China's $60 bn biotech deal boom faces growing US pushback

Beijing [China], June 5: The wide-ranging geopolitical rivalry between Beijing and Washington could soon expand into biotechnology, raising the prospect of fresh tensions even as American pharmaceutical firms have turned to China's fast-growing industry for new drug candidates.
Biotech in the world's second-largest economy has long been viewed as a predominantly low-cost manufacturing base with opportunities arising from its vast domestic market. But years of sustained investment, cost advantages and faster development timelines are helping China emerge as a source of innovative medication.
Chinese biotech companies struck cross-border licensing deals worth a record US$60 billion in the first quarter of 2026, according to data from the National Medical Products Administration, a medical supervisory body under the State Council.
So far this year, Chinese firms had accounted for about 69 per cent of the total value of global biotech deal-making, said Cui Cui, head of healthcare research for Asia at Jefferies.
The sector's rapid ascent has heightened concerns in Washington, where policymakers are already wary of growing dependence on China's supply chains.
"United States capital flowing to Chinese biotechnology companies through licensing agreements, joint ventures and equity investments is fuelling China's strategy, aiding it in its rapid ascent up the pharmaceutical value chain," wrote US Congressman John Moolenaar in a May 21 letter to US Treasury Secretary Scott Bessent.
Moolenaar, chairman of a prominent committee on US-China competition in the House of Representatives, urged the administration to add biotechnology to the list of prohibited technologies under the Comprehensive Outbound Investment National Security Act, or Coins Act.
He cited US multinational Bristol Myers Squibb's recently announced US$15 billion deal with Hengrui Pharma as a "dangerous" example. If included, US capital flows and investments into China's biotech sector would be restricted and monitored.
Abigail Coplin, assistant professor of sociology and science, technology and society at Vassar College in Poughkeepsie, New York, cautioned that biotech's inclusion in the Coins Act could "have a chilling effect on American firms' rapid acquisition of Chinese drug candidates" and "impact many Chinese firms whose current business models are predicated on the early acquisition of drug candidates before commercialisation".
She added that European firms could fill the void left by the exit of American companies.
Accusations are also mounting in the US that China has distorted the market through subsidies. The US International Trade Commission held a hearing on Wednesday, with a final determination scheduled for January 22, 2027, which could pave the way for tariffs or countervailing duties.
"This indicates that biomedicine is already a key area of focus for the next national security review in the United States," said Jiang Tianjiao, associate professor at the Development Institute of Fudan University in Shanghai.
Separately, the Biosecure Act, which took effect this year, was already affecting some Chinese biotech companies through restrictions on federal government procurement, Jiang added. While sweeping restrictions similar to those on semiconductors remained unlikely for now, analysts said the biotech sector could be pushed to the centre of geopolitical tensions if China were to achieve a high-profile breakthrough.
"[Artificial intelligence] has sucked up all the oxygen these days, but that's because there hasn't been the equivalent of a DeepSeek moment in biotech yet. That moment could be just six months or a year away ... but when that happens, the spotlight will naturally shift to biotech," said Damien Ma, director of the Carnegie China research centre.
But any effort to curb American biotechnology links with China could prove complicated. Diederik Stadig, senior economist of healthcare and technology at ING Research, said Chinese intellectual property was important to US companies in the sector, whereas the US retained a stronger grip on crucial parts of the semiconductor supply chain. Restrictions on biotech would also involve clearer trade-offs for patient care, which risked becoming highly politicised, he added.
These competing interests have complicated efforts in Washington to take a tougher stance on the sector. Cui of Jefferies noted that the original Biosecure Act was the only major piece of China-related legislation that failed to pass the US Congress in 2024, reflecting strong resistance from the pharmaceutical industry - though it was later revived and passed in 2025.
The current structure of many licensing deals also largely benefits Western pharmaceutical companies. Chinese partners were typically entitled to royalties of 10 to 15 per cent of ex-China sales, equivalent to less than a third of the profit split, Cui said.
Those commercial benefits could shape the form of future restrictions. "We expect the focus to be less on broad trade bans and more on controlling critical nodes of innovation and data flows," Stadig said.
Coplin of Vassar College also pointed to differences between the biotech and semiconductor industries, noting that the choke points were fundamentally different given the biotech sector's reliance on open scientific exchange.
Unlike semiconductors, where proprietary knowledge, technological complexity and high equipment costs created strong first-mover advantages, biotech often advanced through ideas published in accessible journals, mobile scientific talent and comparatively lower start-up costs, she added.
"If policymakers restrict American firms from the Chinese biotechnology ecosystem without simultaneously increasing research funding and making more efforts to attract and retain top global scientific talent domestically, their actions are essentially just depriving American patients of cutting-edge affordable treatments," she said.
Source: Qatar Tribune