In the context of pressure on the global pharmaceutical industry and rising geopolitical tensions, a silent &#34;transfer of pharmaceutical power&#34; is underway: In just the first half of this year, the total value of Chinese pharmaceutical companies' overseas transactions has reached $48 billion, accounting for 32% of global drug licensing transactions, better than any previous year.
China is no longer a contract manufacturer of raw materials but is becoming the &#34;source&#34; of global innovative drugs, as previously stated by the founding managing partner of Qiming Venture Partners. Chinese innovative drugs are ushering in a &#34;DeepSeek moment.&#34;
Behind this is not only a leap in technological capabilities but also a result of industrial policies, capital promotion, and changes in the global pharmaceutical landscape. Multinational pharmaceutical companies are nearing a &#34;patent cliff&#34; and urgently need to replenish their innovation arsenal, while Chinese drugs, known for their high efficacy, rapid development, and low trial costs, can meet the needs of multinational companies. At the same time, Chinese pharmaceutical companies are also seeking opportunities for overseas expansion to alleviate funding shortages.
<h2>China becomes the new &#34;source&#34; for global pharmaceutical companies</h2>
According to a July report by Morgan Stanley, pharmaceutical giants such as AstraZeneca, Pfizer, Merck, Eli Lilly, and Regeneron are reaching early drug licensing agreements with Chinese biotech companies with unprecedented intensity. In these transactions, large pharmaceutical companies typically pay billions to over a hundred billion dollars to obtain exclusive development and sales rights for candidate drugs under development in China for overseas markets.
Morgan Stanley predicts that AstraZeneca alone has signed over $13.6 billion in licensing deals with five Chinese companies in the first six months of 2025, including a $5.2 billion agreement with Shanghai Pharmaceuticals. Pfizer has become the largest single transaction to date with a $6 billion cancer drug collaboration with 3SBio.
A Jefferies report indicates that in the first half of 2025, China will account for 18% of the total number of licensing collaborations with multinational pharmaceutical companies and one-third of the transaction value, both setting historical records.
Despite the high tariff threats from the Trump administration, international pharmaceutical giants have achieved deep binding with China through R&amp;D cooperation and localized manufacturing.
<h2>Multinational pharmaceutical companies face a &#34;patent cliff&#34; and urgently need to replenish their innovation arsenal</h2>
According to Jefferies analysis, multinational pharmaceutical companies are turning to China mainly due to the pressure of patent expirations for blockbuster drugs.
Between 2025 and 2030, several blockbuster drugs with annual sales exceeding $10 billion will face patent expirations (such as Keytruda, Eliquis, Opdivo, etc.). At the same time, U.S. healthcare price controls and EU cost containment policies continue to advance, compressing the growth space for traditional &#34;high-priced patented drugs.&#34;
Given the reality of internal R&amp;D cycles often taking ten years with low success rates, multinational pharmaceutical companies are more inclined to &#34;buy time and pipelines&#34; through external licensing, and China just happens to provide a cost-effective alternative path
Chinese medicines have high efficacy, fast development, and low trial costs, perfectly meeting the needs of multinational pharmaceutical companies.
In recent years, Chinese pharmaceutical companies have made significant breakthroughs in areas such as cell therapy, ADC drugs, and autoimmune drugs, with clinical advancement speeds 20%-30% faster than in the United States, and they offer a higher cost-performance ratio. Multinational pharmaceutical companies are &#34;outsourcing innovation,&#34; using Chinese pharmaceutical companies as frontier testing grounds.
<h2>Chinese Pharmaceutical Companies Seize Overseas Opportunities</h2>
At the same time, Chinese pharmaceutical companies are also seeking overseas expansion opportunities to alleviate funding shortages.
For a long time, the Chinese biotechnology industry has faced funding constraints, particularly severe in 2024. To promote overseas registrations and pay clinical costs, many companies are turning to collaborations with foreign investors, exchanging &#34;regional rights&#34; for upfront payments and global resources, thereby maintaining the development of their technological pathways.
According to a previous article by Wall Street Watch, Gary Rieschel, founding managing partner of Qiming Venture Partners, believes that the licensing model is a necessary step for Chinese biotechnology companies at this stage, helping them accumulate experience and ultimately achieve globalization. Currently, China has large pharmaceutical companies like HengRui, but global distribution and trial capabilities still require time to develop.
He also believes that several factors are driving the reversal of the Chinese biopharmaceutical industry: the return and entrepreneurship of overseas talent, the improvement of the industrial ecosystem, market demand, the enhancement of technology and innovation capabilities, and the role of the licensing model.
As previously mentioned, Goldman Sachs pointed out that in terms of technological models, Chinese pharmaceutical companies are forming global advantages in the fields of ADC (antibody-drug conjugates) and BsAb (bispecific antibodies), with these two types of assets accounting for nearly 1/3 of overseas licensing transactions in the past year.
Goldman Sachs believes that the Chinese biotechnology industry is undergoing a structural re-evaluation, and this round of significant growth is not a short-term rebound. As of now, the overall market value of Chinese biotechnology companies is still only 14%-15% of their American counterparts, while their contribution to global innovation is approaching 33%. This indicates that the Chinese innovative drug sector is still in the &#34;value trap&#34; stage, and the global capital re-evaluation has just begun

China is no longer the factory for active pharmaceutical ingredients but is becoming the "source" of global innovative drugs. As multinational pharmaceutical companies approach the "patent cliff," they urgently need to replenish their innovative arsenal, and China's high efficacy, fast development, and low trial costs perfectly meet the needs of multinational pharmaceutical companies. At the same time, Chinese pharmaceutical companies are also seeking opportunities for overseas expansion to alleviate the funding shortage problem

- The global pharmaceutical industry is witnessing a significant "shift in pharmaceutical power," with Chinese companies accounting for 32% of global drug licensing transactions in the first half of 2025, totaling $48 billion.  
- Major pharmaceutical firms like AstraZeneca and Pfizer are increasingly partnering with Chinese biotech companies for early drug licensing agreements, driven by the impending patent expirations of blockbuster drugs.  
- This trend reflects China's growing role as a source of innovative drugs, supported by advancements in technology, favorable policies, and the need for multinational companies to supplement their pipelines.

$48 billion in six months! Behind the record-breaking licensing deals, how is China reshaping the global pharmaceutical landscape?