Posted by Chris Chang on 03 January 2025
China Biopharma Development Still Hot, Still Expanding its Reach
In 2024, 23% of global drug candidates were developed in China, outpaced only by the US, according to a recent Clarivate study. China currently spends more on all domestic R&D than the European Union and is approaching parity with the US, it added.
In 2024, 49.1% of drugs in development profited from some US R&D, down by 2% from 2023. China drug development is in second place, stated Citeline in an overview. At the same time, 26.7% of all development-stage drugs involve Chinese R&D, up from 23.6% one year earlier. China now spends more on R&D than the European Union and is moving toward US levels, Citeline said.
Maybe the most surprising fact of these statements is that they are not surprising. The growth of the China biopharma industry has become a well-known story, at least in pharmaceutical circles.
Partnering
Along with strong drug development numbers, China continues to produce significant outlicensings of its drug candidates to developed markets – the US, EU and Japan. These cross-border deals offer a read from western pharmas of how mature the current state of China’s innovative drug development has become.
In 2024, there were 17 China biopharmas that signed partnerships with an ultimate value of $1 billion or more. The total value of these deals was $34.6 billion with upfront payments of $1.5 billion. Although many of the companies won’t reach the everything-must-be-perfect billion-dollar targets, the size of these agreements shows that China’s biopharmas have the attention of their western competitors/partners. Chinese-developed assets are holding their own in western markets.
The deals send novel products abroad and bring back money to Chinese companies, which continue developing their drug portfolios while, in most cases, holding on to Chinese rights.
The Three Largest Outlicensings of 2024
- In a spectacular agreement, Jiangsu Hengrui Medicine out-licensed global rights for three proprietary GLP-1 candidates to Hercules, in a deal worth up to $6 billion. The agreement combined the hottest current sector in drug development, weight loss, with a NewCo deal structure that is backed by venture capitalists instead of a biopharma. Hengrui will receive $110 million upfront, up to $200 million in milestones, and as much as $5.725 billion in sales milestones, plus royalties. Hengrui will own a 19.9% equity stake in Hercules as part of the deal. Hercules, a partnership between Bain, Atlas, RTW and Lyra Capital, raised $400 million from four investors to underwrite Hercules’ development of the assets.
- Shanghai Argo Biopharma signed two agreements with Novartis, out-licensing four next-gen RNAi therapeutics for cardiovascular needs. Argo received $185 million upfront with up to $4.2 billion in later milestones. In the first agreement, Argo granted Novartis exclusive global licenses to a Phase 1 stage program and will conduct discovery on two Novartis-chosen cardiovascular targets. In the second agreement, Argo granted Novartis an ex-Greater China license to a Phase I/IIa clinical-stage program for a cardiovascular therapy.
- US-based Merck (MSD outside of North America) acquired an exclusive global license to develop a novel investigational bispecific antibody from LaNova. The dual PD-1/VEGF target has received much attention recently. Merck will pay $588 million upfront and up to $2.7 billion in milestones. LaNova says LM-299 is a differentiated candidate with an anti-VEGF antibody linked to two C-terminal single domain anti-PD-1 antibodies. The company has begun enrolling patients in a China Phase I clinical trial of LM-299.
What’s next?
On the political level, the relationship between China and the US has become a story of growing mutual distrust, as shown most dramatically by the 2024 BIOSECURE legislation, which may or may not ultimately become a law.
On the other hand, over the past year, the biopharma industry from the two countries disregarded the tension and kept the focus on their own needs, doing cross-border partnering deals. Chinese products and western markets remain attractive partners.
ChinaBio® Partnering Forum, April 23–24. 2025 in Shanghai, China, will play a vital role as a key platform for fostering collaborations between global and Chinese biopharma companies. Held annually, the forum provides an opportunity to connect with leading organizations and continue to lead to valuable dealmaking. Its role in driving cross-border partnerships aligns perfectly with the growing influence of Chinese innovation on the global stage.