Authored by Kylie Huber
Art by Joyce Wang
Since the upheaval of the COVID-19 pandemic, the demand for vaccinations has created a geopolitical landscape in which the control of global vaccine distribution routes have translated to control over diplomatic ties. An example of a country that has learned to adapt to the growing influence of this “vaccine diplomacy” is mainland China. As a consistent major world player, China can best be viewed in what it offers both in the goods it offers to the public and in its emerging technologies. [1] At the intersection of these factors, the vaccine diplomacy strategies achieved by China have shaped more recent biotechnology business developments. An investigation into how China's vaccine diplomacy has impacted the biotechnology market and healthcare innovation is important in order to best broaden our perspective on pharmaceutical development across the globe.
To first understand China’s influence on modern vaccine diplomacy, we can look to dissect its strategy with its long-term allies. China’s distribution channels have been stronger than those of other non-Western nations, and China has therefore primarily committed itself to bolstering existing ties rather than expending resources on developing new relationships. These partnerships included Cambodia, Hungary, Zimbabwe, and Serbia [2]. This widespread distribution to both lower-income and high-income countries is not necessarily a means to challenge the strategies of Western countries – which have traditionally been viewed as economic powerhouses capable of rapid donation – but rather signifies the rise of China as a vaccine donor within its unique economic framework.
As a parallel to China’s dedication to expanding vaccines to the public, China has also been intentional in its efforts to advance its technological output. The Chinese government implemented a state industrial strategy known as “Made in China 2025," which maintained biotech as one of its top sectors to focus on domestic technologic growth [3]. The pharmaceutical companies based out of China regulated their operations with the intention of competing with Western companies. This initiative appears to have potential for working toward their domestic goals. For example, there is a growing pharmaceutical market in China due to its increasingly aging population [4]. At a policy level, China’s Basic Medical Insurance fund saw a 3.92 increase in spending from 2010 to 2020 [5], which will reveal a need for increased pharmaceutical research and development to aid these newly covered populations.
However, in more recent news, many investors outside of China have pulled finances out of several Chinese biotech startups, citing a lack of innovation and “risk-taking.” More specifically, finances have fallen from $1 billion in 2021 down to about $102 million in 2022. [6] One potential reason for the pullback in investments can be revealed in the makeup of China’s pharmaceutical firms: 70 percent of pharmaceutical developers in mainland China consist of only 300 employees or less and operate at a revenue of less than $3 million USD [4]. Additionally, while Chinese firms’ close relationships with their prestigious universities is important to research efforts and is a shared characteristic they have with many developers in the United States, prioritization of patenting projects by individuals with personal accolades rather than the true nature of the work can have a net negative effect on the rate of drug development and commercialization. Both the sprawling nature of small pharmaceutical companies across the country and the prioritization of prestigiously-titled projects can make the decisions of investors increasingly more elastic, as both factors are connected by an undercurrent of structural problems in the industry.
This challenge to development can be overcome when collaboration is promoted among countries with differing economic frameworks. On the side of distributing public goods, while China’s strategy in vaccine development primarily relied on bilateral partnerships, countries like the United States retained much of their development internally until they donated vaccines much later than non-Western countries like China [2]. Greater interconnection between the two potentially would have reduced the lag in the release of efficient vaccines, rather than making the process excessively competitive at the expense of the public good.
Furthermore, when looking at advancement in technology, export controls by China have made American business partners and investors more apprehensive toward biotech sector trade. A policy of over-securitization has had harmful effects to both parties [7]. In the United States, C-suite pharma executives often explicitly raise drug prices to astronomically high levels – for example, Isuprel, a heart medication, experienced an increase from $440 to $2,700 per dose after its developer acquired it from another – to suit the needs of their shareholders [8]. This pattern has been mirrored in China, with many high drug prices instead resulting from lack of payer negotiation power [9]. High drug prices in both countries are largely a result of a desire to please investors, leaving true technological growth in a slowdown as well as making millions of individuals pay steep prices in their day-to-day medication purchases.
Developers in the pharmaceutical industry, at the end of the day, look for complementary skills and offerings, without much discernment on the country a partner comes from [7]. Once this silo gets diminished, the two countries can stay abreast of the latest technologies and best serve both their own and their partner’s populations.
Works Cited
Moore, Scott. (2022). China’s Next Act: How Sustainability and Technology are Reshaping China’s Rise and the World’s Future. Oxford University Press.
Suzuki, M., Yang, S. (2022). Political economy of vaccine diplomacy: Explaining varying strategies of China, India, and Russia’s COVID-19 vaccine diplomacy. Review of International Political Economy. Vol. 30. https://doi.org/10.1080/09692290.2022.2074514
Bloomberg News. (2023 May 15). China’s $220 Billion Biotech Initiative is Struggling to Take Off. Bloomberg. https://www.bloomberg.com/news/articles/2023-05-15/china-biotech-stumbles-despite-220-billion-investment?embedded-checkout=true
Ni, J., Zhao, J. (2017). Obstacles and opportunities in Chinese pharmaceutical innovation. Biomed Central, Vol. 13 (Issue 21). https://doi.org/10.1186/s12992-017-0244-6
Yu, Z. Chen, L. (2023). A study on the sustainability assessment of China’s basic medical insurance fund under the background of population aging – evidence from Shanghai. Frontiers Public Health. Vol. 11. https://doi.org/10.3389/fpubh.2023.1170782
Gormley, B. (2023 Sept 24). US and other Firms Pull Back from China's Biotech Sector. The Wall Street Journal. https://www.wsj.com/articles/u-s-and-other-foreign-venture-firms-pull-back-from-chinas-biotech-sector-318839cc?st=b79t9wy11zmq8ee&reflink=article_imessage_share
National Committee on U.S.-China Relations. (2023, August 4). Why is Biotech Important to the U.S. and China? [Video]. Youtube. https://www.youtube.com/watch?v=wEOlS1zmvSI
Lee, V. (2020). The Long Fix: Solving America’s Health Care Crisis with Strategies that Work for Everyone. W. W. Norton & Company.
Long, H., Yang, Y. (2022). Changing Characteristics of Pharmaceutical Prices in China Under Centralized Procurement Policy: A Multi-Intervention Interrupted Time Series. Frontiers in Pharmacology. Vol. 13. 10.3389/fphar.2022.944540
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