WSJ What’s News - Chinese Biotech Is Having A DeepSeek Moment

Episode Date: February 7, 2025

P.M. Edition for Feb. 7. China’s biotech industry is creating new drugs more cheaply and quickly than its U.S. counterparts. WSJ Heard on the Street columnist David Wainer tells us what’s behind the sector’s rise. Plus, new data show the U.S. economy added fewer jobs than expected in January. We hear from WSJ finance news editor Christina Rexrode about what this mixed report means about the health of the economy. And a survey suggests that American consumers are less optimistic about the economy than they were before Trump took office. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

US hiring slowed in January but remained solid in the last jobs report of the Biden era. Plus, consumers are already souring on Trump's economy. And why a decade from now, many drugs hitting the US market will have originated in China. Many of the top scientists that have trained in the US over recent decades have returned to China. And that's fueling the emergence of a biotech hub, particularly around Shanghai. It's Friday, February 7th.

I'm Alex Osola for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. The Labor Department released its January jobs report this morning. The U.S. economy added 143,000 jobs in January, slightly lower than the 169,000 jobs economists had expected. The unemployment rate also ticked down to 4%, which was also a bit lower than had been expected.

WSJ Finance News Editor, Christina Rex-Road, joins me now to talk about what these numbers mean. So Christina, seems like we've got some conflicting messages here. There are fewer jobs, but also less unemployment. Break this down a little bit for us. What does this mean? This is a pretty solid report.

The jobs number is a lot lower than it was in December or November, but you have to remember like anything more than 100 is a pretty good number. The reason there's a difference between the two, this can seem really confusing. The number of jobs created can go down, but then the unemployment rate can also go down because those two numbers are based on separate surveys. The jobs number is based on a survey of businesses and the unemployment number is based on a survey of households, of families.

The places that added jobs were the usual suspects, retail, government, healthcare. Some things that were a little surprising to me were that leisure and hospitality slowed down and construction slowed down. Okay, so big picture, what do these numbers tell us about the overall health of the economy? The job market has been doing well.

This isn't like 2021 when the economy was reopening. I wouldn't say that we're in a slow period for the jobs market, but we are maybe normalizing a bit more. We know from some previous data that fewer people are quitting their jobs, which could signify that they have less confidence that they could find another one.

And we know that companies are hiring less overall. So it's not like we're in a period where there's a lot of layoffs, but if you're looking to switch jobs, if you're looking for a better job, if you're looking for your first job, life is a little bit harder than it was a few years ago. So this is the last jobs report of the Biden era,

given President Trump's policies that could have an impact on employment from, you know, tariffs to deportations and border control, what should we be expecting looking forward and when could we potentially see some of those impacts? I hate to say time will tell, but time will sort of tell. Economists tend to think that tariffs are bad for the jobs market because it hurts companies that depend on imports and exports. It also depends on whether tariffs are strung out over a number of months or even just the threat of tariffs is strung out over a number of months, or if we just get them all at once because companies do not like uncertainty when they're deciding whether to hire people.

So there's a difference between wondering for a long time if there's going to be tariffs and just getting them and then moving on and making a plan. The immigration has been huge for the job market. And if there's a lot of mass deportations, if there is a lot of people who would have been able to come into the US but no longer can, that means a lot less growth for the labor market. That was WSJ Finance News Editor Christina Rexroad. Christina, thank you so much. Thanks.

US stock indexes were lower today as investors reacted to the mixed jobs report. The Dow and S&P 500 were both down about 1 percent, and the Nasdaq fell roughly 1.4 percent. American consumers are feeling more pessimistic about the economy than they did before President Trump took office. A preliminary survey from the University of Michigan found that consumer sentiment fell about 5 percent in February, its lowest reading since July last year. Tariff threats, stock market swings, and rapidly reversing executive orders are making Americans

concerned about the country's financial future. And Commerce Department data shows that inventories of U.S. wholesalers fell in December. Inventories of longer-lasting goods drove the decline. The gauge is a key metric in estimating the U.S.'s quarterly gross domestic product. Coming up, how China is developing drugs more quickly and cheaply than the U.S. That's after the break.

Biotech is having a deep-seek moment. Just as the Chinese AI company made a splash in the US's tech sector, China's biotech industry has been looking to do the same in pharma. And their moment may be here. In 2020, less than 5% of large pharmaceutical transactions worth $50 million or more involved China. According to BioPharma Deal deal tracker Dealforma, last year that number had surged to nearly 30%.

A decade from now, many drugs hitting the US market will have originated in Chinese labs. WSJ herd on the street columnist David Wehner is here to tell us more. David, what is driving the rise of China's biotech industry? Well, for one, many of the top scientists that have trained in the US over recent decades driving the rise of China's biotech companies are a lot scrappier. They can work with really highly skilled chemists and pay them a fraction of what you would typically pay someone of that level here in the US.

And then I would also note that over the last several years, China as a government has wanted to play catch up in this area and they've streamlined the approval process and the clinical trial process, like what it takes to get a study off the ground, what it takes to get a drug approved, that sort of thing. And that's allowed companies to conduct clinical trials much more quickly and at a fraction of the price as well. In general, what are the kinds of treatments that are being developed in China?

Well, it's really anywhere from your cutting edge cancer medication to an obesity pill that's like something that isn't even on the market yet but companies are working on. So it really can be anything. What it isn't yet is it's not like new science for the most part, right? It's not like they came up with a new modality

to treat cancer. It's like a new gene therapy that no one's ever thought of. It's really that could we develop this and make an improvement off of what's already existing in the US. It's really not like science that I would say at this point is more innovative than what we have in the US. How are Western pharma companies thinking

about China's growing biotech scene? Well, it really depends where you are on the spectrum, right? If you're a big, big pharma company, companies thinking about China's growing biotech scene? Well, it really depends where you are on the spectrum. If you're a big, big pharma company, this might be a very good opportunity for you. Because you might think, why should I pay $10 billion to acquire a startup or a mid-sized company developing a couple of medications in the US or Europe when I could potentially look in China and pay a fraction of the cost. So I think it's an opportunity for pharma companies and they're starting to realize we're starting to see a lot of deals.

If you're a biotech company, you might need to take care of your data, make sure it's really private, and be before you get started on your drug, you've got to be aware of what's going on in China. That was heard on the street columnist David Wehner. David, thank you. Thank you so much. It was a pleasure. In other news, President Trump said he supported an emerging agreement that would allow the Japanese company Nippon Steel to invest in U.S. Steel without fully owning it. Last month, the Biden administration had blocked Nippon's proposed $14 billion takeover

of the Pittsburgh-based company. The details of the potential reworked agreement weren't immediately clear. Trump said he would meet with Nippon Steel's leaders next week to discuss the deal. A Nippon Steel spokeswoman didn't immediately respond to a request for comment. And authorities in Alaska are searching

for a commercial passenger plane that went missing over the Bering Sea. It's the third major U.S. aviation incident in the past 10 days. The Alaska Department of Public Safety said that the single-engine plane operated by regional carrier Bering Air had nine passengers and a pilot on board when its position was lost at around 3.20 p.m. local time yesterday. The Coast Guard, Air Force, and National Guard are involved in a search for the plane. The incident comes just over a week after 67 people were killed in a mid-air collision

between an American Airlines passenger jet and a Black Hawk Army helicopter in Washington, D.C. Two days later, seven people died when a medical transport jet crashed in a fiery explosion near a mall in northeast Philadelphia. The recent crashes have stirred fears among some fliers. And finally, one thing about me is when I go on vacation, I love to have as much planned ahead of time as humanly possible. Well, columnist Dawn Gilbertson took essentially the opposite approach.

She found out just days ahead of time that she was able to get on board a cruise after going on standby. And even though it was kind of stressful, she says for a total of about $700, it was totally worth it. She told our Your Money Briefing podcast about how to make sure you're getting your money's worth if you try to swing a last minute deal. I mean, first of all, if you get on this particular standby list, make sure you're available that date, right? Because if they pick you and this particular standby list, make sure you're available that

date, right? Because if they pick you and you're not in that thing, you lose that money. So in my case, it would have been almost $1,400. But the other things to do is do the math because last minute I got a good deal. But if you book a cruise in advance and you're a pretty savvy travel shopper, you can find a lot of deals that include a bunch of extras. Like I've been on cruises before where you get free Wi-Fi, you get a free beverage package. So you have to be really savvy about looking at promotions, whether you're doing it yourself

or through a travel agent. They stay on top of these pretty well. To hear more about Dawn's last minute cruise, listen to today's episode of Your Money Briefing. And that's What's News for this week. In case you missed it, we've got a bonus episode out today. In What's News and Earnings, we're looking at the big insurance companies, how they're navigating the Los Angeles wildfires and other extreme weather events, and what it could mean for the cost of insurance.

You'll find it in your What's News feed just before this podcast. Tomorrow, you can look out for our weekly Markets Wrap-Up, What's News in Markets. Then on Sunday, we'll be looking at Greenland, why President Trump says he wants it, and what it shows about the changing geopolitical dynamics across the Arctic. That's in What's News Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Anthony Bansi with supervising producer Michael Cosmitis. Michael Laval wrote our theme music, Aisha El-Moussalim as our development producer, Scott Salloway and Chris Sinzley are our deputy editors, and

Vilana Patterson is the Wall Street Journal's head of news audio. I'm Alex Ossola. Thanks for listening.