China biotech's ingenuity extends to dealmaking

AstraZeneca

16/10/2026 13:00

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.
By Katrina Hamlin
HONG KONG, Oct 16 (Reuters Breakingviews) - Long gone are the days when Big Pharma scoffed at the reliability of China's clinical trials. The world's biggest drugmakers are increasingly looking to biotech researchers in the People's Republic to shore up their pipelines by snapping up the rights to develop and commercialise promising discoveries abroad. Now companies like $44 billion Jiangsu Hengrui Pharmaceuticals 600276.SS are also learning to squeeze more value from those deals.
China-based drugmakers have struck agreements worth just over $139 billion year-to-date to outlicense innovations, treating everything from cancer to obesity, to global giants including AstraZeneca AZN.L, GSK GSK.L and Novo Nordisk NOVOb.CO, per data provider PharmCube. That means they have already beaten last year’s record for the full year. The arrangement is mutually beneficial because Chinese champions lack the experience and brand power to tap more profitable overseas markets.
Critically, Chinese sellers are becoming cannier dealmakers too. The average agreement this year is worth nearly $700 million, more than 10 times the 2018 figure. True, that’s inflated by so-called milestone payments, shelled out only if products hit targets for clinical development and commercialisation. But the mean upfront payments to Chinese biotech companies have also ratcheted up. Terms are more sophisticated as well.
Jiangsu’s Hengrui makes a compelling case study. In 2023 it licensed an asthma drug to a tiny US firm in an agreement worth around $25 million. Months later, GlaxoSmithKline swept in to acquire the buyer, Aiolos, for $1 billion upfront, plus up to $400 million in milestones.
A year on, Hengrui adopted a different approach. It licensed three GLP-1 weight loss drugs to Hercules - a newly formed, US-based entity backed by Bain Capital. As well as negotiating upfront and milestone payouts worth nearly $6 billion, Hengrui secured a 20% stake in Hercules. The company, renamed Kailera Therapeutics KLRA.O, went on to list in New York in April and has a $1.4 billion market capitalisation.
Rivals such as Keymed Biosciences 2162.HK and Genor Biopharma have since used a similar playbook to extract more value. Others are experimenting too. Earlier this month, Abogen Biosciences bundled options to license related assets into a deal granting Novartis NOVN.S the rights to an autoimmune disease treatment, bumping the transaction’s total value to nearly $8 billion. Some companies are also using warrants and contractual rights to gain economic interests.
If Big Pharma succeeds in convincing Washington and other governments that such deals are not a national security risk, expect volumes to keep growing and for Chinese biotech stars to keep sharpening their terms. 
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CONTEXT NEWS
China-based biotech companies’ deals to license the commercialisation of their drugs in overseas markets reached $139.4 billion for the year to October 8, 2026, according to data provider PharmCube. Last year, the total value, including milestone payments, reached $138.8 billion. Upfront payments in those agreements reached $8 billion in the first three quarters, higher than the $7.2 billion total in 2025.

(Editing by Una Galani; Production by Aditya Srivastav)
((For previous columns by the author, Reuters customers can click on HAMLIN/katrina.hamlin@thomsonreuters.com; Reuters Messaging: katrina.hamlin.thomsonreuters.com@reuters.net))