How Trump's Proposed Price Cuts Could Hurt China's Innovative Drugmakers

On May 11, former U.S. President Donald Trump announced plans on social media to reduce prescription drug prices by 30% to 80%[para. 1]. This proposal uses a “most-favored-nation” pricing system, pegging U.S. drug prices to the lowest prices paid by other developed countries. Further, Trump’s plan involves reforms aimed at increasing transparency and reducing the costs imposed by pharmacy benefit managers, who act as intermediaries in the drug pricing chain[para. 2]. These dramatic proposals have deeply unsettled the pharmaceutical industry.

Efforts to lower drug prices began during President Joe Biden’s administration and show no sign of reversal[para. 3]. Any significant change in U.S. pricing policy would have global ramifications, especially for Chinese pharmaceutical firms whose business models and valuations are anchored on obtaining higher prices and robust sales in the U.S. market[para. 3][para. 4].

Due to strict cost controls and reimbursement restrictions in China, many Chinese drugmakers depend on U.S. sales for revenue growth and to attract investment. For example, BeiGene Ltd. and Hutchmed China Ltd. have both introduced drugs in the U.S. at prices significantly higher than in China. A single 80-milligram tablet of BeiGene’s lymphoma drug Brukinsa costs $67.98 (about 490 yuan) in the U.S. versus 91.2 yuan ($12.65) per capsule in China[para. 4]. In the first quarter of 2025, Brukinsa’s global sales totaled 5.7 billion yuan, rising 63.7% from the previous year, with U.S. sales accounting for more than 70% (over 4 billion yuan) of the total[para. 5].

Trump’s announcement immediately affected Chinese drugmakers’ share prices. On May 12, BeiGene’s mainland China shares dropped over 9%, and its Hong Kong shares by nearly 9%. Its U.S.-listed stock, however, experienced a slight increase of 0.54%. Hutchmed saw its Hong Kong shares fall by nearly 3.6% and its U.S. shares by just over 2%[para. 6].

Should these price cuts proceed, Chinese biotech firms may need to adjust their valuation models, as their fundraising often relies on the potential of high-priced U.S. market sales[para. 7][para. 8]. Experts note companies like Akeso Inc. and Innovent Biologics Inc.—each with market capitalizations near HK$90 billion ($11.5 billion)—will be pressured to deliver substantial sales to justify these valuations[para. 8]. The proposed policy change also introduces uncertainty for biotech startups seeking investment and for companies that license drug assets abroad[para. 9].

Chinese drugmakers have increasingly entered into out-licensing deals and established overseas ventures (NewCos) to generate revenue as domestic fundraising becomes more challenging[para. 10][para. 11]. In 2023, Chinese biopharma disclosed over 80 out-licensing deals valued at $45 billion. This trend accelerated in 2024, with 94 out-licensing deals totaling $51.9 billion—a 26% year-over-year increase[para. 12].

Industry experts predict multinational pharma firms may step up acquisitions of low-cost, Chinese-developed drugs—usually improved versions of existing treatments—to help navigate lower price environments in the West[para. 13]. The potential U.S. price cuts also raise questions about orders for Chinese contract research and manufacturing organizations (CXOs), such as WuXi AppTec and Pharmaron, which heavily depend on overseas clients[para. 14][para. 15][para. 16]. However, as CXO costs are a small fraction of pharmaceutical companies’ expenses, the immediate impact may be limited; specific sectors, like manufacturing of GLP-1 diabetes drugs, may be more affected[para. 17][para. 18].

Finally, some industry insiders argue that if U.S. drug innovation slows due to these policy changes, China could become a new hub for global drug development, given its economic stature and growing capacity in pharmaceutical innovation[para. 19][para. 20].