Corridor
الخميس، ٣ سبتمبر ٢٠٢٦
Dear reader, one number explains more about the future of this industry than any product launch of the past two years. In 2025, Chinese biotechnology companies signed cross-border licensing deals worth 137.7 billion dollars, roughly ten times the 13.9 billion of 2021. That was about a third of all global pharmaceutical licensing spending and close to 90% of licensing for antibody drug conjugates, among the most valuable classes in oncology. The number of such deals rose from 65 to 186 over the same period, and this year is expected to break the record again: the first quarter of 2026 alone accounted for some 60 billion dollars, nearly half the whole of last year compressed into three months.
The individual transactions make the trend concrete. In January of this year, AstraZeneca agreed terms with CSPC for weight-related candidates worth up to 18.5 billion dollars, of which 1.2 billion was paid up front. GSK committed $ 500 million up front to Hengrui last July, as part of a package worth up to $ 12 billion across a dozen programs. AbbVie opened this year by licensing a RemeGen cancer asset in a deal valued at up to 5.6 billion, with 650 million up front. In May 2025, Pfizer paid 3SBio 1.25 billion upfront for a single oncology candidate, the largest upfront payment yet for a Chinese asset. Chinese companies now account for close to 30% of global drug development activity, second only to the United States.
For most of the past century, pharmaceutical technology flowed in one direction, from Western laboratories outward to Asian markets and Asian factories. That flow has reversed, and it reversed quickly enough that most of our regional strategy documents have not registered it.
Here is the part worth dwelling on, because it is the part that transfers. China did not achieve this by discovering better chemistry. It achieved it through demand and through regulation. The demand came from a patent cliff, with analysts putting as much as $ 200 billion in annual branded revenue at risk between 2026 and 2030, arriving at exactly the moment large companies were cutting internal research budgets. Licensing an external asset became cheaper than discovering one. The supply came from a decade of deliberate regulatory reform: the Chinese regulator joined the International Council for Harmonisation in 2017, built breakthrough designation, priority review and conditional approval into its system, began accepting multiregional trial data, and last September codified a thirty working day route to clinical trial authorisation, making itself a place where a study could start quickly and finish cheaply. Add a generation of scientists returning from Western laboratories, and you have the entire recipe. It is a policy achievement rather than a scientific one, which is precisely why it deserves our attention.
Now turn to ourselves. Our conversation about pharmaceutical localization is almost entirely about manufacturing: plants, fill-and-finish lines, and the percentage of local content required in government tenders. Manufacturing matters, and I have spent enough time in this business to say so sincerely. But manufacturing is the commodity end of the industry, the part with the thinnest margins and the most competitors, and the value in the numbers above does not sit in the factories. It sits in originating assets and, for us, far more attainably, in being the place where those assets get tested.
No country decides to outdo China. But the specific thing China did first was to make itself fast and predictable to run trials in, and that decision is available to any country with hospitals, patients, and a regulator willing to commit to timelines and then keep them. Our advantages are real: a young population, a disease burden in metabolic and inherited conditions that the world genuinely needs studied, tertiary centers concentrated in a few cities, and centralized health systems capable of moving when instructed. What we lack is unglamorous and fixable: study start-up times, ethics reviews that run in parallel rather than in series, contracting that does not outlast recruitment, and a credible national capability to run trials to international standards rather than hosting other people's sites.
There is a political overlay that should not be ignored. Proposed biosecurity legislation aimed at Chinese contract research and manufacturing, together with export controls in Washington, has complicated this trade without slowing it, and the tariff conversation now underway is the other face of the same coin, an attempt to pull manufacturing home at the very moment the industry sources its innovation abroad. Countries positioned between these blocs have more room to maneuver than they usually believe.
Dear reader, the direction of the corridor is not set by whoever owns the finest laboratories. It is set by whoever makes themselves easiest to work with. That is a competition we can enter without inventing a single molecule, and the entry fee is paid in administrative reform rather than in capital. It may be the cheapest strategic opportunity in front of us, and it is certainly the least discussed.
The individual transactions make the trend concrete. In January of this year, AstraZeneca agreed terms with CSPC for weight-related candidates worth up to 18.5 billion dollars, of which 1.2 billion was paid up front. GSK committed $ 500 million up front to Hengrui last July, as part of a package worth up to $ 12 billion across a dozen programs. AbbVie opened this year by licensing a RemeGen cancer asset in a deal valued at up to 5.6 billion, with 650 million up front. In May 2025, Pfizer paid 3SBio 1.25 billion upfront for a single oncology candidate, the largest upfront payment yet for a Chinese asset. Chinese companies now account for close to 30% of global drug development activity, second only to the United States.
For most of the past century, pharmaceutical technology flowed in one direction, from Western laboratories outward to Asian markets and Asian factories. That flow has reversed, and it reversed quickly enough that most of our regional strategy documents have not registered it.
Here is the part worth dwelling on, because it is the part that transfers. China did not achieve this by discovering better chemistry. It achieved it through demand and through regulation. The demand came from a patent cliff, with analysts putting as much as $ 200 billion in annual branded revenue at risk between 2026 and 2030, arriving at exactly the moment large companies were cutting internal research budgets. Licensing an external asset became cheaper than discovering one. The supply came from a decade of deliberate regulatory reform: the Chinese regulator joined the International Council for Harmonisation in 2017, built breakthrough designation, priority review and conditional approval into its system, began accepting multiregional trial data, and last September codified a thirty working day route to clinical trial authorisation, making itself a place where a study could start quickly and finish cheaply. Add a generation of scientists returning from Western laboratories, and you have the entire recipe. It is a policy achievement rather than a scientific one, which is precisely why it deserves our attention.
Now turn to ourselves. Our conversation about pharmaceutical localization is almost entirely about manufacturing: plants, fill-and-finish lines, and the percentage of local content required in government tenders. Manufacturing matters, and I have spent enough time in this business to say so sincerely. But manufacturing is the commodity end of the industry, the part with the thinnest margins and the most competitors, and the value in the numbers above does not sit in the factories. It sits in originating assets and, for us, far more attainably, in being the place where those assets get tested.
No country decides to outdo China. But the specific thing China did first was to make itself fast and predictable to run trials in, and that decision is available to any country with hospitals, patients, and a regulator willing to commit to timelines and then keep them. Our advantages are real: a young population, a disease burden in metabolic and inherited conditions that the world genuinely needs studied, tertiary centers concentrated in a few cities, and centralized health systems capable of moving when instructed. What we lack is unglamorous and fixable: study start-up times, ethics reviews that run in parallel rather than in series, contracting that does not outlast recruitment, and a credible national capability to run trials to international standards rather than hosting other people's sites.
There is a political overlay that should not be ignored. Proposed biosecurity legislation aimed at Chinese contract research and manufacturing, together with export controls in Washington, has complicated this trade without slowing it, and the tariff conversation now underway is the other face of the same coin, an attempt to pull manufacturing home at the very moment the industry sources its innovation abroad. Countries positioned between these blocs have more room to maneuver than they usually believe.
Dear reader, the direction of the corridor is not set by whoever owns the finest laboratories. It is set by whoever makes themselves easiest to work with. That is a competition we can enter without inventing a single molecule, and the entry fee is paid in administrative reform rather than in capital. It may be the cheapest strategic opportunity in front of us, and it is certainly the least discussed.