China Pharma Innovators Pursue Global Expansion via Licensing Deals

April 14, 2026

China’s pharma innovators pursue a range of deal structures to support global expansion

Jill Ge A&O Shearman + Follow Contact LinkedIn Facebook X Send Embed

[co-author: Paul Jing]*

Thanks to its scientific skills base, growing prowess in AI and a policy environment that supports rapid clinical trials, China has become one of the world’s leading markets for pharmaceutical innovation. Here we explore how the country’s pharma businesses are expanding internationally via out-licensing, partnership and NewCo deals—and the key legal and regulatory angles involved in these diverse transaction structures.

In recent years, Asia has emerged as a nexus of life sciences innovation. According to research, the region once known primarily as a manufacturing hub is now responsible for 43% of the world’s innovative drug pipeline, up from 28% in just five years. In 2024 nearly two-thirds of biotech patents were granted in Asia, five times the proportion emanating from Europe.

Market dynamics create conditions for rapid innovation

At the center of this wave of innovation sits China, which now generates 29% of the world’s innovative pipeline. The country’s huge scientific skills base, dense patient pools, sophisticated network of contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs), and favorable policy environment, underpin a drug development lifecycle that is significantly faster than the global average.

China’s growing prowess in artificial intelligence, supported by the state government’s drive to deploy AI across industries through initiatives such as its AI+ Program and its 15th Five Year Plan, provides further momentum for therapeutic discoveries.

Why China leads the world in clinical trial velocity

Amendments to China’s Drug Administration Law established a 60-working-day implicit approval schedule for clinical trials (which had been further shortened for novel medicines) and set caps on the duration of regulatory reviews.

This, coupled with significant state investment—including in the country’s Center for Drug Evaluation, part of China’s National Medical Products Administration (NMPA)—has delivered dramatic results. China now conducts more clinical trials than the United States, while in 2024 the NMPA approved 83 new drugs compared with the 50 consents granted by the U.S. Food and Drug Administration (FDA). The time it takes to review a new drug in China fell from 663 days in 2017 to 105 days in 2024, far faster than the FDA average of 356 days.

The country’s drug approval process—including in relation to clinical trial standards, the use of real-world evidence, electronic submissions and safety and efficacy protocols—has become more closely aligned with international standards since China joined the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) in 2017.

The NMPA also supports China’s involvement in multi-region clinical trials (MRCTs), further cementing its integration into the global pharma supply chain.

These developments have fueled Chinese innovation in therapeutic areas, including oncology—where it is a leader in the development of novel antibody-drug conjugates (ADCs)—immunology and metabolic disease.

Domestic innovators pursue different options to finance international growth

While Chinese innovators have proved successful at generating promising new discoveries, the country’s domestic capital markets have not been able to fully support their international expansion. As a result, Chinese pharma companies are increasingly pursuing strategic partnerships, joint ventures and out-licensing deals as a way to access new financing and build ties with global players who can support the development of their portfolios.

Asian businesses were responsible for almost 25% of global pharma out-licensing deals in 2024. Those originating in China generated USD800 million in advance payments, up from less than USD100m in 2020.

Chinese out-licensing transactions often involve molecules, early-stage drug candidates or discovery platforms, with the IP holder licensing to a foreign partner either the global or regional rights to further develop, manufacture and commercialize its innovations.

In return the licensor generally receives upfront payments to cover R&D costs and/or milestone payments and royalties on future ex-China sales, and in most cases retains its rights to commercialize the final product inside China. By going down this route, the licensor avoids the need to invest in production facilities, regulatory expertise and marketing capabilities outside its home market. Notably, a licensing deal with a reputable multinational can validate the licensor’s science and pipeline, enhancing its reputation with investors and future partners both in and outside China.

Panel: Recent Chinese out-licensing deals

Deal	Details
AstraZeneca/Jacobio Pharma

December 21, 2025 | Jacobio will receive an upfront payment of USD100m and is eligible for additional development and commercial milestone payments of up to USD1.915 billion, as well as tiered royalties on net sales achieved outside China. AstraZeneca will be responsible for all clinical development, regulatory submissions, and commercialization activities for JAB-23E73 (a pan-KRAS inhibitor) outside of China. |
| Novartis/Argo

September 3, 2025 | Argo will receive an upfront payment of USD160m and is eligible to receive potential milestone and option payments of a combined potential value of up to USD5.2bn, as well as tiered royalties on commercial sales. In addition, Novartis has expressed its non-binding intention to participate in Argo’s next round of equity financing. |
| Merck KgaA/Biocytogen

September 3, 2025 | Biocytogen will provide proprietary, fully human antibodies derived from its RenMice platform for evaluation in Merck KGaA’s antibody-conjugated LNP services. Merck KGaA has been granted an exclusive option to acquire rights to selected antibody assets in return for fees and royalties on sales and sub-licenses. |
| Sanofi/Visirna (a subsidiary of Arrowhead)

August 1, 2025 | Sanofi will acquire rights to develop and commercialize investigational plozasiran, Arrowhead’s first-in-class RNA interference (RNAi) therapeutic candidate designed to reduce production of apolipoprotein C-III (APOC3) as a potential treatment for familial chylomicronemia syndrome (FCS) and severe hypertriglyceridemia (SHTG), in Greater China. Visirna will receive an upfront payment of USD130m from Sanofi. In addition, Visirna will be eligible to receive further milestone payments of up to USD265m upon approval of plozasiran across various indications in mainland China. Arrowhead is further eligible to receive royalties on net commercial product sales in Greater China as part of the Arrowhead-Visirna license that was assigned in part to Sanofi. |

Uptick in strategic partnerships and NewCo deals

We are also seeing a rise in joint ventures (JVs) and collaboration deals between Chinese pharma companies and foreign parties, who share risk on co-development projects and cooperate to facilitate global clinical trials, among other things. When structuring these collaborations, parties would typically factor in geopolitical, regulatory and tax risks, and their impact on future supply chain stability and cost efficiency.

A third growth model involves mainland Chinese pharma companies incorporating NewCos outside the country—often in the Cayman Islands—into which they license ex-China intellectual property (IP) rights as a way to access international financing. This strategy, known as the “Spin-off NewCo” or “NewCo” model, has gained significant traction as a hybrid structure that sits between a traditional out-licensing deal and a full corporate spin-off. For companies with deep pipelines, the structure allows management to focus internal resources on priority programs while monetizing non-core or earlier-stage assets through external capital.

These arrangements often work best for larger businesses with extensive drug pipelines but can be more complicated in certain scenarios, for example if they rely on the parent company’s platform technology.

The Chinese company will often retain an equity stake in the NewCo, with foreign venture capital firms, private equity investors, or licensees funding the development and commercialization of the in-licensed IP. This model offers advantages to the Chinese company over standard out-licensing deals, where royalties and milestone payments are contingent on the successful commercialization of products over which the originator has limited control. NewCo structures also offer Chinese companies that retain equity stakes the possibility of financial upside through an eventual strategic sale or IPO.

Here, Hong Kong listings are supported by Chapter 18A of the Hong Kong Stock Exchange (HKEX) listing regulations, which provides an established route for pre-revenue biotech companies to source equity financing. HKEX is now the second largest biotech funding platform globally, with more than USD17bn raised in 80 biotech IPOs since Chapter 18A was introduced in 2018.

Panel: HKEX biotech IPOs, secondary placements and dual listings

• Insilico Medicine listed in Hong Kong in December 2025, becoming the first AI-driven biotech company to go public on the main board of the HKEX. The IPO raised a total of HKD2.27bn (USD291m) and was backed by investors, including Eli Lilly and Tencent.
• Hengrui listed in Hong Kong in May 2025, raising HKD9.89bn (USD1.26bn). At the time, the deal was the biggest healthcare IPO in Hong Kong in nearly five years.
• DualityBio debuted on the HKEX with a HKD1.64bn (USD211.4m) IPO in April 2025, making it one of the biggest offerings made under the HKEX’s Chapter 18A regime since 2020.
• Ascentage has been listed on the HKEX since 2019 and in January 2025 listed on the NASDAQ in a USD126.4m IPO.
• 3SBio raised HKD3.12bn (USD401m) in December 2025 through a new share placement. Funds raised from the sale will largely be used for research and development. The company is partnered with Pfizer in China.
• Biocytogen listed on the Shanghai Stock Exchange STAR Market in December 2025. The listing followed the Company’s flotation on the HKEX in September 2022 and established Biocytogen as the first “H+A” (i.e., Hong Kong and Mainland China) dual-listed global drug innovator.

What do parties need to consider in China-related pharma deals?

The legal and regulatory framework surrounding China-related out-licensing, partnership and NewCo deals is complex. Where substantive pipeline assets are transferred outside of China in NewCo transactions, or in co-development deals where the parties may want to export improved technologies, China’s technology export regulations may apply. Some tech exports are prohibited altogether (e.g., cell cloning and gene editing technologies applied to humans), while the export of “restricted technologies” requires a government license (though these are less relevant to biotech transactions).

Notably, while the registration of agreements involving the export of “freely exportable technologies” is voluntary from a legal standpoint and not required for technology export purposes, PRC banks may in practice require evidence of a registered license agreement with the local Ministry of Commerce (MOFCOM) to process cross-border remittance of funds such as milestone payments and royalties. The registration process is relatively streamlined, though the specific documentary requirements for foreign exchange processing will depend on the practices of the relevant bank.

Chinese ownership of equity in foreign NewCo vehicles is subject to the country’s outbound direct investment (ODI) framework, which requires approvals or filings with various government ministries, including the National Development and Reform Commission (NDRC). We have seen ODI processes suspended during tariff negotiations, while Chinese companies also need foreign exchange approvals to remit funds required for operations overseas.

Cross-border data transfers and geopolitical implications

Data transfers are another important consideration. Cross-border life sciences transactions invariably involve the transfer of data during transactional due diligence and transition services, while such transfers will be ongoing in strategic partnerships.

Here, the global legal and regulatory environment is evolving rapidly and is heavily influenced by geopolitics. Countries including the U.S., the UK and certain EU member states have designated pharma supply chains as critical national infrastructure following interruptions to the supply of active pharmaceutical ingredients (APIs) and medicines during the COVID-19 pandemic and in response to more generalized geopolitical tensions.

Against this backdrop, biotechnology, AI and health data are also now protected by many nations as a matter of national security. As a result, FDI and national security screening processes (such as that administered by the Committee on Foreign Investment in the United States) may apply, alongside other measures such as the U.S. government’s America First Investment Policy, which imposes restrictions on U.S. outbound investments into China in areas including artificial intelligence and biotechnology.

Navigating Chinese export regulations on health data and human genetic resources

In the pharma sector, parties need to navigate the Chinese government’s regulations on the export of clinical data and human genetic resources, among other things.

In NewCo deals where the intention is to eventually seek marketing authorization for drug sales in the U.S., a range of data will need to be made available to the U.S. authorities. If this information is held by the originator inside China, information sharing provisions between the Chinese company and the NewCo will need to be carefully constructed from the outset.

Exporting the personal health data of Chinese citizens requires either a security assessment arranged by the PRC’s Cyberspace Administration or for the transfers to be conducted under contracts approved by the Chinese authorities. From a diligence perspective, the consent documentation underlying any cross-border data transfers should be reviewed and validated. For example, where a PRC licensor/target has obtained only generalized consent (such as consent to share data with unspecified overseas “partners”) without expressly identifying the overseas recipient and providing the requisite information, the consent may be defective under PRC data regulations and may limit the foreign acquiror/licensee’s ability to use the data.

Where human genetic resources (e.g., organs, tissues and other genetic materials) and related data (i.e., data generated by performing processes on human genetic resources, which includes genetic information, among other things) are involved, specific approvals/filings are required for exports.

In some instances, extra security reviews may apply, while data privacy regulations may also require parties to obtain additional consents from data subjects for cross-border transfers (which could be challenging to secure where clinical trial data is concerned). The time it takes to get the relevant authorizations needs to be factored in to deal strategy.

Robust intellectual property diligence is a critical consideration

Another key area of focus in China-related pharma deals is IP. When negotiating licensing deals, it is common for parties to focus their attention on IP licensing terms and the technical and commercial aspects of the underlying assets. However, IP ownership is equally important and sometimes overlooked.

Here, licensors may have jointly developed therapies or platforms with other parties and may also have jointly registered patents. And as Chinese innovators pursue different avenues to raise financing and commercialize their portfolios, the structure of their businesses may evolve rapidly. The implications of these reorganizations on IP rights require careful scrutiny.

More broadly, as China’s pharmaceutical industry shifts from generics to innovative drugs, Chinese companies face increasingly severe challenges in IP protection and risk management. Many domestic innovators adopt a “fast follow” strategy, with products that closely resemble those of international leaders but lack sufficient differentiation. This not only weakens market competitiveness but also creates potential IP infringement risks that could ultimately prevent commercialization of products with considerable clinical promise.

As the volume of overseas deals involving Chinese innovative drugs continues to rise, disputes over new drug R&D are also on the up, with IP and compliance at the core of these challenges. Compared to mature multinational pharma businesses, Chinese drug companies lag behind in terms of patent strategy and IP risk management. This has led to frequent setbacks as they seek to expand overseas. In addition, trade secret disputes have become a major legal risk for Chinese innovators in the sector, particularly where key personnel have moved between competitors.

With this in mind, comprehensive due diligence on IP rights is vital to secure value in the deal. This analysis should be tailored to the assets and targets in question, which requires sophisticated in-market advice. Given these dynamics, it is prudent for potential investors and partners to pay close attention to patent and IP due diligence from the outset, and related risk assessments should be conducted holistically and thoroughly.

• Counsel, Shanghai Lang Yue Law Firm

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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