China is adapting its Life Sciences policy to bolster innovation and data transparency. Big Pharma is taking note.
In the final weeks of 2024, pharmaceutical companies struck a handful of deals with China-based biotechs, with antibody-drug conjugates high on the wish list. The flurry of activity reflects a potential gold mine for Western companies as China’s data become more trustworthy, experts told BioSpace.
“What you’re seeing is, as the U.S. is doing things to make its environment less hospitable to biopharma, China is making its environment more hospitable to biopharma,” said Kirsten Axelsen, a nonresident fellow at the American Enterprise Institute and senior policy advisor at DLA Piper, in an interview with BioSpace.
China is revamping Life Sciences policy to bolster its intellectual property system, investing in R&D, allowing smoother technology transfer between universities and companies and, most importantly, allowing universities to make money from the IP protecting those innovations. China joined the International Council for Harmonisation in 2017, launching its integration into the global drug regulatory system.
The fruits of that labor are now apparent in rising deal activity—and value. These deals have been larger than the average over 2024 and at least three to four have involved partnerships or whole new companies forming around a China-developed asset, according to Jefferies. A Chinese company is involved in at least a fifth of development programs across the entire industry’s total clinical pipeline, according to a 2025 preview report from Evaluate Pharma.
This uptick in U.S.-based companies licensing drugs from China in 2023 and 2024 is occurring despite “geopolitical hiccups,” Jefferies analysts said in a recent note. The hiccup, of course, is the BIOSECURE Act, which directed biopharma to move away from using certain Chinese firms, such as CDMO WuXi Biologics. The legislation was not included in an end-of-year defense budget bill, however, leaving the issue unresolved.
Venture capital firms like Bain Capital Life Sciences, Atlas Venture and RTW Investments have been looking to China to launch new companies, too. Kailera Therapeutics launched in October 2024 with $400 million to develop Jiangsu Hengrui Pharmaceuticals’ metabolic disease portfolio outside of greater China.
“What is interesting in China is they have borrowed the best of U.S. healthcare policy in many ways,” Axelsen told BioSpace.
Me Too But Better
China has a lot going for it when it comes to attracting interest from the biopharma industry. Data coming from the region is becoming more transparent and trustworthy, Axelsen said, and it’s just plain cheaper to conduct early research there. A quarter of clinical trials and early drug development is happening in China, Axelsen added, a feat she calls “remarkable.”
Historically, oncology has been the focus for pharmas seeking deals in China. IQVIA reported that 46% of the 318 deals involving Chinese companies in 2023 were oncology-focused, although not all of these involved foreign companies. The firm said that the most notable deals were in oncology, particularly involving ADCs.
But pharmas have broadened their prospecting, signing deals in obesity, immunology and cardiometabolic diseases, Jefferies noted. The firm thinks this simply reflects pharma’s insatiable appetite for “whatever’s perceived as ‘hot’ at the moment.” The trend initially began with PD-1s, then moved on to CD19 and BCMA, then antibody-drug conjugates, and now GLP-1s and PD1xVEGF.
“China becomes a place for deal hunters to look for a ‘me too better’ version of the target,” Jefferies’ analysts said.
Jefferies does not see this rush stopping anytime soon, but said future deals may focus more on next-generation versions or assets that can bring costs down in the U.S. market. This is particularly likely in obesity, where numerous deals and companies are emerging from China, such as Kailera. The company’s most advanced asset so far is the Phase II GLP-1/GIP recepter dual agonist KAI-9531, an injectable already being tested in the country.
ADCs have been red-hot for pharmas seeking out deals in China. According to Evaluate, more than half of the ADC, bispecific antibody and CAR-T clinical pipeline is China-originated or China-partnered. Roche signed an ADC deal with China’s Innovent worth $80 million upfront and $1 billion in milestones on the first day of the year. Prior to that, GSK inked two ADC partnerships at the end of 2024 with Hansoh Pharma worth $1.7 billion, then with DualityBio for $1 billion.
BioNTech also signed a major deal with Duality in 2023, worth up to $1.5 billion, to work on solid tumor candidates. The partners announced early Phase I/II data in December 2024 showing responses in just over 56% of 73 patients with small cell lung cancer. The German biotech also bought China’s Biotheus in November for up to $1 billion to nab a pipeline of anti-PD-1/VEGF bispecifics, Evaluate pointed out.
An FDA Intervention
Trial starts by China-headquartered companies rose 28% in 2023 compared to just 3% a decade ago, according to a February 2024 report from IQVIA. This came as trial starts overall declined by 15%.
Drugmakers do have to be careful, however, to ensure they meet trial diversity standards to avoid scrutiny from the FDA. IQVIA reported that Chinese companies typically stick to the region for clinical trials, with just 27% including non-China sites.
Eli Lilly ran into this challenge in 2022 when the pharma partnered with Innovent Biologics to bring an immunotherapy to the U.S. market. The drug, marketed as Tyvyt in China, was rejected by the FDA, which requested another global clinical trial. The partners are still working together through a global licensing deal on Tyvyt and other oncology drugs, howeverthey have not to-datereturned an application to the U.S.
The Lilly-Innovent debacle, as well as a similar situation with Hutchmed’s surufatinib, dented deal values in its aftermath, according to Jefferies. Summit Therapeutics also trumpeted data in September that could beat Merck’s megablockbuster Keytruda in non-small cell lung cancer, only for analysts to caution that the results were only from a single Chinese-only trial.
But pharma seems to have moved on. Average deal size including upfront payments for China-focused deals increased over the past two years as total deal count also ticked up.
It seems that companies are seeking early-stage assets that have already been tested in China-based trials or will be soon, with the intention of bringing successful candidates elsewhere for the later stages of clinical development, Jefferies said, adding: “This seems wise and logical.”
“These trends [indicate] that China’s influence on the global pharma industry is likely to deepen in 2025,” Evaluate predicted. “There is a big ‘but’ here, however, in the shape of the Trump administration.” Trump has indicated a desire to “protect U.S. interests,” according to Evaluate, which many experts fear could trigger a trade war. He could also renew support for the BIOSECURE Act.
On the regulatory front, Axelsen believes the FDA needs to provide more robust guidance on what it wants from drugs tested in China. The agency has not explicitly said what portion of trial data or population can come from China. Absent that directive, more and more applications are going to roll in from the region with industry keenly watching for patterns. China’s regulatory agencies can also help by increasing harmonization efforts.
“It’s in China’s best interest to have standards that are what the FDA is looking for,” Axelsen said, “because that makes their developed drugs more valuable.”
