As U.S. President Donald Trump threatens a new round of tariffs as part of an onshoring push, Chinese President Xi Jinping is courting foreign investment as well, including from drugmakers.
CEOs from large pharma companies AstraZeneca, Bayer, Boehringer Ingelheim, Eli Lilly, GSK, Merck KGaA, Pfizer and Sanofi were among more than 40 international business leaders who met with Xi in Beijing on Friday. Their presence gave pharmaceuticals the largest representation of a single industry sector at the meeting, according to Reuters.
Sanofi CEO Paul Hudson was among seven top business officials from different countries who spoke at the meeting, according to state news agency Xinhua (Chinese). The French pharma in December made its biggest single investment in China to date, roughly 1 billion euros ($1.08 billion) to establish a new production base in Beijing.
The American representative who delivered a speech at the Xi meeting was FedEx CEO Rajesh Subramaniam.
Xi is trying to woo foreign investments amid escalating trade tensions with the U.S. Trump has recently slapped a 20% levy on imports from Chinese and has threatened to unleash a new round of “reciprocal” tariffs on major trading partners on April 2.
In his speech, Xi said that “maintaining the stability, health and sustainable development of China-U.S. relations is in the fundamental interests of the people of both countries,” according to a translated Bloomberg video recording of the session.
“In recent years, foreign investment in China has also been interfered with by geopolitical factors,” Xi said, as quoted by Reuters. “I often say that blowing out other people's lights does not make you brighter.”
The meeting with Xi come at the juncture of the annual China Development Forum in Beijing and the Boao Forum for Asia, two back-to-back gatherings in China focused on policy and the economy featuring some top government, academic and business leaders. Foreign pharma CEOs have been regular attendees of both events.
Pharma CEOs have increasingly found themselves walking a tightrope between China and the U.S., since relationships between the two superpowers started to worsen during Trump’s first term in the White House.
The biopharma industry has landed in the administration’s crosshairs as Trump has doubled down on his pledge to raise tariffs on pharmaceuticals “in the not too distant” future earlier this week. Even before the expected arrival of the sectoral tariffs, drugmakers have raised concerns that country-specific tariffs on the EU, Canada and China will drive up production costs of medicines, according to a February survey by the trade group the Biotechnology Innovation Organization (BIO).
During a private White House meeting in February, Trump warned several pharma CEOs that he intends to impose pharmaceutical tariffs and that they should move drug manufacturing back to the U.S., Bloomberg reported, citing two people familiar with the conversation.
Pfizer CEO Albert Bourla and Lilly chief David Ricks attended both meetings with Xi and Trump. Merck CEO Rob Davis and industry group PhRMA’s CEO Stephen Ubl were also at Trump’s meeting.
Following that February dialogue, Lilly soon announced a $27 billion investment in domestic manufacturing, looking to build four new production facilities in the U.S. Before Friday’s meeting with Xi, Ricks told Chinese Commerce Minister Wang Wentao during a separate meeting last week that Lilly will increase investment and expand production capacity in China, according to Xinhua.
Last week, Johnson & Johnson also said it will spend $55 billion in the U.S. over the next four years, including a plan to build three new manufacturing sites stateside.
But companies only have so much they could invest, and pharma companies can’t afford to lose either the China or U.S. markets.
AstraZeneca CEO Pascal Soriot appeared to have found the balance. Amid an ongoing investigation by Chinese authorities into its former China president, AZ last week unveiled a $2.5 billion investment in the country with plans to build a global strategic R&D center in Beijing, partnerships with local biotechs and a vaccine manufacturing plant.
The China investment follows a $2 billion new commitment the British pharma is adding to its U.S. operations, which also covers expansions in manufacturing and R&D capabilities, bringing its total planned U.S. investment to $3.5 billion by 2026. AZ shared the plan in November, shortly after Trump was elected for his second term.