U.S. drugmakers deepen China biotech partnerships as security scrutiny grows

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US drugmakers and China biotech

Highlights

Pfizer agrees to pay $650 million upfront and up to $10.5 billion total to Innovent Biologics for several cancer drugs in its latest China partnership.
In 2025, AbbVie, AstraZeneca, Eli Lilly, Novartis, and Sanofi together pay $2.5 billion upfront to Chinese companies for drug deals, with additional potential milestone payments worth billions more.
U.S. lawmakers increase scrutiny of biotech sector, as Bristol Myers Squibb's $950 million deal with Hengrui and other transactions prompt calls for tighter national security measures on China-linked investments.

China dealmaking accelerates in drug development

As first reported by Financial Times, Pfizer said on Thursday it would pay $650 million to Suzhou-based Innovent Biologics for several cancer drugs, in a deal that could reach $10.5 billion if commercial and regulatory milestones are met. The agreement adds to a broader rise in cross-border partnerships as large drugmakers seek new assets from China.

Global pharmaceutical companies are increasingly turning to Chinese research and development as patents on best-selling medicines expire. In 2025, Chinese drugmakers strike a record number of overseas asset-sale deals, and data provider Evaluate says AbbVie, AstraZeneca, Eli Lilly, Novartis and Sanofi together pay $2.5 billion in upfront cash to Chinese companies so far this year for drug deals, with potential milestone payments worth billions more.

Pfizer's Innovent agreement is its second cancer-drug deal with a Chinese company in less than a year. In July 2025, Pfizer agreed to pay $1.25 billion to 3Sbio, including a $100 million equity investment, highlighting how licensing arrangements can also include ownership stakes.

Washington pressure builds on sector exposure

Political concerns in the U.S. are intensifying as lawmakers and investors assess whether deeper ties with Chinese biotech could create strategic vulnerabilities. On May 21, Republican congressman John Moolenaar asked Treasury Secretary Scott Bessent to include biotechnology in a 2025 national security law designed to restrict U.S. investment into countries including China.

Moolenaar pointed to a May 12 agreement between Bristol Myers Squibb and Hengrui that pays the Chinese drugmaker up to $950 million for medicines and gives it the option to co-develop drugs with BMS. In his letter, the House China committee chair warns of a "dangerous surge" of American capital and know-how into China's biotechnology sector and urges the Treasury to examine transactions involving pharmaceutical intellectual property.

The U.S. International Trade Commission is also investigating how potential Chinese state support for biotech companies affects American businesses. At a May 27 hearing in Washington, an official from China's Chamber of Commerce criticises that inquiry as unnecessary.

Investors are increasingly watching how regulators could respond. Kyle Rasbach, head of research at Bellevue Asset Management, says developments in Washington have led the fund to pay closer attention to how the Committee on Foreign Investment in the U.S. handles Chinese investment, especially in deals that could be blocked if ownership or control questions are open to interpretation.

Views inside the biotech sector remain divided. Former U.S. Food and Drug Administration commissioner Scott Gottlieb says earlier this year that China represents the biggest threat in the drug sector, while Curie Bio circulates material to lawmakers comparing biotech supply chains with China's dominance in rare earths. But Peter Kolchinsky, managing partner at RA Capital, argues that applying national security restrictions to biotech would backfire and be uniquely damaging for the U.S. biotech market.

Our earlier article covered a congressional push to tighten rules on automakers with Chinese state-linked ownership, including proposals that could restrict importing, selling, or even producing vehicles in the U.S. It highlighted how ownership-threshold language in measures such as the Connected Vehicle Security Act could sweep in major brands and disrupt domestic manufacturing footprints and jobs, even when production is based in the United States.

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