The pace and scale of the pharma industry’s turn toward China in early 2026 is difficult to overstate, with more than $43 billion in licensing commitments in just five months. What is currently unfolding can be described as a structural realignment of where the global drug industry sources its innovation, and its terms.

Which pharma companies have recently made R&D deals with China?

Back in January, AstraZeneca announced a collaboration with CSPC Pharmaceuticals valued at approximately $18.5 billion, with $1.2 billion upfront and potential milestones reaching $17.3 billion to advance eight programs targeting obesity and type 2 diabetes.¹ The deal pairs AstraZeneca's global development and commercialization infrastructure with CSPC's AI-driven peptide discovery platform along with its proprietary LiquidGel technology, designed to support once-monthly injectable dosing.²

The deal was announced just a day after AstraZeneca separately announced a $15 billion investment in China through 2030, signaling that this is not a one-off transaction but a sustained strategic commitment. AstraZeneca wasn’t the only company to begin shifting its focus towards China, as in May, Bristol Myers Squibb (BMS) announced a $15.2 billion agreement with Hengrui Pharma spanning 13 early-stage programs across oncology, hematology, and immunology.⁴

Pfizer then closed out the spring with a $10.5 billion deal covering 12 cancer drugs with Innovent Biologics, announced May 28.⁵ Together, the three announcements represent a volume of capital that would have been eye catching in this context just four years ago, when Chinese sources accounted for just roughly 5% of large pharma licensing activity.⁶

By 2025, that figure had climbed to 38%, and now in early 2026, it has crossed the majority threshold.

How large has the surge become?

In 2024, deals involving Chinese pharma and biotech firms reached $51.9 billion in total potential value—a record at the time—and a figure that reflected a 90% jump in combined deal value from 2023, with transaction volume up 40% over the same period.^7,9 Then the following year shattered this figure.

Total deal value climbed to $135.7 billion for the full year in 2025, according to China's National Medical Products Administration, nearly tripling 2024's record in a single year and cementing China's position as the dominant source of external pipeline activity for global pharma.¹⁰

By that point, 38% of large pharma licensing deals were originating from Chinese partners, representing 30% of all upfront payments made industry wide.⁶ That acceleration has not slowed entering 2026.

Cross-border out licensing by Chinese biotech firms hit $60 billion in the first quarter alone, a 73% jump from the same period a year earlier, and nearly half of 2025's entire annual total compressed into three months.¹⁰ The pipeline behind those numbers is expanding just as fast, with Chinese companies now bringing novel targets, next-generation modalities, and AI-assisted discovery to the table at a pace that has fundamentally altered the supply side of global pharmaceutical dealmaking.

Underpinning that volume shift is a pricing story that is equally striking. The average upfront value for a China-sourced licensing deal rose from $52 million in 2022 to $172 million in early 2026, a 230% increase, with average upfront payments climbing an additional 36% in the past year alone.¹¹

Chinese biotech companies are no longer accepting the terms that defined the market's early deal wave, rather they have recognized the value of their assets, and Western pharma has largely agreed to meet their price.

Why is pharma turning to China now?

The demand-side explanation begins with looming patent cliffs, as AstraZeneca, BMS, and Pfizer are each facing the erosion of major revenue-generating franchises over the next several years, and internal R&D alone cannot fill the gap fast enough or in a cost friendly way. China's licensing market offers something the traditional biotech hubs in Boston and San Diego increasingly cannot: early-stage assets, often with novel mechanisms of action, at development timelines that Western companies struggle to match.

China now accounts for 23% of drug candidates globally, second only to the U.S., and its clinical trial volume has also surpassed that of the Unites States.⁶ The scale of individual upfront payments tells its own story, with AstraZeneca committing $1.2 billion upfront to CSPC, BMS paying $600 million to Hengrui at signing, and Pfizer putting $650 million on the table for Innovent, figures that all reflect a market where Chinese assets are being priced on par with innovation from any other global hub.^1,4,5

The appeal is not simply cost or convenience, rather its China’s ability to "combine next-generation modality leadership and R&D velocity that runs faster at lower costs than industry norms," according to a McKinsey partner who described Asia as "biopharma's emerging epicenter."⁹

Chinese biotech’s have built particular strength in the modalities Western pharma is most urgently trying to access, including antibody-drug conjugates, multi-specific antibodies, and cell and gene therapies. This gives China the leverage in the therapeutic categories where pipeline gaps are most acute.¹²

Artificial intelligence is also accelerating that advantage further, as Merck and Amgen executives have pointed to China as a likely early approval market for fully AI-designed drugs, with 2026 potentially marking the transition from AI-assisted discovery to end-to-end AI-designed compounds entering regulatory pipelines, a shift enabled by China's large patient datasets and clinical execution infrastructure.¹³

How have the deals changed?

What distinguishes the 2026 wave from prior rounds of China-sourced licensing is the architecture of the deals themselves. These are not simple molecule transfers.

BMS is contributing four of its own immunology assets to Hengrui in exchange for four Hengrui oncology and hematology programs, with five additional assets to be jointly discovered and developed.⁴ Pfizer has structured its Innovent agreement in three tiers, with the most advanced tier involving shared profits in the U.S. and European markets.

AstraZeneca has not only licensed CSPC's compounds but also secured rights to deploy the company's LiquidGel dosing platform across its own internal pipeline.² These deals represent the mechanics of a co-author relationship, not a vendor relationship.

Western pharma companies are no longer just buying Chinese molecules and running them through their own development engines, rather they are integrating Chinese discovery platforms, sharing development risk across geographies, and in some cases, handing Chinese partners meaningful roles in global commercialization.

Are U.S tariffs accelerating the pharma partnership shift to China?

The U.S. has imposed a 10% universal tariff on nearly all imports, with steeper levies reaching up to 245% on Chinese active pharmaceutical ingredients, and the administration has floated a pharma-specific tariff schedule that could reach 150% by 2026 and 250% by 2027.¹⁴ Most consequentially, a proposed 100% tariff on imported branded and patented pharmaceuticals was announced in October 2025, introducing structural risk into global pharma supply chains that executives are still working to model.

The relationship between those tariffs and the surge in China licensing deals, however, is less straightforward than it might appear. Tariffs are not primarily pushing companies toward China for manufacturing, but they are reshaping the competitive landscape in ways that indirectly benefit China as an innovation partner.

Europe, once the default location for global drug development operations, is now being squeezed on two sides, one by U.S. trade and drug pricing policies on one side, and the other by China's biotech boom.¹⁴That pressure is nudging multinational companies toward Chinese partnerships as a hedge against European uncertainty.¹⁵

The more revealing framing may be geopolitical rather than economic. The introduction of a Most Favored Nation pricing model for the U.S. market has made the American commercial landscape less predictable, pushing companies to look more favorably on China's rapidly growing domestic market as an alternative revenue base.¹⁵

Tariffs are not the only U.S. policy in play. In January 2026, following Congressional approval, President Trump enacted the Biosecure Act, preventing designated Chinese biotech and manufacturing firms from accessing U.S. federal funding or collaborating with domestic companies using federal dollars, a measure working in direct opposition to the deal wave.¹⁵

In a conversation with Pharmaceutical Executive, Ron Lanton, Senior Partner & Global Strategist, Lanton, Lanton & Sosa Law PLLC, noted how the Biosecure Act affects partnerships.

"The Biosecure Act is changing how companies structure partnerships,” Lanton said. “We're seeing more diligence around supply chains, data access, technology transfers, manufacturing arrangements, and contractual exit rights. Companies are trying to preserve flexibility in case the geopolitical environment changes. The result is not necessarily fewer deals, but more complex deals with additional safeguards built into them."

As of June 2026, the act has not slowed the pace of agreements, but it has added meaningful legal complexity for U.S.-based companies in particular, representing a constraint that could tighten as the legislation's implementation advances.

Lanton emphasized that these tariffs and U.S. policies could have a lasting impact on pharma.

“The United States remains the most important pharmaceutical market in the world. The challenge is uncertainty,” he noted. “Companies can adapt to higher costs, tariffs, or new pricing frameworks if they understand the rules. What is more difficult is planning long-term R&D investments and launch strategies when the future reimbursement environment remains unclear. Discussions around MFN pricing, pharmaceutical tariffs, and Section 232 investigations have introduced questions that many companies cannot yet model with confidence. That uncertainty can have a chilling effect on investment decisions long before any policy is fully implemented."

What is the significance of the growing ties between China and big pharma?

The reason this moment matters extends beyond deal volume. When BMS hands a Chinese company four of its own immunology assets, and Pfizer agrees to split US and European profits with Innovent, they are making an implicit statement about where pharmaceutical innovation is being created and who controls its trajectory.

For pharma leaders, it reframes questions that once belonged to business development, such as which assets to pursue, how to structure partnerships, and where to conduct clinical trials? Companies that recognize the strategy as a potential fundamental reorganization of the global innovation ecosystem will be better positioned to capture the opportunity without being blindsided by the risk.

"The greatest unpriced risk is what happens after the agreement is signed. Many companies focus on acquiring promising assets but may underestimate the challenges that can arise later regarding intellectual property, regulatory review, reimbursement, market access, and political scrutiny. The legal risk is not simply whether the deal closes; it's whether the asset can successfully navigate the U.S. market years down the road," said Lanton.

Sources

1. AstraZeneca strikes deal for up to $18.5 billion to license weight-loss drugs from China's CSPC Reuters January 30, 2026 https://www.investing.com/news/stock-market-news/astrazeneca-strikes-deal-for-up-to-185-billion-to-license-weightloss-drugs-from-chinas-cspc-4476023
2. AstraZeneca enhances its weight management portfolio through collaboration agreement with CSPC Pharmaceuticals AstraZeneca January 30, 2026 https://www.astrazeneca.com/media-centre/press-releases/2026/astrazeneca-agrees-obesity-and-t2d-deal-with-cspc.html
3. AstraZeneca plans to invest $15 billion in China through 2030 to pioneer the next-generation of innovative medicines AstraZeneca January 29, 2026 https://www.astrazeneca.com/media-centre/press-releases/2026/astrazeneca-invests-15bn-in-china-through-2030.html
4. Bristol Myers Squibb and Hengrui Pharma Announce Strategic Agreements to Advance Innovative Medicines Across Oncology, Hematology, and Immunology Bristol Myers Squibb May 12, 2026 https://news.bms.com/news/details/2026/Bristol-Myers-Squibb-and-Hengrui-Pharma-Announce-Strategic-Agreements-to-Advance-Innovative-Medicines-Across-Oncology-Hematology-and-Immunology-2026-EbQpaI6Zdc/default.aspx
5. Innovent Biologics and Pfizer Enter Global Strategic Collaboration to Accelerate Development of Innovative Oncology Medicines Pfizer May 28, 2026 https://www.prnewswire.com/news-releases/innovent-biologics-and-pfizer-enter-global-strategic-collaboration-to-accelerate-development-of-innovative-oncology-medicines-302785085.html
6. Today's China Crucible: What It Means for Pharma Pharmaceutical Executive February 11, 2026. https://www.pharmexec.com/view/today-s-china-crucible-what-it-means-for-pharma
7. Navigating Cross-Border Pharma Deals: Key Trends and Lessons Out of China Pharmaceutical Executive February 12, 2025 https://www.pharmexec.com/view/navigating-cross-border-pharma-deals-key-trends-and-lessons-out-of-china
8. Exploring Biopharma's Dealmaking Terrain, Roadmap in China Pharmaceutical Executive January 27, 2025. https://www.pharmexec.com/view/exploring-biopharma-s-dealmaking-terrain-roadmap-in-china
9. Pharma M&A, China deals and GLP-1s: What to watch in 2026 Drug Discovery & Development December 19, 2025 https://www.drugdiscoverytrends.com/pharma-ma-china-deals-and-glp-1s-what-to-watch-in-2026/
10. China biotech deals hit record as innovative drugs draw interest of multinationals South China Morning Post March 29, 2026 https://www.scmp.com/business/china-business/article/3348295/china-biotech-deals-hit-record-innovative-drugs-draw-interest-multinationals
11. No longer a bargain pool, Chinese biotechs command higher premiums BioSpace June 3, 2026 https://www.biospace.com/business/no-longer-a-bargain-pool-chinese-biotechs-command-higher-premiums
12. As Chinese Biotechs Recognize Their Value, the Bargain Era May Be Over PharmaVoice March 18, 2026. https://www.pharmavoice.com/news/china-biotech-recognize-value-bargain-over/814979/
13. Big Pharma's China Deal Wave Techlifesci Feburary 9, 2026 https://www.techlifesci.com/p/big-pharmas-china-deal-wave-and-12
14. Navigating U.S. Tariffs in 2025: Impacts and Strategies for Pharma and Healthcare Delveinsight April 30, 2025 https://www.delveinsight.com/blog/us-tariffs-2025-impact-healthcare-pharma-strategies
15. Pharma industry laments Trump’s tariff on branded drugs Pharmaceutical Technology April 8, 2026 https://www.pharmaceutical-technology.com/news/pharma-industry-laments-trumps-tariff-on-branded-drugs/