Cover Story: Chinese Biotech Is Having a ‘DeepSeek Moment’
In a resounding vote of confidence in China’s biotechnology sector, leading global pharmaceutical companies are striking multi-billion-dollar deals for innovative therapies developed by Chinese firms. These deals mark a pivotal point for China’s role in global drug development and have sparked a capital market frenzy.
In late May, Pfizer Inc. agreed to pay $1.25 billion upfront to 3SBio Inc., a Shenyang-based biotech firm, for the rights to a promising anti-tumor drug. The agreement could eventually be worth up to $6.05 billion.
Two weeks later, Germany’s BioNTech SE and its partner Bristol Myers Squibb Co. unveiled an agreement valued at $1.5 billion upfront, with another $2 billion guaranteed through 2028 and as much as $7.6 billion tied to development milestones. The therapy stems from a drug BioNTech acquired from Chinese startup Biotheus Inc. in November 2024.
At the heart of these blockbuster deals is a new class of oncology drugs, known as PD-1/VEGF bispecific antibodies, which attack cancer by targeting immune checkpoints and tumor-associated blood vessels simultaneously.
Investor enthusiasm for the drug class surged in September after China’s Akeso Biopharma Co. Ltd. presented compelling clinical trial results at the World Lung Cancer Conference. Akeso’s Ivonescimab, also known as Yidarfang, outperformed Merck & Co.’s immunotherapy juggernaut Keytruda in head-to-head trials. That result has ignited a global race to acquire Chinese-developed PD-1/VEGF candidates.
Analysts view the current wave of dealmaking as a watershed for China’s biotech industry and a vital source of capital for domestic firms. Long perceived as lagging behind their Western counterparts, Chinese biopharma companies are now being actively courted by multinational suitors.
Investors quickly took notice. Shares in 3SBio’s Shanghai-listed unit doubled in the week following Pfizer’s announcement. “Suddenly, everyone is talking about innovative drugs,” one investor told Caixin.
The wave of partnerships reflects a broader realignment. For Chinese biotechs, collaboration with multinational companies is now key — not only to access international markets, but to raise capital and boost valuations. According to Li Sheng, a partner at strategy consultancy Roland Berger, licensing revenue in 2024 outpaced the sector’s total equity fundraising for the year.
In late May, Pfizer Inc. agreed to pay $1.25 billion upfront to 3SBio Inc., a Shenyang-based biotech firm, for the rights to a promising anti-tumor drug
“China’s novel drugs have carved out leading roles in several niches,” said Peng Wei, a partner at a life sciences incubator. Insiders attribute the sector’s leap forward to years of state backing, venture capital inflows and homegrown scientific talent. They expect the momentum in global out-licensing and business development to continue.
“No one questions anymore whether China can create innovative drugs with global appeal,” said Peng.
Reversal of fortune
After nearly four years of stagnation, China’s innovative drug sector is showing signs of revival. Between 2021 and 2024, market downturns erased over half the industry’s value, freezing initial public offerings (IPOs) and dragging valuations to historic lows in both mainland and Hong Kong markets.
Now, blockbuster licensing and business development deals with Western pharmaceutical giants are injecting new energy into the sector. For companies that weathered the downturn, signing agreements to license “best-in-class” therapies to the likes of Pfizer is becoming a path to profitability and credibility.
“These major deals have catalyzed the recent market surge,” said Liu Dan, managing partner at Pivotal bioVenture Partners.
Signs of financial stabilization are emerging. BeiGene posted its first annual adjusted operating profit in 2024 and aims to break even on a GAAP basis this year. In the first quarter of 2025, it reported a $1.27 million GAAP profit. Innovent Biologics, meanwhile, trimmed its 2024 losses and reported its first adjusted non-IFRS profit — a measure that excludes certain expenses to better reflect ongoing operational performance. Product revenue for the quarter rose 41% to 2.4 billion yuan ($334 million).
Industry insiders are dubbing this the “DeepSeek moment”— a point where domestic innovation converges with global relevance. “China’s innovative drug sector has arrived at that moment,” said Liu.
Fang Yang, executive director at CEC Capital, said the recent flurry of deals reflects the strong innovation capacity of Chinese biopharma firms.
After Pfizer’s tie-up with 3SBio, Albert Bourla, Pfizer’s CEO, called the startup’s anti-tumor drug SSGJ-707 a “fabulous asset.”
This marks a sharp break from the past, when China’s drug pipeline was flooded with copycat “me-too” drugs, fueling price wars. “Now we are seeing more firms aiming for ‘First-in-class’ and ‘Best-in-class,’” said Roland Berger’s Li.
That evolution is underpinned by a decade of capital investment, policy support and talent cultivation. China now leads the world in oncology clinical trials, accounting for 39% of the global total — up from 24% in 2019 and only 2% in 2009, according to healthcare data and analytics firm IQVIA.
“Perceptions have shifted,” said Liu. “Now, when clinical data is generated in China, global buyers view it as credible. That trust was built over time and through consistent delivery.”
Globalization accelerates
Global pharmaceutical giants are pouring billions into China’s innovative drug sector as a looming “patent cliff” on their own blockbuster drugs forces them to scout around for next-generation therapies.
The number of deals has accelerated far beyond expectations. In the first quarter of 2025, the total value of Chinese pharma deals rose 222% year-on-year, according to data from Pharmcube. China accounted for nearly half of the world’s billion-dollar-plus pharma transactions, with local firms signing 11 such deals. This frantic activity continues a powerful trend: between 2020 and 2023, the value of China’s drug out-licensing deals grew at an average annual rate of more than 80%, dwarfing the global average of 10%, according to CEC Capital.
“I didn’t expect the deal values to explode so dramatically this year,” said Pivotal bioVenture Partners’ Liu.
This shopping spree is driven by desperation. With core patents on 69 blockbuster drugs due to expire by 2030, multinational pharmaceutical companies are facing massive revenue gaps. They are now turning to China’s burgeoning pipeline of high-value assets, particularly in oncology.
Cutting-edge therapies like PD-1/VEGF bispecific antibodies — seen as the potential successor to Keytruda — are top targets. Antibody-drug conjugates (ADCs) that deliver potent toxins directly to cancer cells are also on big pharmas’ radar. AstraZeneca, Merck and Pfizer are each aggressively acquiring Chinese assets to bolster their next-generation portfolios.
“If a multinational pharma company wants to buy a bispecific antibody or an ADC, it is now a given that they will have to see what’s available in China,” said Peng.
Still, not every Chinese firm will land a big-ticket deal. While partnerships with major pharma companies offer prestige and scale, most buyers are still smaller overseas firms.
For China’s innovators, the message is clear. “There are only so many big pharma companies,” cautioned CEC Capital’s Fang, advising firms to engage with all potential buyers. In the race to go global, the first priority is simply “getting the deal done.”
Reshaping strategies
The avalanche of innovative drug deals is doing more than reviving investor sentiment — it’s reshaping business strategy across the biotech sector.
“Global expansion isn’t just about cash,” said Roland Berger’s Li. “It’s about tapping into a partner’s global platform.”
With IPOs stalled and equity markets sluggish, many Chinese biotech startups have turned to global partnerships as financial lifelines. In 2024, for the first time, cash from upfront licensing payments — totaling nearly $4.1 billion — surpassed equity fundraising, according to industry data. For some firms, licensing deals have become the only viable path forward.
“As long as you make something good, someone will pay for it,” said Fang, noting that such deals have revived confidence in a sector that had lost its footing.
One powerful incentive is price. Even record-breaking valuations still represent a discount. “Most Chinese assets are priced at 30% to 50% of what comparable overseas companies used to command,” said Liu. Yet for Chinese firms, whose domestic clinical trials are faster and more cost-effective, those valuations offer meaningful returns.
Still, success has brought crowding. Nearly every active clinical trial for PD-1/VEGF bispecific cancer drugs now originates in China. A similar race is unfolding in the GLP-1 weight-loss drug segment.
“These hot tracks are getting saturated,” Li warned. “The competition is already intense.”
Time for reckoning
Despite the headline deals, the broader industry faces a painful reckoning where a lucky few celebrate while thousands struggle to survive, industry sources said.
Rather than a broad-based recovery, China’s innovative drug sector is undergoing a deep structural overhaul. The era of easy funding and fast-track IPOs is over. What remains is a clarified mandate for surviving firms: develop globally competitive drugs and strike deals with the world’s pharmaceutical giants.
“Even with the increasing number of business deals, compared to the nearly ten thousand biopharmaceutical companies in China, those that can successfully close a deal are still in the minority,” said Liu. “An industry shakeout is bound to happen.”
This shakeout follows a boom cycle marked by speculative capital, inflated valuations and shaky R&D foundations, said Fang. In the current climate, only firms with truly valuable assets and global vision can secure lifelines.
“The primary challenge should be clearer now,” said Fang. “How to create valuable products and then go overseas to strike deals with major pharmaceutical companies. This is the core challenge of the business.”
The sector’s realignment is also redrawing investor expectations. The new priority is international competitiveness — from clinical execution to cross-border strategy. “For almost all projects, the hope is that they will eventually go overseas,” Liu said.
As the shakeout unfolds, attention is turning to what comes next. Experts expect the next crop of blockbusters to come from hyper-competitive therapeutic areas. Oncology remains the dominant R&D focus, accounting for 40% of pipelines, but weight-loss drugs, autoimmune treatments and high-risk fields such as Alzheimer’s are drawing serious capital.
“We will see breakthrough new therapies emerge,” said Li.
Contact reporter Han Wei (weihan@caixin.com)
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
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