[Big read] Big Pharma bets billions on China biotech — will Washington pull the plug?

(Edited and refined by Candice Chan, with the assistance of AI translation.)

In Singapore, US pharmaceutical giant Pfizer is probably best known for the messenger ribonucleic acid (mRNA) vaccine it developed during the Covid-19 pandemic. But vaccines are only one part of its business: Pfizer develops a wide range of medicines spanning oncology, cardiology, endocrinology, neurology and other fields.

At the height of the pandemic in 2022, Pfizer’s annual revenue topped US$100 billion, making it the world’s largest pharmaceutical company by revenue. By last year, however, it had fallen to sixth place globally and fourth in the US, with Covid-19 vaccines accounting for just 7% of revenue, down from around 40% during the pandemic.

To make up for the decline in vaccine revenue, Pfizer has been expanding aggressively into cancer treatment in recent years, with a goal of developing at least eight blockbuster cancer drugs by 2030. As part of this strategy, it struck a deal with China’s Shenyang-based 3SBio in mid-2025, paying US$1.25 billion upfront for the rights to market a cancer drug outside China. If the drug eventually reaches the market and becomes a commercial success, Pfizer could pay 3SBio up to a further US$4.8 billion.

In May this year, Pfizer followed up with a partnership with Suzhou-based Innovent Biologics to jointly develop 12 next-generation cancer drugs that are still in the early stages of clinical trials. Depending on their development progress, the total value of the collaboration could reach US$10.5 billion. Together, the two deals show that Pfizer is not only looking to bolster its mid- and late-stage drug pipeline, but is also positioning itself early in the research and development cycle.

For Innovent, Pfizer is just one of several major pharmaceutical companies it has attracted in recent months. Over the preceding eight months, the company had already struck similar agreements with Japan’s Takeda Pharmaceutical and US drugmaker Eli Lilly, with each partnership potentially worth billions of dollars.

Over the same period, Western pharmaceutical giants including Merck, Bristol Myers Squibb, Novartis and AstraZeneca have entered into similar partnerships with Chinese biotech companies.

Omar H. Khalil, managing director at US healthcare venture capital firm Santé Ventures, told Lianhe Zaobao (LHZB) that there has been a major push from the Chinese government, and the ecosystem in China has matured to the point where they are developing high quality assets on a regular basis. He added that one key point is getting clinical data to validate whether there is a product that is worth developing and investing more into.

According to 2025 data compiled by Boston Consulting Group, a Phase I clinical trial in China costs an average of US$3.3 million and takes 6.2 months, compared with US$5.8 million and 13.2 months in the US.

Khalil said, “A lot of investment goes into the Chinese assets. Once their potential is supported by clinical data, it can then be developed in the US.”

Tighter scrutiny

However, the flurry of multibillion-dollar deals between US and Chinese biotech companies has begun to unsettle policymakers on Capitol Hill.

In early June this year, Republican representative John Moolenaar, chairman of the US House Select Committee on China, and Democratic representative Debbie Dingell jointly introduced the Biotech Investment National Security Act (BINSA), which seeks to give the Treasury Department the authority to review US companies’ overseas biotech investments.

Late last year, Congress passed the Comprehensive Outbound Investment National Security Act (COINS), restricting US companies’ overseas investments in five sensitive sectors: semiconductors, artificial intelligence (AI), quantum information, supercomputing and hypersonic systems. The Biosecure Act also came into force, restricting the federal government from entering into research and manufacturing partnerships with foreign biotech companies deemed to pose national security threats.

If BINSA is eventually passed and incorporated into COINS, commercial partnerships such as Pfizer’s deals with 3SBio and Innovent could face the same stringent national security scrutiny and investment restrictions as those in AI and semiconductors.

Why have private-sector biotech partnerships between the US and China caused such unease in Washington? Frank Lavin, a veteran former US diplomat, told LHZB that there has been a deterioration in the bilateral political relationship, causing some headwinds. “But on top of that, the sector has a set of sensitivities, some stemming from Covid-19, that makes it even more difficult.”

Lavin, who served as US ambassador to Singapore and later as undersecretary of commerce for international trade under former President George W. Bush, is well acquainted with Washington’s policymaking process.

He said, “The majority of policymakers in the US saw China as less than fully honest with what transpired with Covid-19, and in that sense, China is not a good faith partner in terms of government-to-government cooperation. This sets a negative tone for the overall sector, making it all the more difficult or challenging for anybody in the current administration to reverse that and say, ‘Okay, let’s go to work with them.’”

Threat to national security?

Thitinan Pongsudhirak, a professor of political science at Thailand’s Chulalongkorn University, told LHZB that he could see where the US is coming from even though he disagrees with it. He said biotech is not an entirely standalone sector but part of a broader ecosystem along with AI, chips and rare earths.

He said, “As BINSA would bring pharmaceutical development, biologics manufacturing, and clinical research under outbound-investment scrutiny, the underlying fear is not only that American money goes to China but that capital comes bundled with intellectual property, managerial expertise, data, research networks, and manufacturing know-how that could help China build strategic capabilities.”

Thitinan also pointed candidly to US concerns over China’s alleged infringement or theft of intellectual property. “Has the US copied or stolen any Chinese technologies? Now flip the question and you see why the US is putting BINSA in motion, not to mention that biotech is the next frontier in the tech race.”

Khalil, however, sees things differently. He said, “When you look at the types of drugs that are the subject of the large acquisitions and licensing — oncology, immunology, obesity — I don’t know if they’re in and of themselves a national security risk.

“From a public health perspective, it doesn’t matter if the best cancer therapy is developed in China or the US. My goal is to get the best therapy for my patients in the US.”

He agreed, however, that the legislation is intended to protect US leadership in biotech innovation. “The politicians are focused on the centre of gravity of the industry moving towards China, and the US ability to innovate around new therapies becomes much more diminished.”

Cui Cui, head of Asia healthcare research at investment bank Jefferies, disagrees with that assessment. She told LHZB, “In our view, the rise of China biotech out-licensing does not undermine US innovation; rather, it encourages US biotech companies to focus on more cutting-edge therapies and novel mechanisms, ultimately fostering a healthier and more innovative global biotech landscape.”

Highly complementary markets

Back in 2024, during former President Joe Biden’s administration, the US Congress began drafting the Biosecure Act, aimed at preventing federal funds from flowing to Chinese contract research and manufacturing organisations. The original sweeping bill named major Chinese companies such as WuXi AppTec and MGI and sought to place them on a statutory blacklist.

The legislation ultimately failed to pass in the previous Congress. When it was revived last year, its provisions were watered down: instead of naming companies, it authorised the White House Office of Management and Budget to draw up a list of “biotechnology companies of concern”, while also extending transition periods for existing contracts. Only then did it pass at the end of the year.

The lengthy and convoluted legislative process suggests that Congress may not view competition with China in biotechnology with the same sense of urgency as it does AI and semiconductors. BINSA’s prospects therefore remain far from certain.

According to Jefferies’ Cui, the Biosecure Act has so far had only a limited impact on contract development and manufacturing organisations (CDMOs) in China. WuXi AppTec continues to manufacture GLP-1 products — commonly known as weight-loss injections — for Eli Lilly. So far there has not been any meaningful impact on the industry.

Cui told LHZB, “While BINSA’s outlook remains uncertain, we do not expect a meaningful decoupling between the US and China in biotech and CDMO. The two markets remain highly complementary, with China offering cost-efficient R&D and manufacturing capabilities while benefiting from access to US partners and end markets.”

Cui also noted that US pharmaceutical companies benefit from China’s efficient innovation ecosystem, particularly as they face pricing pressure under the Inflation Reduction Act (IRA) and patent cliff from 2027 onwards. As patents on major drugs expire and generic alternatives enter the market, pharmaceutical companies face potentially steep declines in revenue. At the same time, they are under pressure to cut drug prices under the IRA.

Santé Ventures’ Khalil likewise said it is hard to predict how something still in early draft is going to play out. Although major pharmaceutical companies have shown no sign of slowing their investment in China, policy risks in Washington have dampened sentiment in the venture capital industry, prompting some investors to steer clear of Chinese biotech assets.

However, “you have another significant group of investors who fundamentally believe their job is to find the best asset regardless of where it’s developed,” he said.

Market access under pressure

Investing in Chinese biotech innovation has become a global trend, with European and Asian pharmaceutical companies also eager to tap the sector. If BINSA eventually comes into force, it could undermine the competitiveness of US companies globally, in turn prompting them to lobby policymakers in Washington. Another emerging risk is whether the Trump administration might pressure US allies to follow Washington’s lead in decoupling from China’s biotech sector.

Khalil noted that the US is the world’s largest pharmaceutical market, and gaining approval from the US Food and Drug Administration (FDA) is crucial for any drugmaker seeking to bring a medicine to market.

“If the government or the administration really wanted to minimise the investment in China, that’s the biggest stick that they have. Even if the companies aren’t based in the US, they’ll certainly make you think twice about investing in Chinese assets.”

Khalil nevertheless remains cautiously optimistic. He said if the US can solve the challenge, reduce the cost and time to get clinical data, and become more competitive with China in terms of the path to clinical data, then there is always going to be a biotech ecosystem.

“And we don’t necessarily have to create more barriers to the flow of innovation between the two countries.”

Former US diplomat Lavin is similarly uncertain how aggressively the Trump administration will pursue BINSA, and does not rule out the possibility that the issue could fade by next year.

He said, “A better approach for the US would be to cultivate more partners to avoid concentration risks in China. Instead of putting up barriers, we should encourage companies to strengthen cooperation with Europe, India, Japan and other countries to expand multiple paths to experiment, giving a better outcome.”

Chulalongkorn University’s Thitinan, meanwhile, suggested that it is better not to treat the whole industry as a threat to national security and to distinguish between sensitive biotechnology, such as genomic data, dual use biological capabilities, and critical manufacturing dependencies, and conventional pharma collaboration that aims for better and cheaper medicines.

“If Pfizer’s license to Innovent collaboratively ends up with cancer cures to mankind’s benefit, then it would be a win-win and a global security interest.”

Trump-Xi consensus on AI could bode well for biotech cooperation

The US is seeking legislation to regulate American companies’ investments in foreign patented drugs, but one important fact should not be overlooked: more than 90% of medicines sold in the US are generics. India is the largest source of imported generics, accounting for 35%, followed by the European Union at 18% and China at 8%.

At the same time, the US is the world’s largest supplier of plasma, accounting for 70% of global production. China itself relies heavily on plasma imports from the US for treatments including severe trauma care and therapies to restore plasma protein levels in patients with liver disease. The global biopharmaceutical supply chain therefore remains relatively diversified and deeply interdependent.

China’s shortage of domestically collected plasma can be traced to a series of HIV infections among blood donors in the 1990s, which prompted Beijing to introduce extremely stringent plasma collection regulations. But its long-term reliance on US supplies has become a source of concern. Should the two countries become embroiled in a serious geopolitical confrontation, or should another public health crisis on the scale of the Covid-19 pandemic erupt, China could find itself vulnerable to US pressure. Beijing has therefore stepped up efforts in recent years to expand domestic plasma collection capacity.

This illustrates how, as the geopolitical environment deteriorates, national security considerations have increasingly taken precedence over purely commercial logic in both US and Chinese strategic calculations, even though the global pharmaceutical supply chain remains broadly mutually beneficial.

Lavin said this reflects just how negative US-China relations are, where neither the US nor China have any interest in offering the other side any “carrots”, preferring instead to wield the “stick”.

“Most other presidents would say, fine, if we have to do that, then so be it. But let’s have a “carrot” that tries to generate a little bit of goodwill and trust, and see if we can build something. But Trump just does not seem interested in any kind of carrot — neither does Beijing.”

Trump and Xi are meeting in Washington this week, but Lavin does not expect the current tenor of US-China relations to change significantly.

Thitinan similarly said, “For the Trump-Xi meeting in Washington, great stabilisation is likely but not reconciliation. While both leaders have incentives to put a floor under the US-China conflict, their structural rivalry remains the issue. Rare earths, semiconductors, AI, biotechnology, industrial subsidies and supply-chain security are mutually viewed through a national-security prism.”

Khalil, however, is more hopeful: “If the US and China can agree on something more sensitive, more acutely sensed within AI and learn to compete but not necessarily be adversarial in that field, I feel like that should be a sign of optimism for the biotech ecosystem.”

This article was first published in Lianhe Zaobao as “华盛顿打着国安旗号立法寻求脱钩 中美博弈新战场——生物科技？”.

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