Medicines from China: What Big Pharma’s Dependence Means for Us
Laura Chrobok 10.08.2026
For many years, China was regarded as the extended workbench of the Western pharmaceutical industry. Raw materials and active pharmaceutical ingredients were manufactured there at low cost, while new medicines were developed primarily in Europe and the United States. That division of labour has now become outdated. Chinese biotechnology companies are increasingly developing innovative medicines of their own, and international pharmaceutical companies are paying billions of dollars to secure the rights to them.
We take a look at why Big Pharma is increasingly licensing experimental medicines from China. Why are Chinese drug candidates in such high demand? And, in addition to dependence on China for pharmaceutical manufacturing, are we now also becoming dependent on China for the medicines of the future?
China Is No Longer Just the Pharmaceutical Industry’s Manufacturing Hub
For decades, Western pharmaceutical companies shifted parts of their manufacturing operations to China and India. Lower costs and extensive industrial capacity made both countries key suppliers of chemical raw materials, active pharmaceutical ingredients (APIs), and generic medicines.
China, however, did not remain content with the role of a low-cost manufacturer. Biotechnology and innovative medicines were identified as strategically important sectors of the economy. Research institutions, biotechnology companies, clinical trial centres, and manufacturing capacity have all been expanded systematically.
Drug regulation has also undergone significant reform. Since 2025, applications for clinical trials involving certain innovative medicines can be reviewed within 30 working days. This accelerated procedure applies, for example, to selected medicines with high clinical value, treatments for rare diseases, and certain internationally developed products. For applications involving particularly complex scientific issues, the review period may still be extended to 60 days (National Medical Products Administration NMPA, 2025).
China is therefore no longer merely manufacturing medicines developed elsewhere. It is increasingly developing the very drug candidates that international pharmaceutical companies are eager to acquire.
Around 40% of Licensed Drug Candidates Now Come from China
The change is particularly evident in international licensing agreements.
In these agreements, a pharmaceutical company acquires the rights to continue developing a drug candidate created by another company and to market it in specified countries. The original developer typically receives an upfront payment, followed by additional milestone payments if the drug candidate reaches predefined development, regulatory approval, or commercial targets.
According to an analysis by the international healthcare data and analytics company IQVIA, by 2025 around 40% of all drug candidates licensed by major pharmaceutical companies originated from Chinese licensors. Just one year earlier, the figure had been just under 30% (Gores et al., 2026).
IQVIA also reported that the total value of licensing agreements involving drug candidates of Chinese origin increased from US$45 billion in 2024 to US$105 billion in 2025. Reuters, citing data from the analytics provider Pharmcube, reported that the potential total value of all out-licensing deals from Greater China reached US$137.7 billion in 2025. Compared with 2021, this represented almost a tenfold increase (Gores & House, 2026; Wu & Silver, 2026).
The differing figures reflect differences in methodology. Nevertheless, both analyses point to the same conclusion: within just a few years, China has become one of the world’s most important sources of innovative medicines.
Many of the current international licensing agreements involve oncology. Particularly sought after are antibody-drug conjugates and other targeted therapies. Increasingly, drug candidates for metabolic disorders, obesity, autoimmune diseases, difficult-to-treat conditions, and rare diseases are also being licensed internationally (Gores & House, 2026; Reuters, 2026; Travere Therapeutics, 2026).
Billions of Dollars for Medicines That Have Yet to Be Approved
One of the largest recent agreements was announced in May 2026, when Pfizer and the Chinese company Innovent Biologics entered into a major collaboration.
The partnership covers programmes for the development of new cancer medicines and could be worth up to US$10.5 billion if all contractual milestones are achieved. Innovent received an upfront payment of US$650 million, while the vast majority of the remaining payments depend on future success in development, regulatory approval, and commercialisation (Reuters, 2026).
However, a deal valued at US$10.5 billion does not mean that this amount has already been paid, nor does it guarantee that the medicines concerned will ever reach the market. Some of the drug candidates are still in the early stages of development. If they fail during clinical trials, a substantial proportion of the agreed milestone payments will never become due.
Nevertheless, agreements of this magnitude demonstrate the strategic importance that Western pharmaceutical companies now attach to Chinese biomedical research.
Why Chinese Drug Candidates Are in Such High Demand
Chinese biotechnology companies are bringing large numbers of drug candidates into clinical development quickly and at comparatively low cost.
Their advantages include:
o government support programmes
o a large pharmaceutical industry
o extensive research and manufacturing capacity
o numerous clinical trial centres
o comparatively low development costs
o and accelerated review procedures for selected innovative medicines.
According to IQVIA, one of the defining characteristics of China’s biotechnology sector has become the speed of early-stage drug development. A supportive political and regulatory environment enables companies to move promising drug candidates into early clinical trials rapidly and to generate data at an early stage, allowing their chances of success to be assessed more quickly (Gores & House, 2026).
For Western pharmaceutical companies, this is highly attractive. Instead of discovering and developing a new medicine entirely in-house, they can acquire a programme that has already completed laboratory research or even early clinical trials.
In doing so, they are not merely purchasing a potential new medicine. They are also buying time while avoiding part of the considerable risks associated with early-stage drug discovery.
Big Pharma Urgently Needs New Meds
Many of today’s best-selling medicines will lose their patent protection over the coming years. Once patents expire, other manufacturers are allowed to market generic medicines or biosimilars, potentially leading to substantial losses in revenue for the original developers.
According to a Reuters analysis, more than US$300 billion in pharmaceutical sales are at risk over the next five years because of expiring market exclusivity (Santhosh & Roy, 2026).
At the same time, developing new medicines in-house is expensive, time-consuming, and inherently risky. Many drug candidates fail before they ever reach clinical testing. Others prove during patient trials that they are either insufficiently effective or associated with unacceptable adverse effects.
By entering into a licensing agreement, a large pharmaceutical company can join the development process at a later stage. By then, the smaller biotechnology company has often already:
· identified a promising drug candidate
· completed preclinical studies
· established the manufacturing process
· and generated initial clinical data.
This business model is not new. Large Big Pharma companies have long acquired drug candidates from smaller research companies. What is “new” is the extent to which these drug candidates now come from China.
Cooperation with China — A Progressive Division of Labour or a New Dependency?
International collaboration can be beneficial for both sides. At the same time, it highlights not only the growing strength of Chinese biomedical research but also the extent to which Western pharmaceutical companies have become dependent on external innovation.
Europe is already familiar with the consequences of outsourcing pharmaceutical manufacturing. The production of many chemical raw materials and active pharmaceutical ingredients is heavily concentrated in Asia. As a result, disruptions to individual supply chains can contribute to medicine shortages.
The current biotechnology boom, however, extends far beyond the manufacture of established medicines. Increasingly, it also involves:
o novel drug candidates
o patent rights
o research data
o biotechnology platforms
o and specialised drug development technologies.
International scientific collaboration is essential and can accelerate medical progress. It becomes problematic, however, if Western countries neglect their own research and development capabilities while assuming that strategically important medical technologies can simply be acquired abroad indefinitely.
On The Reliability of Clinical Data
A medicine developed in China is not automatically inferior or less safe than one developed in Europe or the United States. These factors matter:
o the quality of the clinical trials
o the protection of study participants
o the completeness of the data
o the possibility of independent verification
o and whether the benefits outweigh the risks.
According to the Chinese National Medical Products Administration (NMPA), the accelerated 30-day review procedure is based on the technical standards of the International Council for Harmonisation (ICH). Applicants must conduct appropriate risk assessments, select suitable clinical trial centres, and obtain approval from ethics committees before studies can proceed (NMPA, 2025).
One important challenge is the international applicability of clinical data: In 2025, approx. 88% of clinical trials sponsored by Chinese companies were conducted exclusively in China (Silver & Satija, 2026). This does not automatically make the results unsuitable for use elsewhere, however, regulatory authorities must determine whether the study population adequately represents the patients who will ultimately receive the medicine. Depending on the drug candidate, factors such as age, underlying medical conditions, previous treatments, or differences in drug metabolism are relevant. Additional international clinical trials may therefore be required.
Accelerated development pathways should never obscure one fundamental principle: every new medicine must still demonstrate its clinical benefit through robust scientific evidence.
What the China Biotech Boom Means for Patients
International collaboration in pharmaceutical research has the potential to produce additional drug candidates and expand future treatment options.
Obviously, a licensing agreement worth billions of dollars is not evidence that a medicine is effective. Many drug candidates that are currently in the early stages of development are unlikely to complete clinical testing successfully.
Nor do lower development costs — such as those often achieved in China — automatically translate into lower medicine prices. Once a pharmaceutical company has acquired the international licensing rights, factors such as patent protection, market position, and pricing strategy largely determine how expensive the medicine will be if it eventually reaches the market.
For patients, the announced value of a licensing agreement is therefore of little importance. What really matters is whether the medicine …
· provides a meaningful clinical benefit
· has been adequately tested
· has an acceptable safety profile
· and is available at an affordable price.
Conclusion: The Pharmaceutical Industry Is Buying Its Future — This Is Hardly a Sustainable Long-Term Strategy
On the one hand, China’s rapid progress comes at exactly the right time for Western pharmaceutical companies. As blockbuster medicines lose patent protection, companies face substantial losses in revenue, while developing new medicines in-house remains expensive, time-consuming, and risky. Chinese biotechnology companies, by contrast, offer a growing number of drug candidates that have already undergone initial laboratory research or early clinical testing. This has the potential to bring much-needed new medicines to patients.
On the other hand, the trend also reveals just how dependent many Western pharmaceutical companies have become on externally developed innovation. This dependence exists despite the fact that trade restrictions, export controls, sanctions, and geopolitical tensions could disrupt the exchange of research data, international cooperation, and pharmaceutical supply chains at any time.
The consequences of shortages of essential active pharmaceutical ingredients — or medicines required by seriously ill patients or formulated specifically for children — became apparent during the supply chain disruptions experienced throughout the COVID-19 pandemic.
FAQ — (Further) Frequently Asked Questions About Medicines from China
1. How can I tell where a medicine was originally developed?
The company that originally developed a drug candidate can usually be identified from regulatory documents, scientific publications, clinical trial registries, or announcements relating to licensing agreements. For example, a medicine may have been discovered in China, licensed by a US pharmaceutical company, and ultimately manufactured in Europe.
2. Who owns a Chinese drug candidate after a licensing agreement has been signed?
That depends entirely on the terms of the agreement. In many cases, the Chinese biotechnology company retains certain rights for China or the Greater China region, while the licensing company acquires the rights to develop and market the medicine in other countries. Some agreements involve shared development costs, profits, or marketing rights. In other cases, the licensee receives almost all rights outside China. A licensing agreement therefore does not necessarily mean that the Chinese company has sold its drug candidate outright.
3. What happens if a Western pharmaceutical company abandons development of a licensed drug candidate?
This also depends on the specific licensing agreement. In many cases, future milestone payments are no longer due. Depending on the contractual terms, the development rights may then revert to the original Chinese biotechnology company, which can either continue developing the medicine itself or seek another licensing partner. Consequently, the termination of one development programme does not necessarily mark the end of the drug candidate.
4. Are Chinese companies becoming serious competitors to the pharmaceutical industry established in other countries?
Very likely. At present, many Chinese biotechnology companies primarily develop promising drug candidates and early-stage development programmes, which are then licensed by Western pharmaceutical companies for global development and commercialisation. However, with every successful licensing agreement, Chinese companies gain additional capital, expertise, and international experience. In the long term, they may increasingly be able to finance large international clinical trials themselves, seek regulatory approval in Europe and the United States, and establish their own global marketing and distribution networks. If that happens, they will no longer serve merely as cost-effective sources of innovation for Big Pharma — they will become direct competitors. Oh, the irony.
Further information (on many other topics) can be found on our blog. You can also find our “Medizinskandale” book series and the “Codex Humanus” — the fifth volume of which was recently published — in our online shop. We look forward to your visit.
Sources:
· National Medical Products Administration (2025): “NMPA Announcement on Optimizing of the Review and Approval Process for Clinical Trials of Innovative Drugs ([2025] No. 86),” National Medical Products Administration (NMPA).
· Gores, M. et al. (2026): “Biopharma M&A: Outlook for 2026,” IQVIA.
· Gores, M.; House, T. (2026): “Biopharma M&A: Mid-year 2026 Update,” IQVIA.
· Wu, K.; Silver, A. (2026): “China Biotech Licensing Boom to Hit Record in 2026 as Pipeline Swells,” Reuters.
· Reuters (2026): “Belgium’s UCB in Autoimmune Drug Deal with Antengene.”
· Travere Therapeutics, Inc. (2026): “Travere Therapeutics Enters Into Exclusive Licensing Agreement with Everest Medicines for Civorebrutinib, a Potential Best-in-Class BTK Inhibitor for Rare Kidney Diseases.”
· Reuters (2026): “Innovent Biologics, Pfizer Strike $10.5 Bln Cancer Drug Deal Amid China Biotech Boom.”
· Santhosh, C.; Roy, S. (2026): “Big Pharma M&A Set for Mega Year as Patent Expiries Drive Deal Urgency,” Reuters.
· National Medical Products Administration (2025): “Policy Interpretation of the Announcement on Optimizing of the Review and Approval Process for Clinical Trials of Innovative Drugs.”
· Silver, A.; Satija, B. (2026): “Chinese Drugmakers with Big Ambitions Struggle to Recruit Staff for Global Expansion,” Reuters.
Header images are AI-generated illustrative images.