Cover Story: Chinese Biotech Is Having a ‘DeepSeek Moment’

1. In recent months, China’s biotechnology sector has experienced a surge in international recognition, with major global pharmaceutical firms entering multi-billion-dollar deals to license innovative therapies from Chinese companies. These landmark agreements signify a pivotal advancement in China’s status within global drug development and have sparked intense investor interest in the sector [para. 1].

2. A noteworthy example is Pfizer’s late-May 2025 deal to pay 3SBio Inc. $1.25 billion upfront for the rights to a promising anti-tumor drug, potentially reaching $6.05 billion in total value. Shortly after, BioNTech and Bristol Myers Squibb announced an agreement for a therapy originating from Biotheus Inc., with $1.5 billion upfront, $2 billion committed through 2028, and up to $7.6 billion tied to future development milestones [para. 2][para. 3].

3. These deals center on a new class of cancer treatments—PD-1/VEGF bispecific antibodies—which simultaneously target immune checkpoints and tumor blood vessels. The clinical success of these drugs, especially Akeso Biopharma’s Ivonescimab outpacing Merck’s Keytruda, has spurred a global race to acquire Chinese-developed PD-1/VEGF assets [para. 4][para. 5].

4. Analysts view this wave of high-value partnerships as transformative for China’s biotech industry, providing critical capital and shifting perceptions of Chinese firms from laggards to innovators. After years of market downturn and falling valuations, these deals offer domestic firms market access and financial relief, with licensing revenue in 2024 outpacing equity fundraising [para. 6][para. 8][para. 16].

5. Investor enthusiasm has been reflected in market movements, with 3SBio’s Shanghai-listed shares doubling after the Pfizer deal. The ascent is credited to sustained state backing, venture capital investment, and homegrown talent, fueling momentum in out-licensing and business development [para. 7][para. 10][para. 11].

6. The sector’s revival is significant after a period (2021–2024) when downturns erased over half its value and stifled IPOs. Now, successful licensing has brought renewed credibility and enabled companies to report profits, as with BeiGene’s $1.27 million Q1 GAAP profit in 2025, and Innovent Biologics’ 41% revenue increase [para. 13][para. 15].

7. The global pharmaceutical industry’s attention is partly motivated by an impending “patent cliff”: 69 major drug patents are set to expire by 2030. As a result, multinationals are aggressively seeking next-gen Chinese therapies, particularly in oncology. China now leads in global oncology trials, with its share rising from 2% in 2009 to 39% in 2024 [para. 25][para. 28][para. 31].

8. The volume and value of these deals have exceeded expectations—Chinese pharma deals' total value jumped 222% year-on-year in Q1 2025, and the average annual growth in out-licensing deals between 2020 and 2023 was over 80%, far above the global average [para. 23][para. 24].

9. The inflow of global capital is reshaping strategies within Chinese biotech. With IPOs languishing, upfront licensing deals (totaling nearly $4.1 billion in 2024) now surpass equity fundraising. However, most Chinese assets still sell at 30-50% discounts relative to comparable overseas deals, albeit with speed and cost advantages in domestic trials [para. 36][para. 38].

10. Nonetheless, the sector faces saturation and heightened competition, especially in popular therapy areas (e.g., PD-1/VEGF antibodies, GLP-1 weight-loss drugs). Only a minority of Chinese firms successfully close major deals, and a sweeping industry shakeout is expected, rewarding those with globally competitive products who can secure international partnerships [para. 45][para. 47][para. 51].

11. Going forward, China’s priority will be international competitiveness in drug development, with oncology, weight-loss, and complex diseases likely to generate the next generation of blockbuster therapies [para. 55].