Senior editor Nancy Crotti contributed to this report.
UPDATED Sept. 16, 2019, with comment from Accuray.
Shares in Varian Medical (NYSE:VAR), Accuray (NSDQ:ARAY) and Elekta (STO:EKTA B) gained this week after China added medical linear accelerators to a list of 16 products exempted from its trade war with the U.S.
The parties appeared to be edging back to the negotiating table this week; as the White House scrambled for an “escape hatch” from U.S. tariffs slated to be imposed next month and in December, the Chinese government granted one-year exemptions effective Sept. 17 to a small list of product types including the big-ticket medical devices. The U.S. also eased its stance, granting a two-week reprieve on a tariff increase on $250 billion in Chinese goods.
China’s exemptions are retroactive to August 23, 2018, meaning Varian, Accuray and Elekta are due for refunds on any tariff increases they’ve paid since then.
“We are grateful for the China government’s determination to fight cancer and its recognition of the positive impact of radiotherapy treatments,” president & CEO Dow Wilson said in prepared remarks. “Varian envisions a world without fear of cancer and we are committed to empowering our users to achieve new victories against cancer with our cancer care solutions. The exemption allows us to continue to focus on the fight against cancer.”
“We applaud the recent decision to exempt medical linear accelerators,” added Accuray president & CEO Josh Levine. “We believe that this exemption will enable commercial momentum for our joint venture, CNNC Accuray (Tianjin) Medical Technology Co., Ltd, to expand access to our precise, innovative radiation therapy systems for hospitals and patients in China.”
VAR shares are up 5.5% to $117.33 apiece since the Sept. 11 announcement; ARAY shares have gained 1.2% to $3.05; and EKTA-B stock is up 6.2% to kr129.55 (about $13.49) in Stockholm.
The U.S. in July exempted several categories of medical devices from the 25% tariffs imposed on Chinese goods by the Trump administration, including surgical, radiotherapy and dental devices.
The Office of the U.S. Trade Representative said the new exclusions are retroactive to July 6, 2018, when tariffs went into effect on some $34 billion in imports from China, and are due to extend for another year. U.S. medtech makers originally faced about $836 million in tariffs, but that number is lower now that nine types of medical device are on the list of 110 exempted products.
“AdvaMed is engaged with [the U.S. Trade Representative] regarding the U.S.-China trade talks. We will continue to work with officials in Washington and Beijing to make sure our views are known. AdvaMed strongly opposes tariffs by both sides on medical technology products that help save and improve millions of lives every day. We remain hopeful for a successful conclusion of the negotiations, which are delicate and with broad-reaching implications that our industry is watching closely on behalf of the patients we serve,” Ralph Ives, EVP for global strategy & analysis at the trade lobby, said via an emailed statement.
Here’s the list of the products exempted from the Chinese tariffs starting next week:
- Other shrimp and shrimp seedlings
- Aster meal and pellets
- Other purpura (except coarse powder and pellets)
- Fish meal for feed
- Lubricating oil
- Cycloprom, insecticidal ring, insecticidal nail, polythiane, etc. (including methylthiophosphorus, buprofezin, trichlorfen, indoxacarb)
- Decitabine, fluorouridine, cyclophosphamide, gefitinib, capecitabine, raltitrexed, fludarabine phosphate, Fluoride, cytarabine hydrochloride, gemcitabine hydrochloride, ectinib hydrochloride, ifosfamide
- Nonionic organic surfactant
- Mineral oil <70% lubricant
- Lubricant that does not contain petroleum or extracts oil from bituminous minerals
- Medical linear accelerator
- Whey and modified whey for feed
- Release agent (oil by weight and oil extracted from bitumen ≥70%)
- Isoparaffin solvent
- Lubricating base oil
($1 = kr9.60151)