Chinese biotech firms look abroad for partners with deep pockets
When Germany's BioNTech struck an eye-popping US$11 billion licensing deal with Bristol-Myers Squibb earlier this month, few headlines mentioned where the drug originally came from. The cancer therapy, known as BNT327, wasn't born in a Mainz lab or a Boston biotech incubator. It was first developed by a small Chinese firm called Biotheus.
Earlier this year, BioNTech completed its acquisition of Biotheus in a US$800 million deal that handed the German company full global rights to a protein-blocking antibody that industry insiders predict could someday dethrone existing inhibitors in standard cancer treatment.
To some observers, the deal looked like a classic case of a Chinese company selling too early, too cheap. But that view misses the bigger story.
Is China at risk of becoming just a pharma outsourcing engine?
An Innovation System Under Pressure
As China's biotech sector matures, companies are striving to reconcile their bold innovation goals with a healthcare system still evolving to support them. Cost-control policies, particularly volume-based procurement and strict reimbursement ceilings, have made it harder for developers of advanced therapies to achieve commercial viability at home.
Unlike in the US, where new therapies often command premium prices, China's model prioritizes affordability. That works for generics. But for breakthrough therapies, where years of R&D precede market entry, the pricing pressure can be overwhelming. Prices for life-saving drugs like PD-1 inhibitor toripalimab have been cut by over 70 percent through national tenders. CAR-T cell therapies, despite their personalized nature, have been excluded from reimbursement altogether for being "too expensive."
The Case for Reform
Health authorities say this is not a flaw but a necessary correction. In a press conference last year, the National Healthcare Security Administration emphasized that high prices don't always reflect high value. In the past, officials said, up to 40 percent of drug costs were consumed by marketing and "relationship maintenance," not innovation or quality improvement. The administration cited cases like the antibiotic polymyxin B, whose price ballooned from a few dozen yuan to over 2,000 yuan (US$280), before regulatory intervention brought it back to under 200.
By cutting inflated prices and discouraging backroom marketing, the system aims to reward real science and shift budget space to higher-value therapies.
Betting on Both Sides: Control and Incentive
Alongside these cost-control measures, China has also stepped up efforts to support innovation. Regulators have halved trial review timelines for priority drugs, while pilot schemes now offer tailored guidance for urgent therapies. New rules grant three to six years of data and market exclusivity for innovative treatments, giving companies more breathing room.
And the results are visible. China's pharmaceutical R&D spending has grown at an average annual rate of 23 percent, with the number of clinical-stage drug candidates now second only to the U.S. In 2023 alone, 40 innovative drugs were approved for market.
The message from policymakers is clear: controlling prices and encouraging innovation are not contradictory goals, but parallel tracks.
Global Lifelines for Local Innovation
Yet for many startups, the runway at home remains too short. Hospital budgets are tight, doctors often opt for cheaper generics, and reimbursement lags can last months. Faced with narrow margins and long payback cycles, going global becomes a lifeline.
Recent cross-border licensing deals show the trend. Biotheus and BioNTech is one. In 2022, Akeso licensed its PD-1/VEGF bispecific drug ivonescimab to US-based Summit Therapeutics for up to US$5 billion, including a US$500 million upfront payment. In March, United Laboratories signed a deal with Novo Nordisk worth up to US$41.8 billion for an early-stage diabetes drug, receiving US$200 million upfront.
These are not fire sales, but strategic pivots. Still, they come at a cost. By handing over rights, companies give up future profits and control over branding and global development. China becomes the lab, not the label.
The core issue isn't scientific capability or capital access. It's the commercial structure. The current system risks turning China into a development hub for others' gain, rather than a biotech powerhouse in its own right.
