Chinese drug-related stocks stumbled after a report that the Trump administration has been discussing major restrictions on medicines from the Asian nation.
The Hang Seng Biotech Index dropped as much as 8.6%, the most in five months, before paring much of the loss. A draft executive order aims to boost US output of medicines that are currently mass-produced in China, and impose tough scrutiny on licensing deals for experimental drugs, according to the New York Times report.
Measures to bolster US drugmaking would follow similar efforts by President Donald Trump’s government to increase domestic manufacturing of semiconductors and other crucial products. Meanwhile, China’s biotech industry has been gaining prominence this year as a new hub for drug discovery, driving big gains in share prices.
“Policies may cause short-term disturbances, but they cannot alter the long-term value of China’s innovative drug industry” said Yiqi Liu, an analyst at Exome Asset Management LLC in New York. “I see this as a big endorsement to China’s biotech industry.”
Among specific stock moves, Hansoh Pharmaceutical Group Co. plunged as much as 18% in Hong Kong, the most on record, while Sichuan Kelun-Biotech Biopharmaceutical Co. slid 13%. Hangzhou Tigermed Consulting Co. dropped as much as 13% in mainland trading. All quickly trimmed their declines along with the Hang Seng biotech gauge, which remains nearly 100% higher year to date.
“We expect the proposed measures to potentially pose impediments, but they should not meaningfully impede the dynamics propelling the flow of innovation,” Morgan Stanley analyst Jack Lin wrote in a note. It would be difficult “to carry out measures that would meaningfully affect the US-China innovation axis, given the plethora of stakeholders.”
With assistance from Amber Tong.
This article was generated from an automated news agency feed without modifications to text.
