Cross-border biotech deals grow more complex as US targets China investment links

Cross-border biotech deals between China and the United States are becoming more complicated and could face a modest slowdown as Washington steps up efforts to restrict investment and technology transfers, according to industry analysts.
“There will be more geopolitical scrutiny going forward. This scrutiny may lead to slightly fewer deals than without it,” said Diederik Stadig, senior healthcare economist at ING Research.
Despite the growing regulatory hurdles, Stadig said the broader trend of Western pharmaceutical companies partnering with Chinese biotech firms was unlikely to reverse.
“Given the rising importance of Chinese innovation, Western pharmaceutical companies will continue to strike deals with Chinese counterparts, and we expect this trend to accelerate in the years ahead,” he said.
ING estimates the value of out-licensing agreements between Chinese biotech companies and Western drug makers would reach about US$240 billion this year, up from US$136 billion in 2025.
“There is room for these deals to become even larger,” Stadig said. “Only the largest pharmaceutical companies have the scale and resources to navigate the political environment. These transactions will increasingly remain the domain of Big Pharma.”
Stephen Farrelly, ING’s global head of pharmaceuticals and healthcare, said measures such as the proposed Biosecure Act, which targets US ties to certain Chinese biotech firms, were unlikely to halt Western interest in Chinese drug development, but would make partnerships “more complex, selective and politically sensitive”.
The comments come as Washington expands restrictions on China’s biotechnology sector. On June 2, US lawmakers introduced BINSA, which would amend existing outbound investment screening rules to cover pharmaceutical and biological product development.
If passed, the legislation would subject US licensing agreements, joint ventures and equity investments involving Chinese biotech companies to review by the US Treasury Department.

“The regulations would have a slightly negative impact on China’s out-licensing market by limiting cooperation models and potentially reducing deal sizes,” said Cyrus Ng, head of Asia healthcare equity research at Deutsche Bank.
He noted that early-stage Chinese drug assets trade at roughly a 50 per cent discount to comparable global assets, helping to preserve their appeal to overseas pharmaceutical companies.
“Out-licensing activity is unlikely to be halted given the large valuation gap and the continued emergence of promising drug candidates,” Ng said.
The pace of deal making remains strong. Chinese biotech firms had signed more than 20 out-licensing agreements by the end of May, according to Chinese media reports.
Among the largest transactions this year, Jiangsu Hengrui Pharmaceutical agreed a deal worth up to US$15.2 billion with Bristol Myers Squibb covering 13 early-stage oncology, haematology and immunology programmes. Meanwhile, Innovent Biologics secured a partnership worth up to US$10.5 billion with Pfizer involving 12 early-stage oncology candidates.
Ng said some deal structures face greater regulatory risk than others. In particular, the “NewCo” model – in which a Chinese biotech company spins assets into a newly created venture alongside a foreign partner while retaining an equity stake – could fall directly within BINSA’s proposed investment-screening framework.
He added that Beijing had also become increasingly protective of proprietary biomedical databases, creating another layer of complexity for cross-border collaborations.
Cui Cui, head of Asia healthcare research at Jefferies, said multinational drug makers still have strong incentives to source assets from China because of lower development costs, faster timelines and mounting pressure from patent expirations.
“Global pharma’s demand for China-originated assets remains strong,” Cui said. “We believe multinational companies have incentives to actively lobby against further frictions.”
The tensions extend beyond deal making. Earlier this month, the Pentagon added WuXi AppTec to a list of companies it alleges have ties to China’s military, alongside a number of Chinese technology firms.
WuXi AppTec subsequently filed a lawsuit in the US District Court for the District of Columbia, calling the designation “clearly a mistake” and saying it would take immediate steps to challenge the decision.