As U.S. trade war escalates, China rolls out red carpet for Indian drugmakers

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China is preparing a smooth path for Indian drugmakers to enter its pharmaceutical market. (Shutterstock)

As Beijing and Washington exchange harsh words over President Donald Trump’s renewed threat of additional tariffs on $200 billion worth of Chinese imports, China is preparing to open up its pharmaceutical market further for a neighbor that it hasn’t historically had a good relationship with.

“China and India … are in sound communication on opening the Chinese market to drugs from India and conducting dialogue and cooperation between the two sides’ pharmaceutical industries,” China’s Foreign Ministry spokeswoman Hua Chunying said at a press conference this week.

According to Hua, pharmaceutical trade between the world’s two most populous countries is growing, and related government agencies “have formulated specific measures on promoting China-India pharmaceutical trade cooperation and granting greater access to drugs from India.”

It’s not yet clear what kind of detailed terms the two sides are working on. But Dinesh Dua, chairman of the Pharmaceutical Export Promotion Council (Pharmexcil) under India’s trade ministry, told Reuters that China is considering granting Indian drugs already approved in Europe the expedited review pathway, which promises drug application decisions in six months. Pharmexcil and the China Chamber of Commerce for Import and Export of Medicines and Health Products will also sign an agreement to ease clearance processes and help Indian companies find Chinese partners, according to a government document seen by Reuters.

Traces of a cozier China-India pharma relationship predated the press conference. In June, China reportedly agreed to help train Indian pharma companies to understand China’s drug regulatory system.

“China has assured us that they would provide a platform for Indian exports of pharmaceutical products and would also impart specific training to our companies to understand the Chinese regulatory system and processes,” an unnamed senior Indian government official recently told The Economic Times

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The announcement also came as “Dying to Survive,” a Chinese dark comedy about smuggling cheap cancer drugs from India to China, renews nationwide debate over high cancer drug prices. China has been trying to expand access to cancer drugs by slashing their prices. It just recently exempted import tariffs on all cancer drugs and lowered their import value-added tax to 3%. Many innovative cancer drugs made mainly by Western pharma companies have also been added to the national insurance scheme after huge price cuts, while the country is preparing to start another round of negotiations to get more drugs enlisted.

However, other than those accepted in the West, many cheap Indian knockoffs of newer, cutting-edge therapies might not be allowed to enter the Chinese market because China’s patent law—though also criticized by the U.S. as insufficient—offers more protection for innovative pharmaceuticals than India’s.

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Indian medicines are rarely seen in China, a market already crowded with domestic players. Though China is the world’s second largest pharma market after the U.S., the country only contributed 1% of India’s total $17.3 billion drug exports from April 2017 to March 2018, according to Pharmexcil.

Because both countries rely heavily on generics, they could also be seen as competitors in the pharma world. Plus, historically, China and India were not exactly friends, especially as China has been supportive to India’s archnemesis Pakistan. And only last summer, armed forces from the two countries engaged in a monthslong military standoff near a border area. But since then, Indian Prime Minister Narendra Modi has visited China three times in less than a year.

Recent trade spats with the U.S. might have also helped pull the two countries together. While a 25% tariff on $34 billion of imports from China has gone into effect and another $16 billion is pending public review, the Trump administration recently proposed a 10% tariff on another $200 billion products from China. At the same time, India was a hit by steel and aluminum tariffs from the U.S.