China Biotechs Reshape US Biopharma Landscape with Surge in Outlicensing Deals

International pharmaceutical companies are increasingly turning to Chinese biotechs for licensing deals, as concerns over drug pricing and patent expirations continue to mount. A recent Jefferies equity research report reveals a significant shift in the global biopharma landscape, with China's share of outlicensing biotech deal value reaching 32% in the first quarter of 2025, up from 21% in both 2023 and 2024.

Rapid Growth in China's Biotech Sector

The rise of China's biotech industry has been meteoric, with the country's share in business development deals with multinational biopharmas growing from just 8% in 2021 to 32% in early 2025. This growth is attributed to several factors, including government support, accelerated development timelines, and lower costs across various aspects of drug development.

Since 2022, Chinese biotechs have developed 639 first-in-class drug candidates, marking a staggering 360% increase from the 137 candidates developed between 2018 and 2021. This rate significantly outpaces the 100% to 150% growth seen in first-in-class assets produced by companies in the US, Europe, and Japan.

Attractive Proposition for Global Pharma

The appeal of Chinese biotech assets extends beyond their innovative potential. These assets come with significantly lower price tags compared to their global counterparts, with upfront payments approximately 60% to 70% smaller and total deal sizes 40% to 50% less.

"We believe China biotechs are reshaping the U.S. biopharma landscape, as in-licensing assets from China could offer multinational corporations a remedy to alleviate pressure affordably and within a manageable time frame," the Jefferies analyst stated.

The most active buyers in the Chinese biotech market include Bristol Myers Squibb, Roche, and Merck & Co., with Bristol Myers Squibb, Pfizer, and Gilead leading in terms of spending. The hottest indications for these deals are in cancer, autoimmune diseases, and cardiovascular and metabolic conditions, with a particular focus on PD-1/VEGF bispecifics and antibody-drug conjugate candidates in oncology.

Regulatory and Political Landscape

Despite potential concerns, the analyst believes it's unlikely that either Chinese or US governments will resist biopharma deals between the two countries. This is largely due to US companies maintaining most of the economic benefits and the low national security concerns associated with these transactions.

The Chinese government's support for the biotech industry is evident in initiatives such as the Hong Kong Stock Exchange allowing pre-revenue biotechs to trade on the public market, a significant departure from traditional listing requirements.

As the pharmaceutical industry continues to evolve, the growing influence of Chinese biotechs on the global stage is likely to reshape strategies and partnerships in the coming years, offering new opportunities for innovation and growth in the sector.