Chinese Biotech Sector Sees Surge in International Deals Amid Funding Challenges

In a significant shift for the global pharmaceutical landscape, Chinese biotech companies are increasingly turning to out-licensing deals with multinational corporations as a lifeline amidst domestic funding challenges. This trend has led to a flurry of high-value partnerships, signaling growing international confidence in China's drug development capabilities.

Record-Breaking Deals Highlight Industry Shift

The past six months have witnessed approximately 80 out-licensing deals from China, with several breaking records for upfront payments and total deal values. Notable transactions include:

• Pfizer's commitment of up to $6 billion to 3SBio, Inc. for ex-China rights to SSGJ-707, a bispecific antibody targeting PD-1 and VEGF, with a record-setting $1.25 billion upfront payment.
• AstraZeneca's R&D collaboration with CSPC, valued at over $5 billion.
• GSK's agreement to pay up to $12 billion for 12 oncology candidates from Jiangsu Hengrui Pharmaceuticals.

These deals underscore the increasing integration of Chinese biotechs into the global pharmaceutical value chain, with U.S. companies prominently featured among the top 20 international buyers in 2025.

Domestic Challenges Drive International Partnerships

The surge in international partnerships comes at a critical time for China's biotech sector, which has faced significant funding challenges since 2022. The IPO market for biotechs in China has contracted sharply, with only 21 companies successfully launching IPOs in China A-shares in 2023, marking a 57.14% decrease in total offerings and a 70.15% decline in fundraising compared to previous years.

This financial squeeze has forced many companies to seek alternative funding sources, including out-licensing deals and partnerships with multinational corporations. "Things were extremely hard [for companies] in 2023 and 2024," said a CEO of a Shanghai-based biotech company, speaking under the pseudonym Tom. "Simply because they don't have money anymore."

The situation has been particularly dire in biotech hubs like Shanghai's Zhangjiang Pharma Valley and Suzhou's BioBAY, where companies have been quietly laying off staff, cutting pipelines, and in some cases, filing for bankruptcy.

China's Biotech Ecosystem: Challenges and Opportunities

Despite the current funding challenges, China's biotech sector has built a robust ecosystem over the past decade, driven by regulatory reforms, capital investment, and the return of internationally trained scientists. The country has established itself as a cost-effective and efficient hub for drug R&D, with development costs estimated at 30% to 50% of those in the U.S.

Sam Lou, former GM of Parexel China and co-founder of Hope Medicine, summarized China's capabilities: "China can do it in a way that can be summarized as 'many, fast, good, and cheap'. This is not a 'DeepSeek' moment for China's biotechs. This is a confirmed trend."

However, the abundance of biotech startups has created a highly competitive landscape. "Now, there is no single modality that you can't find a second candidate in China," Lou noted. "It's not even just the second or third. There is almost no modality in which there are less than five or 10 startups at the same phase available [in China]."

As international interest in Chinese biotechs grows, industry experts anticipate a continued evolution of the sector. "The global biotech value chain is being reconstructed, and China and the U.S. are integrating their complementary strengths," said a CEO of a Shanghai-based publicly-listed biotech, speaking under the pseudonym Jack.

While the recent surge in international deals has provided critical hope and endorsement for Chinese biotechs, challenges remain in securing sustainable funding for the broader ecosystem. As the industry continues to adapt to these new dynamics, the coming years will likely see further integration of Chinese innovation into the global pharmaceutical landscape.