Key Takeaways
- In Q1 2025, 32% of outlicensing biotech deals occurred in China, a significant increase from 21% in 2024 and 2023.
- Chinese biotechs are rapidly reshaping the U.S. biopharma landscape with cost-effective solutions and government support.
- Bristol Myers Squibb, Roche, and Merck & Co. are the leading companies investing in China’s biotech sector.
Growth of China’s Biotech Licensing Deals
International companies are increasingly establishing licensing agreements with Chinese biotech firms, driven by rising concerns around drug pricing and imminent patent expirations. A report from Jefferies equity research, published on July 14, reveals that in the first quarter of 2025, a remarkable 32% of the total outlicensing biotech deal value came from China. This is a notable increase from the 21% share reported in both 2024 and 2023, and a substantial jump from just 16% in 2022 and 8% in 2021.
The analyst attributes the surge in Chinese licensing deals to growing pressures concerning potential drug pricing cuts and the expiration of patents for high-revenue products. The question arises: why has the focus shifted to China at this time? The analyst notes that Chinese biotechs are transforming the U.S. biopharma landscape. By in-licensing assets from China, multinational corporations are finding affordable and timely remedies to meet market demands.
Recent data demonstrates the impressive capabilities of Chinese biotechs, especially highlighted by the first-in-class approval of Akeso’s ivonesimab in 2024, showcasing their credibility and strong market potential. Additionally, China’s government is actively supporting the biotech sector, as evidenced by the Hong Kong Stock Exchange allowing pre-revenue biotechs to enter public markets, breaking away from previous stringent listing requirements.
China offers a significantly accelerated timeline and reduced costs for all stages of drug development, including workforce, supply chain, and clinical trials. Since 2022, Chinese biotechs have introduced 639 first-in-class drug candidates, marking a staggering 360% increase from the 137 candidates developed between 2018 and 2021. This acceleration outpaces the 100% to 150% growth in first-in-class assets seen in the U.S., Europe, and Japan.
Additionally, the financial aspect offers compelling reasons for interest. Chinese biotech assets come at much lower price points compared to global counterparts, with upfront payments costing 60% to 70% less and overall deal sizes being reduced by 40% to 50%. The most sought-after therapeutic areas for buyers include oncology, autoimmune disorders, and cardiovascular/metabolic conditions, with a notable emphasis on PD-1/VEGF bispecifics and antibody-drug conjugate candidates.
The leading players actively seeking assets in China’s biotech market include Bristol Myers Squibb, Roche, and Merck & Co. Furthermore, Bristol Myers Squibb, Pfizer, and Gilead emerge as the top spenders in this sector. Despite concerns about potential funding limitations, the analyst maintains optimism that Chinese programs with best- or first-in-class capabilities will continue to thrive. It is also believed that neither the Chinese nor U.S. governments will obstruct biopharma deals, given that U.S. companies retain most of the economic benefits and face minimal national security concerns.
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