US drug, medical equipment firms unlikely to return home due to China’s huge market, rich talent
Published: Jun 12, 2020 06:23 PM

File photo:Xinhua

Chinese medical industry insiders said US drug and medical equipment companies are unlikely to relocate their current manufacturing in China to the US, as the Chinese market creates large profits and more Chinese talent overseas is returning home.

The comments came as several US Republican senators including Kelly Loeffler  introduced a bill on Thursday (US time) aiming to incentivize pharmaceutical and medical devices and supply companies to relocate to the US, according to a press release from Loeffler's office.

Tax incentives are included in the bill as these politicians are calling for a reduced "dependency on China for critical medical supplies and pharmaceutical products."

US drug giant Pfizer Inc, med-tech solutions provider GE Healthcare and Honeywell declined to comment when reached by the Global Times on Friday. Honeywell's N95 protective face masks are in great demand in the US, China and Europe amid the global pandemic.

Industry insiders say US drug and medical companies' wide presence in the Chinese market and higher costs in the US make it difficult for these firms to relocate to the US, at least in the next three to five years.

Drug and medical supply production in the US has little competitiveness, and US companies may even face losses if they choose to move their manufacturing back, Lai Yankun, deputy general manager of the HanmoYoucheng Medical Technology (Beijing) Co, told the Global Times on Friday.

"Apart from high-tech and finance, there are almost no other industrial chains in the US, with few skilled workers. Hence, the price of a raw material may cost $1 in China but $10 in the US. In the short- and mid-term, relocating to the US isn't cost-effective at all," Lai said.

Medical equipment industry veteran Lü Mengtao agreed, saying large US drug and medical firms might relocate their research and development (R&D) departments to the US, but it will be difficult to move their purchase and sales departments back as the industrial chain has been globalized to a great extent.

According to the US Food and Drug Administration, China was the largest exporter of medical devices and the second-largest exporter of drugs and biologics to the US by 2018. Chinese pharmaceutical companies produce more than 90 percent of the US supply of antibiotics, vitamin C, ibuprofen and hydrocortisone, according to the press release from Loeffler's office.

"US and EU pharmaceutical companies have made big profits in the Chinese market amid huge need, thus they would not be happy to move back to the US," Lü told the Global Times, noting that it has been a trend for Chinese medical talent overseas to return to China - another draw for foreign drug and medical companies.

Wu Kun, Pfizer China Biopharma country head, said in an interview on Friday that the company has confidence in the prospects of the Chinese market and will continue to invest in China. He said China is an important part of Pfizer's global market, and the company has realized year-on-year growth in the market so far this year, domestic news site reported.