China’s drugs offer lifeline for global pharma as it peers over the patent cliff

Core Insights - The out-licensing of clinical candidates from China has surged significantly over the past five years, driven by global pharmaceutical companies preparing for an impending patent cliff for several blockbuster drugs [1] - In 2025, six of the ten largest licensing deals since 2020 occurred within the first nine months, indicating a robust trend in partnerships between Chinese biotechs and foreign pharma [1] Group 1: Market Dynamics - AstraZeneca has emerged as a leading developer acquiring rights to Chinese drugs, with a notable $5.2 billion deal in June 2025 to co-develop chronic disease drug candidates with CSPC Pharmaceuticals [2] - China now represents one-fifth of all drugs in development globally, contributing to 28% of the world's licensed drugs in 2024, valued at $41.5 billion, marking a 66% increase from 2023 [3] Group 2: Innovation and Regulatory Environment - The ongoing collaboration with US and EU pharmaceutical companies underscores the maturity of China's innovation landscape, transitioning from past issues of fabricated clinical data to being recognized for high-quality therapies [4] - The focus of out-licensing deals is primarily on oncology candidates, with increasing interest in immunological and metabolic candidates, reflecting the advancement of China's innovative capabilities [5] - Regulatory reforms, including a 2024 pilot program by the National Medical Products Administration (NMPA) aimed at enhancing clinical trials and expediting drug reviews, have significantly contributed to the rise in out-licensing deals [6] Group 3: Challenges and Future Outlook - Strained international relations pose a potential threat to these licensing deals, particularly with the recent passing of the amended BIOSECURE Act, which restricts Chinese companies from accessing federal funds or collaborating with US companies reliant on such funding [7] - Despite these challenges, the trend of out-licensing Chinese candidates continues, facilitated by arrangements like NewCo deals, which allow licenses to be granted to new offshore companies rather than directly to established developers [7]