Why China’s biotech rise is harder to contain than AI

“... It’s not one of missiles and tanks. It’s of laboratories and lifesaving medications. It’s a war right now with China on American innovation and biotechnology,” recently said Chris Klomp, a top assistant to Robert F. Kennedy Jr, the US health secretary. 

As in artificial intelligence (AI), the biotechnology/pharmaceuticals (biopharma) sector has become another arena of great power competition between China and the US. In recent years, China has accounted for 34% of roughly 14,088 new drugs in global clinical development, surpassing the US’s 27% share. It also produces 40% of the world’s new drug candidates entering clinical trials each year, again outpacing the US.

US-China biopharma industries interlinked

China’s growing strength in new drug development, ironically, is accompanied by the US’s heavy dependence on China for active pharmaceutical ingredients (APIs) used in drugs. While one estimate put key starting materials in US‑approved active ingredients from China at 41%, this figure has been much higher for a few basic antibiotics, including 95% of US imports of ibuprofen, 70% of acetaminophen and 40-45% of penicillin. 

To curb this exposure to China, the US Congress passed the bipartisan Protecting our Pharmaceutical Supply Chain from China Act in 2022. It was signed into law as the Comprehensive Outbound Investment National Security Act of 2025. In June 2026, two US House of Representatives members introduced another bipartisan bill — the Biotech Investment National Security Act, or BINSA, aiming to halt “American [biotech] investment, expertise, and technology” to China. 

Despite the US government’s retaliatory response, US pharma companies have sought continued cooperation with their Chinese counterparts. In summer 2025, Pfizer paid US$1.25 billion to China’s 3SBio for rights to a cancer drug candidate. In 2026, Bristol Myers Squibb announced a US$15 billion deal with China’s Hengrui Pharma including a transfer of intellectual property to China. In 2024, US firms paid US$52 billion in licensing fees for innovative Chinese drugs, and in 2025, this figure shot up to US$137 billion. 

In 2025, 48% of all US pharmaceutical licensing deals valued at US$50 million or more were with Chinese companies, up from 0% in 2020. The US faces a dilemma of de-risking its drug supply chain dependence on China as it loses some competitive edge in biotech to China while strengthening corporate ties with China.  

How to make sense of this shifting balance between the China-US competition and cooperation in the biopharma sector? To answer this question, we delve into how China has developed several comparative advantages in its biopharma sector, enabling corporate competition against US firms while serving as their valuable partners. We also see mutual benefits from more biotech cooperation between China and the US if they can manage a constructive relationship of “strategic stability” reset by the recent Xi-Trump summit in Beijing.

China’s approach: speed, low cost, clustered

An industrial policy juggernaut, the Chinese government has been favouring and driving its biopharma sector. By designating biotech as a pillar of economic growth in Made in China 2025, the Chinese government has prioritised the financing of high-end research and development (R&D) in areas ranging from synthetic biology to commodity goods like generic medications. 

In its 15th Five-Year Plan, China has upgraded biotech to a top strategic role and stature like AI and electric vehicles (EVs) with the goals of building out a self-sufficient biotech ecosystem, tightening regulations on biological data, and enhancing AI applications across the biotech sector.

While the 15th Five-Year Plan will drive China’s biotech forward faster, the sector’s rapid growth over the past decade features speed, low cost and regional clustering of drug development, clinical trials and medicinal innovation. While speed defines every aspect of China’s rise over recent decades, speed of drug development has been shaped by a practical Chinese regulatory system that prioritises rapid testing and speedier approval of drug candidates. 

The system is known for its large-scale and ready pools and pipelines of investigator-initiated trials (IITs) that can run on sizeable patient registries of 15,000-20,000 people. This approach not only generates large and more representative datasets on drug efficacy but is also flexible in creating smaller subgroups for testing reactions to more specific ingredients of early drugs. It makes it possible to kill or clear early drugs sooner, before they need greater investment.

The speed of trials, coupled with a massive patient population and testing pool, lowers the average cost of new drugs in China. As remarked by Dr Ni Jun at Raffles Hospital Shanghai, “It usually takes about five to ten years for prices of new drugs to come down. But China has a volume-based procurement system and a large number of eligible patients, so the cost may drop faster.” Generally lower labour and material costs in China also contribute to lower-cost drug development relative to the US. 

A more favourable factor, however, is China’s complete domestic supply chain of biopharma manufacturing, which also allows China to supply a disproportionately larger share of early compounds and intermediate inputs into US-made drugs. It certainly makes China less dependent on costly imports and its home-made drugs more affordable for domestic patients.

The Shanghai-Suzhou biopharma hub

Suzhou is even more illustrative than Shanghai of why and how a dominant and diversified local manufacturing base is critical to clustered biotech strength. Dating back to its early days as the host and partner for the Singapore-Suzhou Industrial Park in the 1990s, Suzhou has prioritised manufacturing and today registers an annual industrial output of over US$700 billion, only the second Chinese city reaching this level besides Shenzhen. 

Suzhou also boasts a dominant AI cluster rivalling that of Hangzhou. Since AI fuels biopharma by accelerating the analysis of vast biological data and thus shortening timelines and reducing costs for drug discovery, Suzhou reaps mutual benefits between locally clustered AI and biotech.

A crown jewel of Suzhou’s manufacturing prowess, BioBAY has amassed hundreds of innovative life science companies together on its designated campus since 2007. Spanning all aspects of drug discovery, these companies cover medical devices, in vitro diagnostics, contract research, nanotechnology, and more. Regarding diagnostics alone, BioBAY boasts over 30 companies developing and producing biochemical reagents, immunodiagnostics, molecular diagnostics, instrumentation and testing services. 

This specialised density is conducive to the emergence of innovative firms, as exemplified by Innovent Biologics, whose obesity and diabetes drug mazdutide was approved in 2025. A milestone in China’s efforts to combat rising obesity, with 600 million Chinese adults projected to be overweight by 2050, mazdutide has become a viable domestic alternative to Novo Nordisk’s and Eli Lilly’s blockbuster GLP-1 drugs like Wegovy and Zepbound, respectively.

Breakthrough models for greater US-China cooperation

At the heart of the shifting global biopharmaceutical landscape is the growing US-China collaboration, which is rapidly becoming a powerful, highly efficient new model for drug R&D. Perhaps the most striking example of this synergy is Carvykti, currently the most successful cell therapy for blood cancer globally.

Originally developed by a small, dedicated group of Chinese scientists at Legend Biotech, who released their initial investigator-initiated trial data during the 2017 ASCO annual meeting, the treatment caught the attention of US pharma giant Johnson & Johnson, which helped propel it through global clinical trials. Today, it stands as the best-selling cancer cell therapy in the world, projected to reach US$5 billion in peak sales, and most importantly, it has saved the lives of thousands of patients facing relapsed or refractory multiple myeloma.

The momentum of this collaborative model extends far beyond cell therapies. The “Biotech DeepSeek” moment that definitively put China’s biotech ecosystem on the global map was the emergence of ivonescimab, a groundbreaking, first-in-class PD-1/VEGF bispecific cancer drug initially developed in China. 

This innovation has paved the way for an unprecedented wave of cross-border alliances. Today, China-West biopharma partnerships are actively advancing multiple late-stage clinical assets pioneered by Ivonescimab across many major cancers. Tens of billions of dollars’ worth of licensing and development deals have involved industry titans like Pfizer, AbbVie, BMS, Merck, BioNTech, and Summit Therapeutics, all eager to tap into this rich vein of scientific innovation.

For US investors, the financial and strategic upside of this collaboration is crystal clear. The most recent and striking success story is Candid Therapeutics. Based in San Diego and led by serial entrepreneur Ken Song, the biotech masterfully leveraged China’s highly efficient early R&D engine and first-in-human clinical development system to generate an impressive, robust clinical data package at unprecedented speeds. This strategic trans-Pacific bridge directly de-risked their pipeline and led to a US$2.2 billion acquisition by European pharma UCB — a monumental exit achieved in a mere 20 months from the company’s inception.

This is not just a collection of fortunate anecdotes; it is a structural shift validated by industry experts. As a recent McKinsey report points out, China’s fast and highly efficient pharmaceutical R&D capability is fundamentally redefining the global pharma R&D formula. Chinese biotechs operate with unmatched efficiency in preclinical discovery and early-stage clinical development, utilising a fast-to-signal approach that generates crucial First-in-Human data faster than traditional hubs in Boston or San Francisco. Big pharma, global venture capitalists and even Western biotechs are taking serious notice. Of the top six largest China-outbound deals in the first half of 2026, five explicitly include R&D collaborations designed to leverage China’s world-class preclinical and early clinical R&D engine.

This “Trans-Pacific Biotech Relay” model — where China handles the early sprint of discovery and rapid iteration, passing the baton to the US for the marathon of complex late-stage global trials and commercialisation — will likely become a major, if not the dominant, paradigm for future biopharma R&D. 

However, this engine of mutual benefit faces serious geopolitical headwinds. There are active US efforts to dismantle this resource-efficient model through restrictive policies. These efforts seem to be ineffective at best and tremendously self-damaging at worst. If political friction severs these scientific and R&D ties, the ultimate losers will be US patients, US biopharma, most US biotech companies and many US investors. Cutting off access to China’s biotech R&D engine will inevitably inflate drug development costs, stifle innovation, and delay life-saving treatments.

Ultimately, the mission of the life sciences industry must transcend political friction. Disease has no borders; neither should we.

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