In this article, we will be taking a look at the top 10 drug companies in USA and their China reliance.

The US has long been reliant on China for the upkeep of several industries. The most notable of these industries are the semiconductor and healthcare sectors. With the outbreak of the coronavirus pandemic, America’s widespread reliance on China became increasingly evident because of a sharper light being shed on US-Chinese manufacturing and supply chains. With the pandemic first breaking out in China and reducing exports from the Asian country to others, shortages of critical medical supplies in the US made the latter’s heavy reliance on the former clearer than ever.

Top US drug producers such as Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and AbbVie Inc. (NYSE:ABBV) were found to be just as heavily reliant on China as smaller medical companies. Many American drug companies have manufacturing and supply chain infrastructure set up in China, causing this reliance. According to a report published by the Economic Commission for Latin America and the Caribbean in  2021, the US imported about $105.32 billion worth of medical products and equipment, including medical imaging, diagnostic, and oxygen therapy equipment, in 2019 alone. China was recorded as the second-largest supplier of these products and equipment. During the first nine months of 2020, pharmaceutical imports from China to the US increased by 46%, with 69% of the imports being active pharmaceutical ingredients and 27% of the imports being pharmaceutical preparation products.

President Biden has been taking steps to curb the US reliance on China when it comes to the healthcare sector and elsewhere. In September 2022, Biden signed an executive order to boost domestic manufacturing in the biotech sector to increase American self-sufficiency in this area. However, it is unclear how this objective can be attained since China is a major manufacturer of active pharmaceutical ingredients to India, which is conversely a major supplier of generic drugs to the US. Ever since China acceded to the World Trade Organization in 2001, it began focusing on economic growth through the expansion of its pharmaceutical industry. As a result of this, the country devoted itself to producing basic chemicals and active pharmaceutical ingredients. Consequently, it is unsurprising that the country today is a lead supplier of these ingredients by volume in the global market. In some markets specifically, China has increased its share of the US import markets. For instance, the market for penicillin saw an increase in the Chinese share from 1% to 51%, while the antibiotics market saw an increase of the country’s share from 15% to 37%. This increase occurred over the 10 years preceding 2021. As the situation currently stands, it will be difficult for the US to disengage itself from the Chinese manufacturing and supply chain infrastructure. Hence, many major American companies have a huge stake in the Chinese pharmaceutical market, leading to their increased presence in the country.

Let’s now take a look at the top 10 drug companies in USA and their China reliance.

Our Methodology

We have selected pharmaceutical companies in the US with the highest revenues in the sector as of 2021 and a strong reliance on China. They are ranked based on these revenues, from the lowest to the highest. These companies are heavily reliant on China since they source a variety of their raw materials from the country. They also have a large presence in the Chinese market, making China one of their most profitable consumer markets to date. We have also mentioned analyst price targets and ratings for the stocks of these companies. In our list below, we go over key business fundamentals for these companies as well, such as their latest profit margins.

Top Drug Companies in USA and Their China Reliance

10. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)

Total Revenue in 2021: $16.07 billion

Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) specializes in developing and commercializing drugs for the treatment of medical conditions such as cancer, eye diseases, and inflammatory disorders. Its top-selling drugs include Dupixent and Eylea.

On January 31, Tyler Van Buren at Cowen upgraded Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) shares from Market Perform to Outperform. The analyst also placed an $875 price target on the stock.

Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) expects its Dupixent sales to reach almost $11 billion in 2023, representing an increase of about 30% compared to 2022 numbers. Dupixent is one of the company’s top products recently approved in China for adults with moderate-to-severe atopic dermatitis. This approval will likely increase Regeneron Pharmaceuticals, Inc.’s (NASDAQ:REGN) Dupixent sales significantly, making the company heavily reliant on continued Chinese use and approval.

Bronte Capital, an investment management company, mentioned Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) in its third-quarter 2022 investor letter. Here’s what the firm said:

“There have been some bright spots in our long book. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), a major position and a stock we wrote up in our June 2021 letter, has been one of the best performing stocks in the S&P 500 this year. Alas it has not been enough to offset some of our weaker stocks, let alone our overweight exposure to the UK (and Europe) which have suffered from both stock and currency weakness. We do not think we are bad at picking stocks on the long side and hope – reasonably we think – for better relative results in the future. Prior to COVID, our longs were markedly better than the index. Unfortunately, if you look at our long book this quarter and since the onset of the COVID pandemic, there is scant evidence that we have added any value by picking stocks to go long.”

9. Amgen, Inc. (NASDAQ:AMGN)

Total Revenue in 2021: $25.98 billion

Amgen, Inc. (NASDAQ:AMGN) is a biopharmaceutical company based in Thousand Oaks, California. Its top-selling drugs include Neulasta, Enbrel, and Prolia. These are used to treat a variety of medical conditions, such as cancer, rheumatoid arthritis, and osteoporosis.

An Overweight rating was reiterated on Amgen, Inc. (NASDAQ:AMGN) shares on January 19 by Piper Sandler’s Christopher Raymond. The analyst also holds a $293 price target on the stock.

Amgen, Inc. (NASDAQ:AMGN) is considered a top drug company due to its consistent earnings growth and positive cash flows. The company generated a net total of $2.1 billion in cash flows during the third quarter. As of January 17, the company’s stock also outperformed the SPDR S&P 500 Trust ETF by 18.75% during the past 52 weeks. Amgen, Inc. (NASDAQ:AMGN) is heavily reliant on its manufacturing facilities in China, where some of its top-selling drugs are produced. These include Enbrel, a treatment for rheumatoid arthritis, and Prolia, a treatment for osteoporosis.

8. Gilead Sciences, Inc. (NASDAQ:GILD)

Total Revenue in 2021: $27.31 billion

Gilead Sciences, Inc. (NASDAQ:GILD) is a biopharmaceutical company that specializes in the development and commercialization of medicines for various diseases. It was founded in 1987 and is headquartered in Foster City, California. Gilead has a strong presence in the antiviral and oncology drug markets and is best known for its HIV/AIDS treatments, such as Truvada and Atripla.

On January 19, Piper Sandler’s Do Kim reiterated an Overweight rating on Gilead Sciences, Inc. (NASDAQ:GILD). The analyst also raised the firm’s price target on the stock from $104 to $111.

In the fourth quarter, Gilead Sciences, Inc. (NASDAQ:GILD) beat analyst revenue estimates by $900 million, or 15%. Its revenue for the quarter stood at $7.04 billion. The company has been a stable dividend payer for seven years now, and its yield currently stands at 3.5%. Gilead Sciences, Inc. (NASDAQ:GILD) also has a significant presence in China, where a growing market for its drugs exists. As such, it is reliant on the country for a significant portion of its sales. The company also has a manufacturing and supply chain infrastructure established in the country for efficient production and distribution of its drugs.

Ariel Investments, an investment management company, mentioned Gilead Sciences, Inc. (NASDAQ:GILD) in its third-quarter 2022 investor letter. Here’s what the firm said:

“At the stock level, biopharmaceutical company Gilead Sciences, Inc. (NASDAQ:GILD) was the top contributor in the quarter based on positive data released in a study evaluating Trodelvy versus comparative chemotherapy in patients with metastatic breast cancer. The detailed findings increased investor confidence the drug would receive incremental approvals for a broader range of breast cancer treatments. Shares also received a boost on news the TAF patent portfolio for HIV drugs will be extended from the middle of this decade through the early 2030s, thereby lengthening the company’s long-term opportunity in the virology market.”

Gilead Sciences, Inc. (NASDAQ:GILD), like Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and AbbVie Inc. (NYSE:ABBV), is among the most successful American drug companies with high revenue generation.

7. Eli Lilly and Company (NYSE:LLY)

Total Revenue in 2021: $28.3 billion

Eli Lilly and Company (NYSE:LLY) is among the largest global healthcare companies. It is based in Indianapolis, Indiana. Some of its products include Alimta for non-small cell lung cancer and malignant pleural mesothelioma, and Cyramza for metastatic gastric cancer.

An Overweight rating was reiterated on Eli Lilly and Company (NYSE:LLY) shares on January 3 by Carter Gould at Barclays. The analyst also placed a $400 price target on the stock.

In the third quarter, Eli Lilly and Company (NYSE:LLY) generated about $1.7 billion in operating income. In 2022, the company’s shares returned 35%, and as of this January, its stock price is up by over 300% since 2018. Eli Lilly and Company (NYSE:LLY) is dependent on China not only for manufacturing its medicines, but also for research and development and access to patients. The company has established an R&D center in China for the development of new drugs for the Chinese market. Since it has a significant presence in the country, it also relies on Chinese patients for its clinical trials which help bring new medicines into the market quickly.

Baron Funds, an investment management company, mentioned Eli Lilly and Company (NYSE:LLY) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“Eli Lilly and Company (NYSE:LLY) is a large-cap pharmaceutical company. Shares increased on investor optimism about Lilly’s new product pipeline, which includes Mounjaro for diabetes and obesity and Donanemab for Alzheimer’s disease. We continue to think Lilly has a healthy base business with limited near-term patent expirations, a strong pipeline, and potential for significant margin expansion, which should translate to strong revenue and earnings growth over at least the next five years.”

6. Abbott Laboratories (NYSE:ABT)

Total Revenue in 2021: $43.08 billion

Abbott Laboratories (NYSE:ABT) is a healthcare company based in North Chicago, Illinois. It operates through its Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices segments.

Matt Miksic at Barclays holds an Overweight rating on Abbott Laboratories (NYSE:ABT) shares as of January 27, alongside a $125 price target.

Abbott Laboratories (NYSE:ABT) generated huge revenues during the COVID-19 pandemic. In 2020 and 2021, the company brought in $3.9 billion, and $7.7 billion, respectively. In 2022, it generated about $5.6 billion through the second quarter and $1.7 billion in the third quarter. Its revenues are further aided by its existing infant formula manufacturing facility in Jiaxing, China. Abbott Laboratories (NYSE:ABT) is also reliant on China for its medical device sales. In the fourth quarter of 2021, the company’s medical devices sales came in at $3.75 billion, missing analyst estimates of $.84 billion because of China’s COVID-19 curbs at the time.

Stewart Asset Management, an investment management firm, mentioned Abbott Laboratories (NYSE:ABT) in its third-quarter 2022 investor letter. Here’s what the firm said:

“We also need to point out one global consequence of the rapid rise in interest rates: an irrepressibly strong dollar. This hurts the reported earnings of U.S. companies who sell their goods and services overseas. Foreign currency earnings translate into fewer dollars and thus lower earnings. Most of the companies in your portfolios gain a notable amount of earnings from their international operations. While the strength or weakness of a currency doesn’t change the quality of a business or its longer-term earnings power, it can change the reported earnings of a company over short periods of time. It is difficult to forecast this effect accurately because many of our companies manufacture where they sell, which to some extent dulls the sharp negative effect of a surging dollar. Abbott (NYSE:ABT), among others, is a good example.”

Abbott Laboratories (NYSE:ABT), like Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and AbbVie Inc. (NYSE:ABBV), is a medical company with significant earnings and profitability today.

5. Bristol-Myers Squibb Company (NYSE:BMY)

Total Revenue in 2021: $46.39 billion

Bristol-Myers Squibb Company (NYSE:BMY) is based in New York City and is one of the largest pharmaceutical companies in the world. It has consistently ranked on the Fortune 500 list of the largest US corporations.

Bristol-Myers Squibb Company (NYSE:BMY) was initiated with an Overweight rating at Cantor Fitzgerald by analyst Olivia Brayer on January 17. The analyst also placed a $95 price target on the stock.

The company positioned itself well in 2023 through the success of three of its therapies: Revlimid, Eliquis, and Opdivo. Over the past three years, Bristol-Myers Squibb Company (NYSE:BMY)  has generated about $40 billion in operating cash flow. It also generated about $10.8 billion in product sales in 2022. The company has been focusing on marketing its arthritis drug, Orencia, in China, which it is targeting as a profitable pharma market due to its economic power and large population.

Investment management company RGA Investment Advisors mentioned Bristol-Myers Squibb Company (NYSE:BMY) in its third-quarter 2022 investor letter. Here’s what the firm said:

“Bristol-Myers Squibb Company (NYSE:BMY), which we referenced above, boasts a double digit free cash flow yield that gets divided roughly equally between repurchases, a dividend and M&A in what is the best environment for acquisitions perhaps ever. In 2019, BMY acquired Celgene, who had one of the better corporate development programs in the industry. We view this as a great outlet for us as generalists considering a company like BMY should truly thrive with the ability to acquire outstanding assets and science at depressed valuations. We touched on the Turning Point acquisition above and we expect the company to be increasingly active in the M&A landscape. Importantly, Celgene also came to BMY with a phenomenal CAR-T platform. CAR-T is a cell therapy that activates the body’s immune system to target cancers. This will be a key growth vector alongside M&A in overcoming the company’s patent cliff.”

4. Merck & Co., Inc. (NYSE:MRK)

Total Revenue in 2021: $48.7 billion

Merck & Co., Inc. (NYSE:MRK) operates through its Pharmaceutical and Animal Health segments. It focuses on the areas of oncology, hospital acute care, immunology, and neuroscience.

On January 4, Geoff Meacham at BofA upgraded Merck & Co., Inc. (NYSE:MRK) shares from Neutral to Buy.

Over the past 10 years, Merck & Co., Inc. (NYSE:MRK) has seen its revenues grow by 27%. Over the same period, the company’s earnings per share have also increased by 184%. It also has a dividend compound annual growth rate of 7% over the past five years, and a dividend yield of 2.74% as of January 31. China is one of Merck & Co., Inc.’s (NYSE:MRK) eight strategic countries, and it focuses on the pharmaceutical, chemical, and life science sectors in the Chinese market, making it heavily reliant on the country.

Baron Funds, an investment management company, mentioned Merck & Co., Inc. (NYSE:MRK) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“Merck & Co., Inc. (NYSE:MRK) is a large-cap pharmaceutical company with a deep heritage in drug discovery. Share gains were led by the continued growth of key asset Keytruda, the leading immune oncology agent used to treat a variety of cancers. Shares also benefited from increased investor interest as Merck proves its ability to scale its Gardasil vaccine that had previously been constrained by supply issues. We retain long-term conviction, as we expect Keytruda to solidify its position as the best-selling biopharmaceutical drug of all time.”

3. AbbVie Inc. (NYSE:ABBV)

Total Revenue in 2021: $56.2 billion

AbbVie Inc. (NYSE:ABBV) is a biotech company based in North Chicago, Illinois. It offers a wide variety of products to treat conditions such as active rheumatoid arthritis and moderate to severe plaque psoriasis.

An Overweight rating was kept on AbbVie Inc. (NYSE:ABBV) shares on January 26 by analyst Chris Scott at JPMorgan, alongside a $190 price target.

Between 2021 and 2023, AbbVie Inc. (NYSE:ABBV) has returned a total of 38%, including dividends. The company has seen sales increases in 2022, with its core immunology segment recording a sales increase of 15% year-over-year in the third quarter. The immunology segment is heavily reliant on China since AbbVie Inc. (NYSE:ABBV) sources active pharmaceutical agents used in the production of drugs for immunology from the country.

Baron Funds, an investment management company, mentioned AbbVie Inc. (NYSE:ABBV) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“AbbVie Inc. (NYSE:ABBV) develops inflammatory, oncology, and aesthetic drugs. Shares rose primarily due to the rotation into large-cap pharmaceutical stocks trading at low valuations. Investors continue to be focused on the rate of erosion of the Humira franchise upon patent expiration in 2023, which we think is less important over the long term than the growth of novel franchises like Rinvoq and Skyrizi. We retain conviction given AbbVie’s low valuation and growth opportunities.”

2. Pfizer Inc. (NYSE:PFE)

Total Revenue in 2021: $51.75 billion

Pfizer Inc. (NYSE:PFE) is a New York-based pharmaceutical company. It offers medicines in the areas of cardiovascular metabolic and women’s health, biologics, small molecules, immunotherapies, and biosimilars.

Mohit Bansal holds an Equal Weight rating and a $50 price target on Pfizer Inc. (NYSE:PFE) shares as of January 17.

Pfizer Inc. (NYSE:PFE) has an impressive historic record of stock price gains. Between 1980 and 2022, the company’s shares rose by 166.43%. At the close of September 2022, it had $36 billion in cash and liquid investments. The company sources active pharmaceutical ingredients used in the production of antibiotics, cardiovascular drugs, and oncology drugs from China, making it heavily reliant on the country.

1. Johnson & Johnson (NYSE:JNJ)

Total Revenue in 2021: $53.9 billion

Johnson & Johnson (NYSE:JNJ) is a pharmaceutical company based in New Brunswick, New Jersey. It offers baby care products as well, under the Johnson’s and Aveeno brands.

A Buy rating was reiterated on Johnson & Johnson (NYSE:JNJ) shares on December 12 by analyst Joanne Wuensch at Citigroup. The analyst also placed a $205 price target on the stock.

It has been operating in China for over 30 years, and is reliant on the country because it sources raw materials for its pharmaceuticals from there. Over the past three decades, the company has also created a huge customer base in China, which significantly contributes to its revenues.

See also 15 Biggest European Pharmaceutical Companies and 10 Best Pharma Dividend Stocks To Invest In.

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Disclosure: None. Top 10 Drug Companies in USA and Their China Reliance is originally published on Insider Monkey.