Not just electric cars, technology and manufacturing. Chinese "colonialism" is also expanding in an area where Europe has been a research powerhouse. It is pharmaceuticals. In 2023, China will overtake Europe for the first time in the development of new medicines. The annual report of the European Federation of Pharmaceutical Industries and Associations (Efpia) shows that of the 90 new molecules launched in the year of China's overtaking, 28 were "made in the USA", 25 came from China and only 12 from Europe. This leap forward has been accompanied by an impressive increase in investment in research and development, which has risen by 650 percent over the past decade, from two to 15 billion euros. In the post-Covid period, between 2020 and 2022, Beijing has increased research spending by 33 percent, compared with 19 percent in Europe and 4 percent in the United States. This dynamism has attracted Western pharmaceutical companies such as Roche, which invested 110 million euros to upgrade its research and development center in Shanghai, while AstraZeneca acquired a People's Republic company specializing in cell therapies for $1.2 billion. Of the world's 15 largest pharmaceutical companies, 11 have a major research center in China, and many Dragon companies have opened subsidiaries in overseas pharmaceutical hubs. The industry has also increasingly relied on Beijing companies to supply medical equipment as well as to research and produce drugs. Today, between 80 and 90 percent of the active ingredients in antibiotics used in Europe come from China. While up to 25 years ago half of all new treatments were "made in the EU", today it is only one in five. This means that Europe can no longer be attractive and defend its expertise and R&D capacity. This overtaking has been affected by a mix of causes that we find in other areas: government support for its companies, speed of production and market penetration. Europe suffers from a lack of adequate investment, fragmentation of the single market and red tape that slows down the time it takes to get approvals and then to actually sell products.
China and the EU are back in dialogue on cars three months after tariffs on Dragon e-cars came into force, but a new trade spat is on the horizon, this time in the medical devices sector. European Council President António Costa yesterday held his first telephone conversation with his Chinese counterpart Xi Jinping, insisting that Beijing must ensure a "level playing field" and reduce "existing trade and economic imbalances" caused by competition-distorting subsidies.
Such as those confirmed yesterday by the EU Commission in a detailed report following an investigation into China's healthcare equipment market launched in April a year ago. There is "clear evidence" that the People's Republic favors domestic industry in the procurement of hospital supplies, limiting imports to cases of absolute necessity, the report says.
The EU executive is relying primarily on negotiations "to remove discriminatory measures," but is preparing for a new wall-to-wall as in the automotive sector and "decisive action to defend fair competition" also in the health sector, warned Trade Commissioner Maros Sefcovic. In retaliation, Brussels could indeed impose penalties on Chinese companies bidding for contracts in the EU, even to the point of excluding them from government contracts altogether.