(Yicai) April 7 -- The sharp selloff in Chinese pharmaceutical stocks was mainly due to market panic after the US jacked up the import tax on Chinese goods by more than expected, according to industry sources, who pointed out that innovative drug licensing deals remain unaffected by the steeper tariffs.

“The stock price plunge reflects investor panic,” an executive overseeing the novel drug division at a listed firm said, adding that “concerns are being blown out of proportion.” An American pharmaceutical investor echoed that sentiment, adding that the real impact of the tariffs on innovative drugs has yet to materialize.

Cancer treatment developer BeiGene [HKG: 6160] tumbled 22.8 percent to close at HKD125.70 (USD16.18) a share in Hong Kong today, while its Shanghai-traded stock [SHA: 688235] ended 16.7 percent lower at CNY209 (USD28.58).

Junshi Biosciences, which develops novel drugs, saw sharp losses on both exchanges, with its Hong Kong stock [HKG: 1877] dropping 21.6 percent to HKD12.68 (USD1.63), while its Shanghai shares [SHA: 688180] fell 14.8 percent to CNY26.84 (USD3.68).

Other pharma stocks also pulled back hard, with Hutchmed [HKG: 0013] sinking 22.1 percent to HKD19.08, Innovent Biologics [HKG: 1801] tumbling 21.1 percent to HKD39.65, Zai Lab [HKG: 9688] plunging 25 percent to HKD21.60, and Akeso [HKG: 9926] diving 24.6 percent to HKD64.75.

China’s biopharmaceutical exports to the United States are mainly of generic drugs, with relatively lower exports of domestically developed novel drugs, Zhu said, adding that licensing deals, which represent a larger portion of the market, are presently untouched by the tariffs.

Zhu also pointed out that for innovative drugs produced in China with considerable US market potential, low cost domestic manufacture combined with high selling prices in the US provide a buffer against potential tariff impacts.

“Our company's biologic products are in short supply in the US, making it unlikely that it will target such essential imports,” an executive at another Chinese drug innovator said.

He added that the company has already partnered with a multinational pharma business that will handle US sales and commercialization in addition to setting up dual supply channels domestically and internationally to mitigate potential uncertainties arising from future tariffs.

China Securities is optimistic about the innovative drug industry, as it is not yet affected by tariffs, the brokerage said in a research report released on April 6. “We also see opportunities for an increase in the domestic market share for devices and blood products,” it said. “We are firmly confident in the growth opportunities brought about by international expansion.”

Editor: Kim Taylor