The US vaccine maker Moderna has signed a deal to research, develop, and manufacturer mRNA drugs in China. The move marks a major investment in the country even as relations between Washington and Beijing continue to sour.
The Massachusetts-headquartered pharmaceutical firm could invest as much as $1 billion in China under the deal, according to Chinese media outlet Yicai Global, though Moderna has not confirmed that number. In a statement, the company said that any drugs manufactured by Moderna as part of the agreement will only be used in China and will not be exported.
Moderna was the second pharmaceutical company to report promising results for its covid vaccine in November 2020, following Pfizer’s just a week prior. The company was able to quickly develop the vaccine thanks to its years of work on mRNA technology. However, its revenue has slowed as demand for covid jabs has fallen.
Big Pharma wants to tap the Chinese market
For global Big Pharma, expanding into China—where there’s a large and aging population with increasing prevalence of chronic diseases—means the potential to tap unmet demand.
But the Chinese market also presents risks and uncertainty. The UK-listed drugmaker AstraZeneca would know: it is reportedly considering spinning off its China business to insulate the multinational from geopolitical tensions. AstraZeneca has refuted news of the potential spin-off.
Intellectual property protection is another challenge. Last year, Moderna had to refuse Beijing’s requests to hand over its core intellectual property behind its covid vaccines, according to the Financial Times. That tanked discussions to sell Moderna’s mRNA jabs in the country. Moderna has since all but shelved its efforts to sell its covid vaccine in China, according to the Financial Times.
Meanwhile, the BioNTech mRNA covid vaccine made in partnership with Pfizer has to date not received approval from Chinese authorities for widespread sales in the country, despite months of negotiations. For now, BioNTech jabs are only available to foreign residents in China.
Even foreign-developed drugs that manage to clinch approval for sale in China face an uphill fight to reach consumers. In January, Pfizer’s covid antiviral, Paxlovid, was excluded from China’s national medical insurance program following unsuccessful price negotiations with Chinese authorities. Instead, as China expands its arsenal of homegrown covid drugs, two domestic coronavirus medicines were added to the list of drugs covered by national insurance.
China wants to be a leading global biotech player
For China, biotechnology is a strategic industry with deep national security implications. Beijing has made clear its intentions of building an advanced domestic biotech supply chain from raw material inputs to advanced drugs and medical equipment, and to achieve “leapfrog” developments as it seeks to overtake western legacy players.
And as in the automotive industry, China is only likely to throw open its doors to foreign firms if it benefits homegrown players. Over time, the foreign entrants find themselves on their back feet as domestic competitors gobble up market share at home and expand into new markets abroad. A similar dynamic could well play out in biotech.