Following Pfizer's record-breaking USD 1.25 billion upfront payment (with potential deal value up to USD 6.05 billion) for 3SBio Inc.'s PD-1/VEGF bispecific antibody, US pharmas' buying spree of Chinese innovative drugs escalated further in early June.

On June 3, Bristol Myers Squibb (BMS) made a major move with USD 1.5 billion upfront and up to USD 7.6 billion in milestones to co-develop BioNTech SE's PD-(L)1/VEGF bispecific antibody (BsAb) — the core asset BioNTech acquired from Biotheus last November for USD 800 million upfront. The day before, Regeneron purchased a GLP-1/GIP dual receptor agonist from Jiangsu Hansoh Pharmaceutical Group Co., Ltd. for USD 80 million upfront and up to USD 1.93 billion in milestones.

Not only are US pharmaceutical firms actively acquiring China assets, but Wall Street investors are also eagerly serving as intermediaries. A recent Wall Street Journal article noted US venture capital (VC) firms are racing to enter China's growing biotech sector, seeking the most promising novel drug candidates.

Simeon George, CEO and Managing Partner of GlaxoSmithKline's (GSK) venture arm SR One Capital Management, revealed they've implemented a three-pronged China strategy: supporting biotechs licensing assets from China, creating new companies around Chinese drug assets or introducing them to existing companies, and encouraging portfolio companies to conduct clinical trials in China.

With China's license-out wave gaining momentum and its innovation gaining MNC recognition, brokering Chinese drug assets has become a coveted business for top US VCs. Beyond SR One with its Big Pharma roots, global top VC TCG recently acquired a KLK2/CD3 T-cell engager (TCE) molecule for metastatic prostate cancer from EpimAb Biotherapeutics, Inc. for USD 210 million through its biotech fund TCG Labs Soleil, transferring it to portfolio company Juri Biosciences.

This US pharmas and Wall Street's buying frenzy reflects both the maturity of targets like PD-(L)1/VEGF and TCEs, and the industry's anxiety to secure deals amid the unpredictable tariff policies of the US, mirroring other cross-border transaction-dependent sectors racing against potential policy changes.

US Rushing for Chinese Innovative Drugs Amid Tariff Turmoil

On 12 May, China and the US issued a joint statement on US-China Economic and Trade Meeting in Geneva, reducing tariffs on Chinese products exported to the US from 145% to 30%, while suspending the additional 24% "reciprocal tariffs" with a 90-day window. This provided temporary relief for cross-border transactions between the two countries from previous tariff disputes. However, the uncertainty beyond these 90 days has driven a surge in import-export activities during this period.

Goldman Sachs analyst Philip Sun commented: "[…] with this 90-day tariff suspension period, how eager will Chinese exporters and US importers be to rush to place orders? We are living in a highly uncertain world. Who knows what will happen in 90 days (or even during this period)?".

This sense of uncertainty has affected all industries. For the US innovative drug sector, another dangerous signal emerged on 4 May when the US announced plans to impose 100% tariffs on all foreign-produced films. Like cross-border transactions of innovative drug IP, international film production originally avoided the brunt of tariff wars thanks to its classification as service trade rather than goods trade. That tariffs might now target the film industry suggests similar measures could be imposed on cross-border innovative drug asset transactions.

Currently, China has become the largest source of assets for the US innovative drug industry. Over the past two years, the license-out wave has seen Big Pharma gradually establish recognition and trust in Chinese innovative drugs through successive business development (BD) deals, backed by real financial commitments. According to a Stifel report, about 30% of drugs licensed by Big Pharma in 2023 and 2024 came from Chinese biotechs, compared to just 12% in the previous two years.

This trend has extended to primary markets, where Chinese innovative drugs have become an investment consensus and a "money magnet" for US VCs. Since 2024, top-tier VCs have actively participated as intermediaries hoping to profit from arbitrage.

According to PharmCube's MedAlpha® database, 4 of the top 10 US biopharma financings in 2024 involved overseas NewCos of Chinese innovative drug companies or US biotechs completing financing while licensing Chinese assets.

More importantly, Chinese innovative drug assets are not only high-quality but also low-cost. PharmCube's NextBiopharm® database shows that among the global top 10 innovative drug licensing deals by upfront payment, Chinese license-out deals are absent. Notably, BioNTech SE's USD 800 million upfront acquisition of Biotheus's PD-1/VEGF bispecific antibody, later licensed to BMS for USD 1.5 billion upfront with 50:50 profit sharing, ranked tenth.

In the Wall Street Journal article referenced above, investment bank Oppenheimer Managing Director Daniel Parisotto noted: "[…] with venture capital scarce in China, biotechs there have less ability to advance drugs on their own and therefore less leverage to demand large upfront payments, although increased competition for Chinese assets has pushed upfront payments higher lately".

For US-headquartered MNCs and investors, the window may close anytime, potentially ending access to this once-safe "haven" of innovative drug IP transactions. Whether pursuing R&D certainty, development potential or cost-effective assets, now appears the optimal time to act, which explains why MNCs and investors are scrambling for Chinese innovative drugs.

Is Time Running Out for US Pharma Companies?

From unpredictable tariffs to the US government's Most Favoured Nation pricing plans, US pharma companies face mounting pressures that could significantly impact drug pricing and market dynamics.

The Most Favoured Nation policy may force MNCs to confront generic competition earlier than expected, drastically shortening product lifecycles. Even products still under patent protection could be dragged into price wars with comparable therapies, threatening revenue growth. With a 90-day window for reciprocal tariffs looming, US pharma firms appear to be racing against time.

In response, acquiring low-risk, high-potential assets has become a strategic cushion against these uncertainties. Recent deals reveal that pricing and target selection have taken a backseat to speed and potential: companies want promising products, fast.

Months before its BioNTech SE deal, Bristol Myers Squibb acquired compatriot CAR-T developer 2seventy bio for USD 286 million, gaining global rights to Abecma (idecabtagene vicleucel). Eli Lilly and Company has been equally active in its homeland, this year acquiring Scorpion Therapeutics's PI3Kα inhibitor STX-478 for USD 2.5 billion, in-licensing Organovo's FXR314 program, and securing SiteOne Therapeutics, Inc.'s oncology candidates for up to USD 1 billion. Johnson & Johnson made the biggest splash with its USD 14.6 billion purchase of US-based CNS specialist Intra-Cellular Therapies.

These moves reflect US pharma's race against time to fortify market positions ahead of potential disruptions. Meanwhile, Chinese biotechs — refined by years of business development experience — increasingly align with MNC preferences, offering globally competitive assets that fit this acquisition frenzy.

New Phase of BD for China's Innovative Pharma Companies

Amid a constantly changing global context, the BD landscape for China's innovative pharma companies continues to evolve.

From the sudden capital winter at the end of 2021 to tightened IPO policies, China's innovative pharma companies initially engaged in license-out deals primarily for financing needs. However, with several products gaining international recognition for clinical data and the NewCo model achieving early validation in the US market, Chinese innovative drug assets have gained newfound popularity globally.

According to PharmCube's blue paper From Reliance to Defiance: A Decade-Long Panorama of China's Innovative Drug Transactions, global pharmaceutical deals have shown steady growth over the past decade, with China-related deals growing even more rapidly in both quantity and valuation. The number of China deals increased from 55 in 2015 to 213 in 2024, while total deal value surged from USD 3.1 billion to USD 57.1 billion. In 2024, China-related deals accounted for approximately 30% of global transaction volume and value.

Chinese companies have significantly increased their participation in pharmaceutical transactions, with 1,077 outbound and 1,412 inbound deals over the past decade, making China the world's second-largest participant in the segment.

The types of license-out projects from Chinese companies have diversified over the years, shifting from technology platform authorisations to asset rights transfers. Emerging modalities such as bispecific/multispecific antibodies and ADCs now represent a significant proportion, reflecting the layout of next-generation therapies. Additionally, domestic companies boast rich early-stage clinical pipelines with broad coverage of indications and targets, providing ample potential for global expansion.

However, Chinese innovative drug assets in license-out deals remain largely high-quality yet low-priced. Learning how to achieve "value for money" and secure more recognised upfront payments is an ongoing challenge for China's innovative pharma companies.

With growing demand and tighter timelines from foreign pharma companies including US firms for licensing deals, Chinese innovative pharma companies are enhancing their bargaining power. PharmCube's NextBiopharm® database shows that the total upfront payments for outbound licensing deals by Chinese pharma companies in 2025 have reached USD 2.33 billion, a 329% year-on-year increase.

Beyond Pfizer's aforementioned USD 1.25 billion upfront payment to 3SBio Inc. for its PD-1/VEGF bispecific antibody, Novo Nordisk secured exclusive rights to China-based Federal Biopharma's UBT251 (a GLP-1/GIP/GCG triple-target receptor agonist) in certain regions with USD 200 million upfront and up to USD 1.8 billion in potential milestone payments.

Similarly, MSD obtained exclusive rights to China giant Hengrui Pharma Co.,Ltd's cardiovascular Lp(a) oral small molecule HRS-5346 project in certain regions with USD 200 million upfront and up to USD 1.77 billion in milestone payments and sales royalties.

The growing number of cases demonstrates that Chinese drug developers are advancing their innovative asset BD strategies to the next phase amid a volatile external environment, seizing the opportunity to secure a better position at the negotiation table.