To The Moon

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Katrina Hamlin

HONG KONG, Jan 5 (Reuters Breakingviews) - China is on a medically induced high. In 2025, homegrown biotech champions like 3SBio 1530.HK and CSPC Pharmaceutical 1093.HK struck dozens of deals to license drugs and technology to multinational giants such as Pfizer PFE.N. A return of entrepreneurial Chinese with experience working for Big Pharma, alongside more trustworthy data behind clinical trials in the People's Republic, is fuelling the trend. It's part of a bigger shift towards more sophisticated products, services and exports.

The combined total value of Chinese biotechnology companies' overseas licensing deals surpassed $123 billion in 2025, according to data provider PharmCube, from $52 billion for all of 2024. That included multiple blockbuster deals valued at over $1 billion, factoring in upfront payments, payouts for hitting clinical and commercial hurdles, royalties and other benefits. The flurry of activity is far from over, lawyers and bankers told Breakingviews.

Licensees include Pfizer, which committed to a deal worth more than $6 billion all-in to access a cancer treatment from Hong Kong-listed 3SBio, as well as AstraZeneca AZN.L, Merck MRK.N, Roche and peers. Subsidies, lower costs and an abundance of science graduates make the process of drug discovery in China less expensive: 3SBio's average annual research and development budget from 2020 to 2024 was 11% of revenue, while Pfizer's was 17%, LSEG data show.

In the past, multinationals and investors hesitated to trust data from firms in the world's second-largest economy. However, today's standards are considered far more robust. Big Pharma even outsource their own trials to Chinese specialists such as $39 billion Wuxi AppTec 603259.SS.

For their part, the Chinese parties need funds, and drug prices are effectively capped. For some, the licensing success also helps to crystallise their own valuations ahead of public offerings. The Hang Seng Biotech Index .HSBIO leapt 65% last year, trouncing the main benchmark's 28% rise. Hong Kong and mainland stock exchanges hosted more than 50 biotech deals, raising nearly $9 billion – seven times the 2024 tally, per Dealogic.

Geopolitics could emerge as a spoiler. The U.S. has considered imposing restrictions on some medicines and treatments from China, the New York Times reported last year. President Donald Trump in December signed the Biosecure Act, which limits government procurement from and grants to “companies of concern”, without naming specific groups. But so long as China is making the best products, as well as the cheapest, there will be global buyers.

The same story is playing out from automobiles to artificial intelligence. Consumers, companies and investors around the world are starting to splurge on "Made-in-China" meds, gadgets and more for the sake of the innovation and technology, not just the price point.

Follow @KatrinaHamlin on X

CONTEXT NEWS

The combined total value of Chinese biotech companies' out-licensing deals to overseas groups surpassed $123 billion in 2025, according to pharmaceutical data provider PharmCube, compared with $52 billion for all of 2024. An out-licensing deal is an agreement where a drug developer allows another company to develop and commercialise drugs or technology in certain markets, usually in exchange for an upfront payment, milestone fees, royalties or other benefits.

Hong Kong and mainland stock exchanges hosted 57 equity capital market deals involving issuers in the biotechnology sector in 2025. Those deals raised a total of $8.7 billion over the year, according to Dealogic, around seven times more than in all of 2024.

(Editing by Una Galani; Production by Ujjaini Dutta and Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on HAMLIN/katrina.hamlin@thomsonreuters.com; Reuters Messaging: katrina.hamlin.thomsonreuters.com@reuters.net))