China’s Biopharma Rise Poses Increasing Risks to International Companies
For years, China has been welcoming foreign biopharma firms and investment in a bid to boost its burgeoning healthcare sector. In the first seven months of 2025, China attracted more than $4 billion of greenfield foreign direct investment (FDI), accounting for one-third of China’s FDI. This amount is six times more than for the same period in 2024 and already higher than any full year figure on record.[1]
Foreign investors are drawn to China’s growing strength in biopharmaceutical innovation, which is supported by its highly educated workforce and relatively low operating cost. According to figures compiled by finews.com, China’s share of innovative drugs compared to the rest of the world was just 7% between 2015 and 2019.[2] However, between 2020 and 2024, the number of novel molecules originating from China accounted for 40.4% of all innovative drug launches during this period.
European Firms Leading the Way, Followed Closely by U.S. Biopharma
European companies are thus far the leaders in biopharma FDI in China. In March 2025, UK-based AstraZeneca – largest drug manufacturer in China in terms of sales – pledged to build a new $2.5 billion R&D hub in Beijing. Denmark-based Novo Nordisk and Swiss giant Roche Group have also announced multimillion-dollar expansion plans in Tianjin and Shanghai, respectively.
On September 3, 2025, Shanghai-based Argo Biopharma announced an extension of its partnership with the Swiss multinational Novartis. The deal reportedly involves an immediate upfront payment of $160 million for Argo while Novartis enjoys ex-China rights to two next-generation heart disease molecules. Argo could also be eligible for up to $5.2 billion milestone payments and sales royalties.
U.S. companies are also taking advantage of Beijing’s promise to loosen restrictions on the sector and open up to foreign ownership. For example, on September 17 California-based Aditum Bio announced a new joint venture – Kalexo Bio – with China’s Mabwell Bioscience. Mabwell will receive $12 million upfront and potential milestone fees of up to $1 billion. The two companies are developing an siRNA candidate for use in high-risk atherosclerosis.
The day before, California-based Exelixis extended a collaboration with Suzhou-based Adagene to develop a monoclonal antibody used in the development of an antibody-drug conjugate for cancer.
Risks on the Rise
Lurking behind China’s policy of openness is Beijing’s intent to achieve self-reliance and global dominance in key technologies, and biopharma has been identified as a key development priority by the Chinese government. Beijing’s strategic intent carries considerable risks for Western companies, including theft of intellectual property, insider risk, and forced technology transfers.
The risks are compounded as the biopharmaceutical/biotechnology industry becomes a major battleground in the global contest for technological superiority. As a result, Western governments are intensifying their scrutiny of China’s efforts to acquire Western biopharma/biotech know-how.
One notable example is the BIOSECURE Act of the United States. In October, the U.S. Senate adopted an updated version of the legislation, which makes no reference to specific Chinese companies but instead points to DoD list that can – and likely will – be updated based on specific criteria. In so doing, the updated legislation has essentially expanded the possibility of application of the term “biotechnology company of concern” to many more Chinese biotech firms. As a result, all American companies that work with Chinese biopharma/biotech companies may be subjected to U.S. regulatory scrutiny under the updated BIOSECURE Act.
One potential solution to the growing risks of doing business with China is for American companies to diversify their supply chains by partnering with companies in countries that share similar values and institutions. In this respect, Japan’s biopharma industry can be a good alternative for U.S. biopharma. In fact, U.S. and European firms are partnering with Japanese companies. For example, Tokyo-based Chugai has been partnering with Indianapolis-based Eli Lilly on a weight-loss pill for patients with obesity and type 2 diabetes for some times. Similarly, Daiichi Sankyo is collaborating with AstraZeneca to develop antibody-drug conjugates. Otsuka, another Tokyo-based biopharma, is partnering with Novartis to develop different cancer treatment drugs.
As the global contest for technological supremacy intensifies, U.S. biopharma companies must understand the fast-changing geopolitical landscape and identify emerging risks. They should partner with experts with deep knowledge about China, the United States, and the world.
Pamir Consulting has decades of experience helping Western biopharma companies minimize risks and maximize opportunities.
Contact us today to find out how we can help you.
[1] https://www.fdiintelligence.com/content/818e64e2-ac72-40fa-81ef-bca11e652bc4
[2] https://www.finews.com/news/english-news/about-us
