Chinese biotech dominance in R&D is on the rise
Jan. 18, 2025 3:56 PM ET
By: Dulan Lokuwithana, SA News Editor
Against a backdrop of rising U.S.-China geopolitical tensions, there are signs of growing dealmaking activity between Western pharmaceutical companies and Chinese biotechs, multiple research firms suggest.
Large pharma companies have in-licensed nearly a third of their external molecules from Chinese biotechs in 2024, up from about 10%–12% in 2020–2022, Stifel said in a recent report highlighting China's recent dominance in biotech innovation.
According to Evaluate Pharma, China's growing influence in pharmaceutical R&D is a key theme to watch in 2025. The pharma research group said that a Chinese company represents at least a fifth of R&D programs in the industry's total clinical pipeline.
Merck's (NYSE: MRK) recent acquisition of rights to Chinese biotech LaNova Medicines' cancer candidate LM-299 in a deal worth up to $3.3B underscores Big Pharma's appetite for best-in- class assets from China.
It was only a few months ago that ivonescimab, a PD-1/VEGF bispecific antibody similar to LM-299 developed by Summit Therapeutics ( SMMT) and its Chinese partner Akeso ( OTCPK:AKESF), outperformed MRK's blockbuster cancer drug Keytruda in a late-stage trial.
According to Jefferies, U.S.-China pharma deals have also increased in size over the years, with an average out-licensing deal costing $389M in 2024 compared to $101M in 2021.
Meanwhile, data from DealForma suggests that in the first 11 months of last year alone, major pharma companies have spent at least $3.15B in upfront cash and equity to license or acquire molecules originating from China.
Obesity indicates a popular area of dealmaking for Big Pharma, as Eli Lilly ( LLY) and Novo Nordisk ( NVO) continue to operate a duopoly in that space.
In 2023, AstraZeneca (NASDAQ: AZN) inked an exclusive license agreement with Shanghai-based Eccogene for an oral obesity candidate named ECC5004. Just last month, Merck (NYSE: MRK) followed up in-licensing a similar GLP-1-based weight loss therapy from Chinese biopharmaceutical company Hansoh Pharma ( OTCPK:HNSPF) in a deal worth up to $2B.
In addition to Merck (NYSE: MRK) and Astra (NASDAQ: AZN), Roche ( OTCQX:RHHBY) ( OTCQX:RHHBF), Novartis ( NVS) ( OTCPK:NVSEF), AbbVie ( ABBV), and GSK ( GSK) were among other major drugmakers to boost their pipelines through licensing or buyout deals with Chinese companies last year.
Noting that Chinese companies received $6B of upfront fees in licensing deals in 2024, prominent biotech investor Brad Loncar said that "Last year was just the start of that." “If some kind of protectionism is not put in place, it's going to have a big effect on the future smaller type of companies that exist in the U.S. and their chance of success," he added.
Meanwhile, Stifel analysts were more optimistic. "The fact that the Chinese can develop biologics quickly and inexpensively is great news for patients and should motivate U.S. biotechs to do the same," they added. |
