U.S. companies see huge opportunity in China’s resurgent biotech sector

China’s booming biotech sector has become an attractive opportunity for U.S. biotech and pharma companies. But with the Biosecure Act stalled — but looming — how long will it last?

On March 26, 2025, U.S. biopharma giant Merck announced that it had entered an exclusive licensing deal for lipoprotein-inhibitor HRS-5346 from Chinese company Jiangsu Hengrui Pharmaceuticals (Hengrui Pharma). Importantly, the deal reflects a growing desire for U.S. biotech and pharma companies to gain Chinese assets, due to its growing expertise and influence in the biotech sector.

China’s biotech sector is enjoying a significant period of growth, and as a result there is huge interest in M&A and licensing deals from American companies. The Merck deal will see the U.S. company acquire the global rights (excluding Greater China) to develop and market HRS-5346, which reduces the accumulation of lipoprotein(a) in blood vessel walls that can contribute to atherosclerosis.

Chinese biotech companies take the world by surprise

Initially, Merck will pay $200 million upfront, but over time is expected to pay $1.77 billion in milestone payments and royalties. But it is not the first licensing deal of its kind by any means. Last year, a small Chinese biotech firm, Akeso Inc., surprised the industry by developing an experimental cancer drug that proved to be more effective in clinical trials than Merck’s Keytruda. It was then licensed by California-based Summit Therapeutics.

China’s growth changing the global balance in biotech. In 2024, almost 30% of Big Pharma deals with at least $50 million upfront involved Chinese companies, up from 20% in 2023 (and none only five years previously).^[1]

In 2024 there were 25 M&A and licensing deals, each valued over $20 million, which involved U.S. companies and Chinese assets. That’s up from 20 in 2023 and 10 in 2022.^[2]

There are a number of reasons for this. First, from a U.S. perspective, the Biosecure Act stalled in December, when it was not included in the continuing resolution. The Act sets out five companies of concern – BGI, MGI, Complete Genomics, Wuxi Apptec, and Wuxi Biologics, and any subsidiary, parent affiliate, or successor of these entities – which are described as constituting a national security concern.

The bill would ban U.S. Executive agencies from acquiring “biotechnology equipment or services” from these Chinese entities. Further, it includes any entity subject to the jurisdiction, direction, control, or operates on behalf of the government of a foreign adversary (e.g., North Korea, China, Russia, Iran). The Biosecure Act may still become law in 2025, but the uncertainty around its passage has given a reprieve to U.S. companies looking to invest in, or license from, China’s thriving biotech sector.

China has invested heavily in its biotech sector

From China’s perspective, the rise of its biotech credentials is no accident. Once seen as a provider of generic drugs, it is now becoming successful in developing novel drugs. Over the last decade, the state and private organizations have invested heavily in the sector, including providing government incentives, fostering and training talent, and creating an entrepreneurial environment that has led to a boost in innovative drug development.

At the same time, China's National Medical Products Administration has streamlined the approval processes for faster drug development. It is also known for its “bio-better” drug development, whereby it can enhance drugs developed elsewhere cheaper and faster.

China also offers cheaper R&D costs, making it an efficient, cost-effective source of innovation. There are also advantages with respect to clinical trials – China is significantly cheaper for conducting trials and has a huge population base that can be employed to conduct trials. These conditions facilitate the acquisition of large volumes of accurate data that can then be expanded for global trials.

While there are clear opportunities for U.S. companies in Chinese biotech – at least while the Biosecure Act is on hold – there are of course risks: a complex regulatory and compliance environment, talent poaching by Chinese competitors, geopolitical considerations, and concerns over the security of private data, to name a few.

Pamir Consulting offers a comprehensive view of current and emergent risks for the complete supply chain and stakeholder ecosystem. We have experience helping U.S. companies operate and excel in China based on our unique overview of the market and an innovative research methodology. We provide analysis of government policies, companies, people, supply chain, and other aspects of China’s shifting business environment, as well as actionable risk advice and 360° strategic advice.

We can help you to identify and mitigate risk across your entire activity landscape, along with alerts against any potential or emerging threat. Our services include insider risk and assessment, brand protection and monitoring, mergers and acquisitions analysis, supply analysis, anti-counterfeiting assessment, and much more.

To find out how we can help you to optimize the opportunity offered by China’s resurgent biotech sector, contact us today.

^[1] https://dealforma.com

^[2] https://www.bblsa.com/white-papers/exploring-the-us-china-biotech-boom