US–China trade relations and the tit-for-tat tariff war may have faded from the headlines recently, but the white-hot trends reshaping the pharmaceutical industry burn bright.

Policy momentum on both sides of the Pacific is accelerating—and in some cases it is diverging. R&D opportunities beckon like never before, but US companies are facing a highly unpredictable operating environment in China, and Chinese-linked companies face growing scrutiny and constraints in the US.

The result is a new operating reality for pharma and a fundamentally different strategic mindset—one that must accept a new risk profile in order to access the world’s largest business development opportunities.

From fast follower to innovation powerhouse

For years, multinational firms viewed China primarily as a fast follower: a market for efficient manufacturing, local commercialization, or adaptation of innovations developed elsewhere. But market scale, speed, investor optimism, and industrial policy have now firmly established China as a global powerhouse. With accelerated R&D timelines, growing use of artificial intelligence in drug discovery, and regulatory pathways that can enable rapid clinical advancement, the growth of the Chinese biotech sector is stunning.

Consider the following:

• China now accounts for 23% of drug candidates globally, second only to the US.
• In 2025, 38% of licensing deals by large pharma companies originated from China, accounting for 30% of up-front payments, according to Nature.¹
• China’s contribution to new drug discovery has grown from roughly 30 new medicines in 2013 to more than 400 by 2023, according to STAT.²
• The number of clinical trials now exceeds those of the US, according to Clinical Trials Arena.³

Notwithstanding heightened geopolitical risks, major pharma companies are clearly voting with their wallets. China’s gravitational pull is unmistakable. In this context, it is striking that US officials have taken measures to reduce government funding of innovative research and prioritized domestic manufacturing instead.

The China paradox: Opportunity is also exposure

The rise of China’s pharmaceutical industry is not accidental. China’s strategic ambition in the life sciences—as outlined in “Healthy China 2030”⁴ and “Made in China 2025”⁵—has worked because it is consistent, long-term, and state-backed. Those characteristics also introduce expanding levers of government oversight and control.

Look to the experience of other sectors in China. There’s a well-established historical pattern in which foreign expertise is first welcomed, domestic capacity is built, and then competitive conditions gradually—or even suddenly—tilt to favor national firms. These changing conditions can include everything from export controls and licensing to data access, governance, and market access.

Today, that includes practices that exert price pressures designed to favor domestic companies, such as value-based procurement. Over the past year, China has also stepped up regulatory measures targeted at specific multinational firms, and licensing deals often require subtle (but highly impactful) provisions to share IP and localize data.

The US is also tightening requirements. Take the recent passage of the BIOSECURE Act, which should be viewed as a warning shot. At its core, the legislation restricts US federal funding and government contracting for companies that rely on certain designated Chinese biotech firms—particularly in areas tied to sensitive data, research, and manufacturing. Narrower in scope and more phased than earlier proposals, the law does not yet fundamentally alter the industry’s ability to operate in China. But it does formalize a change: ties to Chinese biotechnology entities are increasingly being viewed through a national security lens, not only a commercial one.

What this means for pharma leaders

For an industry built on long development timelines, these signals aren’t just noise—they project future long-term risk. In this context, companies will have to navigate diverging geopolitical systems, in which two major global powers may be seeking to decouple from one another and even impose competing or conflicting requirements.

The bottom line is that China strategy is no longer a commercial or purely operational question. With ramifications that go to the heart of the pharma R&D mission, it is a board- and CEO-level issue with direct implications for enterprise value. Companies that navigate the new geopolitical realities will need to focus on three priorities: insulating critical inputs, assets, and operations from sudden disruption; diversifying data, partnerships, supply chains, and infrastructure to avoid single points of failure; and stress-testing strategies against scenarios in which political responses are asymmetric and abrupt.

Meeting this moment does not mean retreating from China. It means evolving how risk is assessed alongside opportunity so growth strategies can be sustained in a more fragmented and uncertain global landscape.

Geralyn Ritter is President and CEO and Monica Gorman, PhD, is Managing Director; both of Crowell Global Advisors, a global government relations, public policy, and public affairs consultancy

References

1. Dorey, E. Biotech Trends Driving the Deals of 2025. Nature. December 1, 2025. https://www.nature.com/articles/d43747-025-00113-2

2. Kinch, M.; Gardner, K. We Crunched the Numbers on Drug Discovery in the US vs. China. The Results Were Alarming. STAT. December 16, 2025. https://www.statnews.com/2025/12/16/china-drug-discovery-us-leadership-falling/#:~:text=U.S.%20scientists%20must%20compete%20internationally,tripled%20in%20that%20same%20period

3. Beaney, A. OCT West Coast 2025: China Surpasses US for Annual Number of Clinical Trials. Clinical Trials Arena. February 12, 2025. https://www.clinicaltrialsarena.com/news/china-surpasses-us-for-annual-trials/

4. Xiaodong; T., Xiangxiang, L.; Haiyan, S. Healthy China 2030: A Vision for Health Care. 2017. Value in Health. 12C, 112-114. https://www.ispor.org/docs/default-source/publications/newsletter/commentary_health-care_china_2030.pdf

5. Kennedy, S. Made in China 2025. CSIS. June 1, 2015. https://www.csis.org/analysis/made-china-2025