News about the trade war between the U.S. and China recently has been stirring the market nerves.
The Office of the United States Trade Representative (USTR) released a list of commodities worth USD 50 billion in total subject to additional tariffs on April 3 EST, proposing to slap 25% tariffs on the Chinese commodities listed therein, and the U.S. side said that they might slap tariffs again on Chinese commodities worth USD 100 billion. According to the official information, there would be a 60-day publicity period after the list was released, a hearing would be held for items proposed to be slapped tariffs, and the implementation time is expected to be June this year at the soonest. In other word, there is a buffer period of at least two months, and the final result is not clear.
Pharmaceutical plate is one of the field proposed to be slapped tariffs involved in the said list, with varieties including coenzyme Q10, quinone drugs, insulin, vaccines, blood products, MRI, defibrillators, syringes, artificial joints, and pacemakers, etc., which can be roughly classified into the following three categories: 33 pharmaceutical chemicals, 38 pharmaceutical or biological products, and 52 medical instruments and relevant products.
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Pharmaceutical Field Varieties Proposed to be Slapped Tariffs |
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Pharmaceutical chemicals |
Pharmaceutical or biological products |
Medical instruments and relevant products |
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33 |
38 |
52 |
According to statistics, the main business income of Chinese pharmaceutical enterprises above a designated scale was RMB 2.98 trillion in 2017, with the amount of pharmaceutical export accumulatively of USD 15.084 billion, accounting for less than 3.5% of the overall operating income of the pharmaceutical manufacturing industry of China in the same period, showing that the export overall accounted for a small proportion, and the Chinese pharmaceutical industry was mainly driven by the Chinese market consumption.
The Chinese pharmaceutical products on the international market are mainly APIs, intermediates, and basic consumables, there are not many Chinese enterprises exporting preparations, and the U.S. is now the second largest country of export for China’s chemical APIs. According to the data statistics of the Ministry of Commerce and Customs of China, the scale of China’s export of APIs, pharmaceutical preparations, and medical devices to the U.S. separately reached USD 3.9 billion, 1.2 billion, and 5.8 billion in 2017. Overall, the exported products of the Chinese pharmaceutical industry are still at the downstream level of the industry chain.
Exported APIs
In this list of items proposed to be slapped tariffs, vitamins are a big category in the APIs. The U.S. is a big consumer of vitamins. China’s export of vitamins to the U.S. accounted for about 22% of its total vitamin export in 2017. If the list of the vitamin APIs imported from China proposed to be slapped tariffs is implemented after June, the Chinese vitamin manufacturers will be affected, especially enterprises whose performance relies heavily on export, like Guangji Pharmaceutical, Kingdomway, and Zhejiang Medicine.
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