In a significant shift that could send ripples across the global pharmaceutical landscape, China is accelerating efforts to reduce its reliance on U.S. pharmaceutical imports and biotech partnerships.

The move, which analysts describe as a direct response to escalating geopolitical tensions and supply chain vulnerabilities exposed during the COVID-19 pandemic, has already begun affecting global healthcare stocks.

According to a recent report by Yahoo News, Chinese authorities have issued new procurement guidelines favoring domestic pharmaceutical companies for public hospital supply contracts.

These rules are aimed at replacing foreign-made drugs with homegrown alternatives in areas such as oncology, cardiovascular treatments, and rare disease medications—traditionally dominated by U.S. and European firms.

Citing senior officials familiar with the matter, Bloomberg notes that these policy shifts are part of Beijing’s broader “dual circulation” strategy, which aims to insulate the domestic economy from foreign shocks while boosting internal consumption and self-reliance in key sectors, including biotechnology and life sciences.

The financial markets responded swiftly. Shares of major U.S. pharmaceutical companies such as Pfizer (NYSE: PFE), Merck & Co. (NYSE: MRK), and Amgen (NASDAQ: AMGN) fell by 3-5% in the days following the announcement, as reported by CNBC.

Meanwhile, biotech-focused ETFs like the iShares Biotechnology ETF (IBB) also saw downward pressure.

“China has long been a growth market for U.S. and European pharma firms. A pivot away from Western drugmakers will hit top-line expectations,” said Jefferies healthcare analyst David Stein in a CNBC interview.

He added that even a gradual reduction in access to the Chinese market could reshape global R&D and pricing dynamics.

Chinese pharmaceutical companies, including Hengrui Medicine and BeiGene, have seen their stocks rally on the Shanghai and Hong Kong exchanges.

Reuters reports that local firms are benefiting from increased government support through subsidies, expedited regulatory pathways, and bulk procurement advantages.

Additionally, venture capital is surging into Chinese biotech startups in anticipation of higher domestic demand.

Industry observers warn that this decoupling could slow global innovation. “Scientific progress thrives on open collaboration.

This policy fragmentation could limit access to global clinical trials and research data,” said Dr. Alicia Morgan, director at the Global Biopharma Alliance, in an interview with the Financial Times.

Moreover, analysts fear that the escalating U.S.-China rivalry may lead to tit-for-tat restrictions.

Washington could respond with export controls on advanced biomanufacturing technologies, critical reagents, or biotech research tools—potentially worsening the global divide.