China pharma firms turn to local reagent suppliers to cut costs and delivery times

Pharmaceutical research and development firms in China are increasingly interested in procuring critical supplies known as reagents from local manufacturers, industry executives and managers said, as they seek to cut costs and delivery times.

Western reagent suppliers including US-based Thermo Fisher Scientific and Germany’s Merck (MRCG.DE), opens new tab have profited in the world’s second-largest pharmaceutical market from the compounds used in lab tests for analysis and quality control.

But rising Chinese import tariffs due to the trade war with the U.S. and longer-term concerns about costs or access are spurring Chinese companies to request products from local rivals like Shanghai Titan Scientific (688133.SS) and Nanjing Vazyme Biotech (688105.SS) instead, the executives and managers said.

The five who spoke to Reuters work at Chinese firms involved in the purchase or supply of reagents and their comments are an early sign of an expected industry shift toward more Chinese purchases.

China’s reagent market for lab and diagnostic use has been to some extent supplied by imports, which were valued at $5.76 billion in 2024, down slightly from $5.83 billion in 2023, according to UN Comtrade data.

“It is actually more advantageous (for reagents to be local) because the timeliness requirement is high,” said Ma Xingquan, co-president of pharmaceutical research firm ChemPartner PharmaTech.

Most reagents it uses in its pre-clinical work are products that are made in China by firms including Titan and Shanghai Aladdin Biochemical Technology (688179.SS), he said.

ChemPartner’s usage of locally made reagents would probably increase further as new products become available, Ma added.

TARIFF BUMP

The rush to use domestically made reagents has accelerated since April, the month China raised duties on U.S. goods to 125%, a manager at Titan and an executive at Vazyme said, though the levies have since been lowered as Beijing and Washington continue trade talks.

Some Chinese drugmakers were worried about tariff policy uncertainty, Titan product manager Yang Dong said.

Since April, more than 90% of Vazyme’s customers have discussed replacing imported reagents with its products, Vazyme Senior Vice President Xu Xiaoyu said.

“Before April, customers were only saying long term, they hope to be able to replace (reagents) with those locally made, it would be better,” Xu said. “But to customers these tariffs are like a shock in a short period of time. They clearly felt this type of direct impact… their impetus (for replacement) will be stronger.”

Titan and Vazyme are both forecast to report strong sales growth this year, according to brokers.

China International Capital Corp expects Titan’s annual revenue to grow 22% to 3.52 billion yuan ($490.39 million) this year, while Vazyme’s revenue is set to rise 15% to 1.59 billion yuan over the same period, according to Soochow Securities.

“There is still a lot of room for substitution of imported biological reagent enzymes, clients are strongly interested in locally-made replacements,” Soochow said in a recent note.

Shares in Titan and Vazyme have risen about 54% and 18% respectively since the start of the year. Merck and Thermo Fisher shares have fallen about 21% and 8% respectively over the same period.