U.S. biotech spent $137 billion licensing Chinese drug assets in 2025, and 2026 is on pace to double that. Now the industry is tearing itself apart over whether that's smart business or strategic suicide.
The Industry Is Fighting With Itself
Somewhere between the group chats, the boardrooms, and the cocktail parties at J.P. Morgan, U.S. biotech broke into two camps. On one side: executives licensing Chinese drug assets as fast as they can sign the paperwork. On the other: people warning that the entire Western drug industry is sleepwalking into strategic dependence on a geopolitical rival.
A major STAT News investigation published this week captures the fracture in vivid detail. Relationships are souring. Conversations are getting heated. And the numbers behind the tension are staggering.
By 2025, global pharma was spending over $137 billion licensing drug assets from Chinese companies. In just the first three months of 2026, deals hit roughly $60 billion, putting the year on pace to double last year's total.
This isn't a trend. It's a tectonic shift. And the biotech world can't agree on whether it's brilliant or catastrophic.
Why Everyone Wants Chinese Molecules
The appeal is simple: Chinese biotechs build drugs faster and cheaper. A startup in Shanghai can go from founding to first-in-human trials in about 18 months. That same journey often takes several years in the United States.
China's patient pools are enormous, its trial costs are lower, and its regulatory apparatus has modernized quickly. The country now runs more than 5,000 clinical trials per year. By 2024, China was running more trials for innovative drugs than the U.S. was.
For Western pharma companies staring down patent cliffs and shrinking pipelines, Chinese assets look like a lifeline. Why spend a decade and billions of dollars on internal R&D when you can license a clinical-stage oncology asset from a Chinese biotech for a fraction of the cost?
Nearly every major global pharma made at least one China-origin deal in 2025. GSK signed agreements with Jiangsu Hengrui worth up to $12 billion in potential milestones. AstraZeneca locked in a $5.3 billion AI-enabled discovery collaboration with CSPC Pharmaceuticals. Pfizer, AbbVie, and others all dove in.
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The pragmatists' argument is straightforward: this is just good business.
The Hawks See Something Darker
But the other camp looks at those same numbers and sees a slow-motion disaster.
Their worry isn't about any single deal. It's about what happens when roughly one-third of new compounds entering U.S. pipelines originate in Chinese labs. Projections suggest that by 2040, about 35% of FDA approvals could come from China-developed drugs. A December 2025 report from the U.S. National Security Commission on Emerging Biotechnology put it bluntly: "In just three years, China's biopharmaceutical industry rose from near irrelevance to dominance."
Critics argue that Western companies are hollowing out their own R&D capabilities. Every dollar spent licensing a Chinese molecule is a dollar not invested in domestic discovery. Every pipeline slot filled with an imported asset is one less reason to build internal expertise.
And then there's the security angle. Chinese law requires domestic companies to cooperate with state intelligence services. CDMOs (contract manufacturers that handle the actual drug-making) sit at extraordinarily sensitive chokepoints: they see cell lines, process parameters, and unpublished know-how. About 80% of surveyed U.S. biotechs now contract with Chinese-owned or China-based manufacturers, according to one industry analysis.
If geopolitics went sideways tomorrow, a huge chunk of America's drug supply chain could be at risk.
Washington Picks a Side (Sort Of)
Congress hasn't been subtle. The BIOSECURE Act, signed into law as part of the FY 2026 NDAA on December 18, 2025, restricts U.S. federal agencies from contracting with designated "biotechnology companies of concern." That includes federal grants and funding, which means any biotech touching NIH, BARDA, or DoD money will need to audit its Chinese partnerships.
The law doesn't name specific companies in its final text, but the legislative history makes the targets obvious: WuXi AppTec, WuXi Biologics, BGI, and others have been at the center of the debate for years.
Full enforcement won't kick in until roughly late 2028, and existing contracts get a five-year grace period in most cases. But the signal is clear. And companies are already adjusting: Samsung Biologics in South Korea and various U.S. and European CDMOs are positioning themselves as geopolitically safer alternatives.
The problem? RAND estimates that finding non-Chinese CDMOs with comparable capabilities could take up to eight years for some programs. You can't just flip a switch.
The Part Nobody Wants to Talk About
Here's the uncomfortable truth that makes this debate so messy: U.S. policy is actually pushing companies toward China.
Drug pricing pressures, regulatory uncertainty, a frozen IPO market, and tightening NIH budgets have all made domestic drug development harder and more expensive. Meanwhile, Chinese biotechs, squeezed by their own capital drought in 2022 through 2024, started licensing assets to Western partners at attractive terms just to survive.
Supply met demand. The economics were irresistible.
U.S. venture capitalists aren't even waiting for deals to come to them anymore. They're going upstream, scouting Chinese labs before research is even published, trying to lock up rights ahead of competitors. One PitchBook analysis found that China has "gained the lead" in producing promising early-stage drug candidates, and that edge is "likely to persist."
So the very capital markets and policy choices that were supposed to protect American biotech are, in some analysts' view, accelerating its dependence on China.
Two Futures, One Industry
The biotech world now faces a question it can't answer cleanly. Cutting off China means higher costs, slower timelines, and real pain for small companies that relied on Chinese partners to stretch their runway. It could even hurt patients if promising drugs get delayed.
But deepening the relationship means building strategic dependence on a country whose government treats biotech as a dual-use military asset. It means trusting that supply chains will hold even as tariffs, export controls, and data regulations multiply on both sides of the Pacific.
China itself isn't standing still. Decree No. 834, issued in April 2026, gives Beijing broad authority to investigate foreign firms whose decisions threaten China's "industrial and supply chain security." The rules of engagement are shifting in both directions.
For now, the deals keep flowing. Pragmatism is winning the revenue argument. But the strategic hawks are winning the policy argument. And somewhere in the middle, an industry that used to agree on almost everything is learning what it feels like to be truly divided.
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