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China biotech's ingenuity extends to dealmaking
By Katrina HamlinConsidered View
October 16, 20262:53 PM GMT+10:30Updated October 16, 2026
The logo of Jiangsu Hengrui Pharmaceuticals stands outside its office in Shanghai, China June 11, 2026. REUTERS/Andrew Silver
HONG KONG, Oct 16 (Reuters Breakingviews) - Long gone are the days when Big Pharma scoffed at the reliability of China's clinical trials. The world's biggest drugmakers are increasingly looking to biotech researchers in the People's Republic to shore up their pipelines by snapping up the rights to develop and commercialise promising discoveries abroad. Now companies like $44 billion Jiangsu Hengrui Pharmaceuticals (600276.SS), opens new tab are also learning to squeeze more value from those deals.
China-based drugmakers have struck agreements worth just over $139 billion year-to-date to outlicense innovations, treating everything from cancer to obesity, to global giants including AstraZeneca (AZN.L), opens new tab, GSK (GSK.L), opens new tab and Novo Nordisk (NOVOb.CO), opens new tab, per data provider PharmCube. That means they have already beaten last year’s record for the full year. The arrangement is mutually beneficial because Chinese champions lack the experience and brand power to tap more profitable overseas markets.
Critically, Chinese sellers are becoming cannier dealmakers too. The average agreement this year is worth nearly $700 million, more than 10 times the 2018 figure. True, that’s inflated by so-called milestone payments, shelled out only if products hit targets for clinical development and commercialisation. But the mean upfront payments to Chinese biotech companies have also ratcheted up. Terms are more sophisticated as well.
Jiangsu’s Hengrui makes a compelling case study. In 2023 it licensed, opens new tab an asthma drug to a tiny US firm in an agreement worth around $25 million. Months later, GlaxoSmithKline swept in to acquire the buyer, Aiolos, for $1 billion upfront, plus up to $400 million in milestones.
A year on, Hengrui adopted a different approach. It licensed three GLP-1 weight loss drugs to Hercules - a newly formed, US-based entity backed by Bain Capital. As well as negotiating upfront and milestone payouts worth nearly $6 billion, Hengrui secured, opens new tab a 20% stake in Hercules. The company, renamed Kailera Therapeutics (KLRA.O), opens new tab, went on to list in New York in April and has a $1.4 billion market capitalisation.
Rivals such as Keymed Biosciences (2162.HK), opens new tab and Genor Biopharma have since used, opens new tab a similar playbook to extract more value. Others are experimenting too. Earlier this month, Abogen Biosciences bundled, opens new tab options to license related assets into a deal granting Novartis (NOVN.S), opens new tab the rights to an autoimmune disease treatment, bumping the transaction’s total value to nearly $8 billion. Some companies are also using warrants and contractual rights to gain economic interests.
If Big Pharma succeeds in convincing Washington and other governments that such deals are not a national security risk, expect volumes to keep growing and for Chinese biotech stars to keep sharpening their terms.
