Global pharmaceutical executives are hungry for more deals with Chinese biotechnology companies after a record year, even as a stock market boom shows signs of cooling down.
2025 was a breakout year for China’s biopharma industry. Out-licensing deals, in which a Chinese biotech company grants another drugmaker the rights to develop, produce, and sell its drug candidates, hit a record USD 135.7 billion, according to data provider Pharmcube. That was nearly triple the value in 2024.
“It’s hard to be at this moment and not think about extending resources on the ground here,” Stacy Feld, global head of external scientific innovation at Johnson & Johnson, said at the ChinaBio Partnering Forum in Shanghai this week.
Matthias Muellenbeck, head of global business development and alliance management at Merck, said that on top of licensing drugs from Chinese biotech firms, the company is looking to invest in new companies formed outside of China to develop drug candidates in what is known as a “newco” model. “We want to have skin in the game,” he said.
China has emerged as a go-to destination for global pharmaceutical companies hunting for new blockbuster drugs, thanks to biotech companies’ rapid pace of development achieved at low cost. For Chinese biopharma, out-licensing deals help raise cash quickly and bolster their reputation by announcing tie-ups with global giants.
In January, UK-based AstraZeneca agreed to pay USD 1.2 billion upfront to CSPC Pharmaceutical Group for rights to develop a portfolio of obesity and diabetes drugs. CSPC said it is eligible for up to USD 17.3 billion in payments tied to additional R&D and sales milestones. Sanofi licensed the global rights to Sino Biopharmaceutical’s oral drug rovadicitinib in a deal worth up to USD 1.5 billion.
Chuan Sun, managing partner of the Shanghai and Hong Kong offices of law firm Morrison Foerster, said the growing value of the average licensing deal partly reflects a shift in the balance of power between Chinese licensors and the global licensees. “Quite a number of Chinese biotechs are probably no longer short of cash, meaning they are in a better position to negotiate,” he told Nikkei Asia on the sidelines of the Shanghai conference.
Sun recalled his own experience representing a Chinese biotech company for a deal back in 2021 and again last year. “We were able to get way better terms” in last year’s transaction, he said.
Investors said key trends in China’s biotech sector include companies developing platform technologies for drug discovery, rather than a small number of drug candidates, and a deeper integration of artificial intelligence. “Previously, we [thought] AI is a very good, supportive tool,” said Kevin Chen, founding partner of venture capital firm BioTrack Capital. “Today, we started to realize AI is going to play a more important role based on our interactions with the new generation of AI entrepreneurs”.
In recent years, Hong Kong’s stock market has emerged as a key funding channel for cash-starved biotechs. The Hong Kong stock exchange, or HKEX, introduced Chapter 18A listings in 2018 to enable pre-revenue biotech companies to be listed. As of the end of January, 84 companies have listed under Chapter 18A amid a major jump of such listings in 2025.
There are signs that investor appetite is cooling for biotech companies yet to turn a profit, however. In several joint statements since late 2025, the HKEX and Hong Kong’s Securities and Futures Commission have vowed to uphold the quality of stock listings. During the period, some biotech companies’ shares flopped on their trading debuts.
More recently, shares of Mabwell Bioscience, a Shanghai-based developer of treatments for cancer and age-related diseases, were priced at the bottom of their offering range ahead of their trading debut in Hong Kong on April 28. On April 29, shares dropped below the offering price.
Four biotech firms including Mabwell have listed under Chapter 18A so far this year, according to HKEX data, and three of them are currently trading below their offered prices.
“It makes sense for the sponsors to become a bit more selective, rather than rushing to get companies listed,” said Sun.
“You obviously wanted to ask hard questions that they probably should have asked a few years ago,” he said, “Whether or not the science and technology are genuinely differentiated compared to their competitors, whether or not there is a strong experienced management team that can execute corporate strategies, whether or not the development plan is actually credible.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.