinese New Year to ward off evil spirits and bring good fortune. In the pharmaceutical world, the relationship between the US and China is a dragon dance: intricate, occasionally fiery, and requiring immense coordination. It wards off the evil of sickness and this complex choreography has delivered affordable medicines to American shores for years. Recently, the music changed, the tempo is frantic, and President Trump is shouting to cut off the dragon’s head.

The US imported US$10.2 billion while exporting US$9.3 billion to China in 2023, according to the Atlantic Council. “Given the interdependence between the US and China for pharma ingredients, services and innovation, a full decoupling would be challenging and could cause disruptions to the US drug supply, especially for generic drugs, the APIs for which are predominantly sourced from China,” explained Gil Roth, president of the Pharma and Biopharma Outsourcing Association (PBOA), a trade association representing the contract manufacturing sector.

Roth is right. According to the US-China Economic and Security Review Commission, the US sources 80% of its APIs from overseas either directly from China or countries like India, who rely on China for 80% of its APIs. Chinese manufacturers supply 90 to 95% of the ibuprofen imported by the US and EU, 70% of the global paracetamol supply, and over 80% of key antibiotic APIs.

A March 2025 survey from the Biotechnology Innovation Organization (BIO) found that around 90% of US biotech companies rely on imported components for at least half of their FDA-approved products. While reliance is distributed amongst China and other regions like the EU, the imposition of broad tariffs will delay the pipeline of treatments and reduce access to affordable medicines; 70% of surveyed companies anticipate higher manufacturing costs due to tariffs on China.

While pharmaceutical products were initially spared from the highest reciprocal tariff rates imposed on some Chinese goods in early April 2025 (with rates reaching up to 145% for certain items), a baseline 10% universal tariff remained, and the possibility of future, sector-specific levies persist. Even the threat of tariffs can disrupt planning and increase costs; one earlier analysis estimated that potential tariffs could raise costs for the pharmaceutical, life sciences and medical device sectors by billions annually.

Further complicating the relationship is the BIOSECURE Act. In September 2024, the House of Representatives passed the bill with a 306-81 majority. The act has stalled in the Senate. However, all executives questioned on the matter agree that the bill will be passed in some form, bearing the name BIOSECURE or not. BIOSECURE aims to prevent US federal funding from being used by American companies that contract with designated Chinese ‘biotechnology companies of concern’, explicitly defined as BGI, MGI, Complete Genomics, WuXi AppTec, and WuXi Biologics.

Companies like WuXi AppTec have been involved in the development of a significant portion—perhaps as much as one-quarter—of drugs approved in the US. WuXi AppTec supported 27% of all FDA small molecule drug approvals from 2023, and 10% of biologics approvals from 2022, according to Jefferies. This does not account for other drugs currently in development. “WuXi’s scale and reach create uncertainty, particularly for companies in critical development phases. For early-stage companies still preparing for clinical trials, pivoting from WuXi is possible but costly. Those nearing product filing need to secure approvals while preparing tech transfers to other CDMOs. The greatest risk lies with companies between phase one and three,” elaborated Jim Donovan, contract manufacturing business leader at Pfizer CentreOne.

While the legislation includes phase-out periods (potentially up to five or seven years for pre-existing contracts), they are likely not enough. A BIO survey of 124 biopharma companies found that 79% have at least one contract or product with a China-based or China-owned CDMO/CMO and would require eight years to switch manufacturing partners—or millions of patients could be affected.

Dirk Lange, CEO of Pyramid Labs, said: “Geopolitical tensions, tariffs and regulatory uncertainties are prompting companies to shift production closer to their primary markets. Pyramid Labs has seen an influx of clients seeking US-based capacity, with late-stage and even commercialized programs transferring their manufacturing operations domestically.”

Afton Scientific, a CDMO in Virginia, is seeing something similar: “The trend of migrating away from China is largely driven by business risk considerations. We are seeing a growing emphasis on domestic manufacturing capabilities. For US-based companies, this presents an opportunity to compete on quality, trust and compliance,” said Thomas Thorpe, the CEO.

Despite statedly applying to named CMOs, BIOSECURE spilled into the general Chinese CMO market, confessed Nick Kotlarski, the president of Bioworkshops, a contract manufacturing organization in China: “For Bioworkshops, the impact of proposing the Biosecure Act was chilling. Early-year inquiries were strong, but then fell silent. The uncertainty spilled into Europe. Potential clients confessed to avoiding China for CDMO services and being offered higher costs and longer delivery times from alternative suppliers while some of our capacity remained idle.”

Denying US manufacturers access to Chinese and APAC capabilities would be a major drawback, and many US-based CMOs pivot to China to offset the high US manufacturing costs. “When larger capacity is needed, we can shift production to China, where facilities are built quickly and cost-effectively,” said Robert Lee, senior vice president of business development at Particle Sciences.

“Early-phase trials in APAC have given our clients access to faster regulatory timelines and study start-up, large treatment-naïve patient populations, the ability to generate early human data—often even before submitting an IND in the US, and cost advantages that stretch every dollar further,” said Rick Farris, managing director of North America for Novotech, a contract research organization with deep roots in APAC.