Through June, U.S. drugmakers have signed 14 deals potentially worth $18.3 billion to license drugs from China-based companies. That compares with just two such deals in the year-earlier period, according to data from GlobalData provided exclusively to Reuters.
"They are finding very high-quality assets coming out of China and at prices that are much more affordable relative to perhaps the equivalent type of product that they might find in the United States," said Mizuho analyst Graig Suvannavejh.
A licensing agreement grants a company the rights to develop, manufacture, and commercialize another company's pharmaceutical products or technologies in exchange for future target-based, or "milestone", payments while mitigating development risks.
Chinese companies have licensed experimental drugs to U.S. drugmakers that could be used for obesity, heart disease and cancer, reflecting abundant Chinese government investment in pharmaceutical and biotech research and development.
"Chinese biotechs are moving up the value chain by the day. They are... challenging their Western peers," said Macquarie Capital analyst Tony Ren.
That has cut into traditional mergers and acquisitions, which are down 20%, with only 50 such transactions so far this year, according to data from DealForma.com database.
"I think it's only accelerating," Gleason said.
But one healthcare analyst said licensing deals should continue because the yet to be marketed products are not impacted by tariffs.
In May, Pfizer spent $1.25 billion upfront for the right to license an experimental cancer drug from China's 3SBio . That is the largest such deal this year and could be worth up to $6 billion in payments to 3SBio if the drug is successful.
‘WAKEUP CALL’
U.S.-based drug developer Nuvation Bio bought AnHeart Therapeutics in 2024, gaining access to the China-based company's experimental cancer drug taletrectinib, which received U.S. approval last week.
What makes China attractive, said EY analyst Arda Ural, "a fraction of the cost and then multiples of time."
"It's a little bit of a wakeup call to our industry," said Chen Yu, Managing Partner at U.S.-based healthcare investment firm TCGX.
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