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 biotechnology sector playing an increasingly pivotal role.

China's Growing Share in Biopharma Deals

In the first quarter of 2025, China accounted for 32% of outlicensing biotech deal value, a substantial increase from 21% in both 2024 and 2023. This trend represents a dramatic rise from just 8% in 2021, highlighting the rapid growth of China's influence in the global pharmaceutical industry.

The surge in licensing deals with Chinese biotechs is largely attributed to mounting pressure around potential drug pricing decreases and the looming expiration of patents for blockbuster therapeutics. As multinational corporations seek to alleviate these pressures, Chinese biotech assets offer an attractive solution, providing affordable options within manageable timeframes.

Advantages of Chinese Biotech Partnerships

Several factors contribute to the appeal of Chinese biotech partnerships:

1. Credible data and best-in-class potential, exemplified by the first-in-class approval of Akeso's ivonesimab in 2024.
2. Strong government support, including the Hong Kong Stock Exchange's allowance for pre-revenue biotechs to trade publicly.
3. Accelerated development timelines and lower costs across workforce, supply chain, and clinical trials.

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 growth rate significantly outpaces the 100% to 150% growth observed in the U.S., Europe, and Japan.

Financial Implications and Key Players

Chinese biotech assets come with notably lower price tags compared to global peers. Upfront payments are typically 60% to 70% smaller, with total deal sizes 40% to 50% less than those of their international counterparts.

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. These companies are particularly interested in oncology assets, with a focus on PD-1/VEGF bispecifics and antibody-drug conjugate candidates.

Despite potential funding constraints, analysts believe that Chinese programs with best- or first-in-class potential will continue to thrive. Furthermore, it is considered unlikely that either Chinese or U.S. governments will resist these biopharma deals, given that U.S. companies maintain the majority of economic benefits and there are low national security concerns.

As this trend continues to reshape the global pharmaceutical landscape, industry observers anticipate further integration between Chinese biotechs and international pharmaceutical giants in the coming years.