By Stu Woo

SINGAPORE -- China is racing toward economic self-sufficiency by weaning itself off American technology. But it has made a critical exception for another national priority: public health.

To achieve its goal of elevating healthcare to the level of wealthy nations by the end of the decade, Beijing has continued to welcome American-made medical supplies. It has opened its market to advanced U.S. drugs over the past decade and, more recently, exempted medical goods from retaliatory tariffs.

The supplies exempted from tariffs, set at 10% after a trade-war truce last month, include vaccines, diagnostic chemicals, surgical adhesives, cough suppressants and other medicines.

Nine years ago, China's ruling Communist Party unveiled its "Healthy China 2030" plan, which sought to address one tangible quality-of-life gap between itself and the West. It has since compromised on other objectives to give priority to this goal, a crucial piece of the broader rise in prosperity that underpins its political legitimacy.

China imported $52 billion in pharmaceuticals last year, up from $27 billion in 2017, customs figures show. Foreign medicines including Novo Nordisk's Ozempic, Pfizer's lung-cancer drug Lorbrena and Merck's cervical-cancer vaccine Gardasil have all been given a warm welcome.

"The emphasis shifted away from protecting a domestic industry toward increasing life expectancy" and related goals, said Jeroen Groenewegen-Lau, who analyzes China's health policy at Berlin-based think tank Merics. "You needed to have the best possible treatments on the planet, so China basically did a 180."

A half-century ago, life expectancy in China was 60. It has steadily risen, to roughly 79, on par with the U.S. today, as the economy and public-health infrastructure have improved, resulting in widely available vaccines, cleaner water and more hospitals and doctors. Infectious diseases and childbirth-related deaths have declined.

But urbanization and growing wealth helped drive the rise of chronic diseases. Half of Chinese adults are obese or overweight. More than 118 million people have diabetes -- nearly one quarter of the global total, according to a recent study published in the Lancet medical journal. And, as in the U.S., the leading causes of death in China include heart diseases and cancer.

China is a powerhouse in manufacturing generic pharmaceuticals, and makes basic medicines and vaccines widely accessible. But it is still a nascent player in innovating drugs, Groenewegen-Lau said, lacking enough wealthy patients and government support for their development.

China's state-run insurance covers some American pharmaceuticals for certain conditions, including Gilead's HIV treatments. But Chinese people have to pay out of pocket for others, including Merck's cervical-cancer vaccine. As China's middle class expanded, many grew dissatisfied with quality of care at home and began seeking advanced treatments abroad.

China's per capita spending on healthcare was $672 in 2022, compared with $12,434 in the U.S. that year, according to the World Bank. The measure captures both government and individual spending.

"Healthy China 2030," announced by Chinese leader Xi Jinping in 2016, aimed to raise life expectancy to 79 by 2030 -- a goal Beijing said it reached last year -- from 76 at the time. To accomplish this, officials sought to lower the smoking rate, promote physical activity and increase health literacy, among other goals.

Beijing made it easier to bring in more foreign drugs, including those for diabetes and weight loss. It slashed regulatory approval times by more than three years, a recent study found, partly by accepting foreign-trial data to avoid redundant studies.

After launching operations in China in 2017, California-based Gilead said domestic healthcare policies helped it rapidly grow in a market crucial to its future. Of its 13 innovative medicines in China, eight are covered by state insurance, including HIV treatment Biktarvy and chronic hepatitis B medication Vemlidy.

Indianapolis-based Eli Lilly said last year that China participated in global approval trials to speed market entry of its weight-management drug Zepbound. The principal investigator of the Chinese trial, Li Xiaoying, said he hoped that "obese and overweight patients in China will benefit from this innovative drug."

Lilly reported $1.7 billion in sales in China last year, about 4% of its total revenue. Fellow American healthcare companies GE HealthCare and Pfizer each recorded more than $2 billion in sales in China last year, accounting for 12% and 4% of their global sales, respectively. Gilead doesn't break out its China sales.

During a meeting in November, a top Chinese health official told the chief executive of GE HealthCare, which sells imaging tools to China, that Beijing wants U.S. pharmaceutical companies to play an active part in advancing the country's level of care.

While China has advanced its self-reliance goals more broadly, most notably under a plan formerly dubbed "Made in China 2025" that targeted advanced technologies, recent tariff exemptions highlight the country's continued reliance on the U.S. Besides medical supplies, chip-making equipment and jet engines are also on the sanctions exemption list.

"The 'Made in China 2025' self-reliance transformation remains incomplete," said Han Shen Lin, China country director for Asia Group, a business consulting firm.

Still, in the long term, China is seeking medical self-sufficiency. American medical-device makers have reported losing business as state-run facilities favor Chinese alternatives.

The U.S. Chamber of Commerce's analysis of "Made in China 2025" shows that China aimed to be self-sufficient in high-end imaging equipment and medical-monitoring devices by this year. Medical-device makers say that Chinese companies are expected to be globally competitive in the areas of radiation therapy and surgical robots within years rather than decades, according to a recent study by research firm Rhodium.

In 2006, New Jersey-based Merck launched Gardasil, its pioneering vaccine against human papillomavirus, or HPV. China only approved foreign HPV vaccines, including Gardasil, a decade later.

Before Beijing approved Gardasil's advanced version in 2018, more than two million Chinese women sought the vaccine across the border in the separately governed Chinese territory of Hong Kong, state media outlets reported at the time.

After it was approved for sale in China, Gardasil, which isn't covered by Chinese insurance, helped Merck's revenue in China jump 31% to $6.8 billion in 2023.

But local competition intensified. Merck said in February that it temporarily halted shipments of China-bound Gardasil because of declining demand, which it has attributed in part to an overall reduction in discretionary spending in China. Merck's stock is down more than 20% this year.

Merck's top Gardasil product protects against nine types of HPV, but China this week approved its first domestically produced vaccine that also protects against nine kinds. Health experts predict China will continue to narrow the quality divide in pharmaceuticals.

"It's only a matter of time until China can develop these vaccines domestically -- cheaper, faster, better, like it has done in other industries," said Yanzhong Huang, a global-health expert at the Council on Foreign Relations.

Write to Stu Woo at Stu.Woo@wsj.com

(END) Dow Jones Newswires

June 06, 2025 23:00 ET (03:00 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.