Nearly half of the world's pharmaceutical licensing deals last year involved a Chinese company, against 16% in 2022.
The familiar story about Chinese pharmaceuticals is generic pills and bulk chemicals sold cheaply to Western manufacturers. Amber Tong and Robert Langreth describe something else: American drug companies buying their next generation of cancer medicines from Chinese laboratories, and increasingly letting those laboratories run the first trials.
"They're sort of like Netflix, a kind of insatiable need for new content."
Tong covers Asia's biopharma industry for Bloomberg and Langreth has reported on biotech and healthcare for 30 years, which is long enough to have watched the direction of that trade reverse.
The full episode is covered here so you can skip it. 17 minutes of audio, 13 minutes of reading.
Here are the 12 insights that matter.
👤 Guests: Amber Tong, who covers Asia's biopharma industry for Bloomberg News, and Robert Langreth, a Senior Reporter at Bloomberg News who has covered biotech and healthcare for 30 years
🎙️ Host: Oanh Ha, who presents The Big Take Asia for Bloomberg News
📰 Published: 15 September 2026 on the Big Take Asia feed
🟢 Spotify | 🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 17 min
Key Takeaways
Merck's most important cancer drug in development was discovered in Sichuan, not New Jersey
It is in 17 late-stage trials, and Merck licensed it because the Chinese clinical data already existed
Nearly half of global pharmaceutical licensing deals last year involved a Chinese company, against 16% in 2022
A drug company executive's summary of why: twice as fast at half the cost
Between a third and a half of the world's experimental drug pipeline now comes from China
China's turning point was a regulatory overhaul in 2015, plus an insurance reform that killed the margin on generics
Merck loses US patent protection on a drug that sold more than $31B last year, in 2028
The patent cliff across the industry is what makes the buying urgent
The upfront payment on a licensing deal is small, which is the point
$500M to license an early-stage drug, $10B in milestones if it works everywhere
Chinese firms are becoming the early-stage research arm of the US drug industry
In Pfizer's $10.5B deal, the Chinese company runs the initial trials
What Chinese biotechs get back is validation they can show investors
The worry in Washington is that the US is training its own replacement
Even the China hawks cannot agree what to do about it
If a Chinese company cures ovarian cancer, do you block American patients from it?
Chinese-discovered drugs are 4% of FDA approvals, and Morgan Stanley projects 35% by 2040
1. Merck's Chinese Drug
The episode opens at the American Society of Clinical Oncology's annual meeting in Chicago, which Langreth described as "the world's biggest cancer conference with 20,000 or 30,000 people in attendance." As he put it, "It's called ASCO, and this is one of the biggest forums for new drug studies to come out in cancer."
The most talked-about drug there came from Merck, which already sells the world's best-selling cancer treatment. The new one is SAC-TMT, and Langreth said "It's testing in 17 late-stage trials in lung cancer and breast cancer and other tumors."
Merck did not discover it. "Merck licensed SAC-TMT from a Chinese company called Sichuan Kelun Biotech. And this is a drug that is already approved in China."
The existing Chinese data was the attraction, not a complication. "In fact, one of the reasons why Merck was so excited about it is because of all these clinical data that they already saw come out of China that they believed offered evidence that the drug does work and is safe."
2. Twice as Fast, Half the Cost
Tong's framing of why large American drug companies are shopping. "Think of some of the big U.S. drug companies. They're sort of like Netflix, a kind of insatiable need for new content." Her second point is price: "And they found in recent years that China is a great place to go to buy early stage drugs at a lower price."
Langreth added the part that matters more than price. Drugs come out of China faster as well as cheaper, and he quoted a drug company executive's own summary: "What one of the drug company executives said to reporters at one point is that they said literally you can go twice as fast at half the cost in China."
The host's framing figure for the shift: novel drugs from Chinese companies now make up around a third of the global development pipeline.
3. Akeso Beat Keytruda
The precedent was set in 2024, when the Chinese biopharma company Akeso reported a lung cancer medication that outperformed Merck's Keytruda in a Chinese trial — Keytruda being one of the most profitable drugs on the market.
This year that work reached the main stage at ASCO. "For one of the first times, a drug exclusively tested in China in a phase three trial was one of the featured presentations there," Langreth said. "It was a drug from Summit Therapeutics that was licensed from a company in China called Akeso."
The volume is what changed the conversation. "And so the exploding number of drugs coming out of China was just a very big focus and topic of conversation at the conference this year."
4. Up the Value Chain
For decades the breakthroughs came from the United States and Europe, and Chinese manufacturers supplied the inputs.
Tong's description of the starting position. Chinese companies were making generic drugs and active pharmaceutical ingredients — the raw chemicals that go into finished products — which sit low in the value chain. "But China is rapidly moving up the value chain."
Langreth put a range on where it has got to. "If we look at the whole universe of experimental drugs that are being developed around the world, depending on how you count, between a third to half of the pipeline came from China." His conclusion: "So there's just a lot of innovation going on. There's a lot to choose from."
Tong dates the turning point to 2015. "China essentially overhauled its regulatory system for drugs and aligned China's standards more closely with international standards, streamlined drug reviews and kind of enforced quality control to really level the playing field for local drug developers."
The second lever was reimbursement, and it worked by making the old business unprofitable. "The authorities reformed the national insurance system to incentivize innovative drugs and really squeeze the profit margin of generics." That reached the incumbents too: "And that also kind of pushed even the older guard pharma companies in China to focus on innovative drugs because, frankly, they could no longer make money on generics."
5. The Patent Cliff
The other half of the story is what is happening to the buyers.
Langreth's description of the industry's problem. "Pharmaceutical companies are facing a so-called patent cliff, where they will lose patent protection over the next few years, and that would expose really important sources of revenue to generic competition."
The specific number behind Merck's urgency. Keytruda loses its US patent protection in 2028, and the host noted the drug produced more than $31 billion in sales last year.
That is what turns a search into a shopping spree. "So they have an urgency to kind of buy a lot of promising treatments with the hope that some of them will become top sellers that can plug the revenue gap."
The shift from internal to external innovation predates China. "And decades ago, it might be a little more common for pharma companies to rely on their own drug discovery, drug development teams. But over the past decades, we've also seen big companies kind of rely more on smaller companies to kind of fill their pipelines."
6. How the Deals Work
What actually changes hands is the intellectual property. "So that means they're getting the intellectual property, the seller would transfer the formula for the drug and all the related data to the buyer." The buyer then plans its own trials, manufactures in its own facilities, and if the drug is approved, sells it under its own brand name.
The host's familiar example is the COVID vaccine Pfizer sells, which came from a licensing and development partnership with Germany's BioNTech.
The payment structure is the second attraction. "Maybe only a small percentage of that money is paid up front, so it's much cheaper, and that makes it cost-effective for the big pharma companies, so they're very happy to pay."
Langreth's illustration of the arithmetic: "If you have an early-stage drug, we'll license it for $500 million and pay, but if it works for every type of cancer, sure, we're going to pay you $10 billion years down the road."
7. From 16% to Nearly Half
The share of global pharmaceutical licensing deals involving Chinese companies reached nearly half last year, against 16% in 2022 — the host's figures, and the clearest measure of how fast this moved.
Tong's two recent examples came weeks apart. "These deals are being done with Chinese companies rapid fire. So in May, Bristol-Myers signed a collaboration. It was worth as much as $15.2 billion with Hengrui Pharmaceuticals Co." Then: "Pfizer had its own deal with a different Chinese company worth as much as $10.5 billion to develop cancer drugs."
In the Pfizer deal the Chinese partner also runs the early work. "And in that deal, a Chinese company is also in charge of conducting initial trials. So there's increasingly, it's becoming like an early stage research arm of the U.S. drug industry."
8. Why China Moves Faster
The episode's explanation for the speed advantage is structural rather than regulatory laxity.
The inputs are patients and hospitals. "China can move drugs through early development faster because it has huge patient pools, and large research hospitals that can fast-track this work."
The process has been rebuilt to look familiar. China has streamlined its regulatory processes to mirror the Food and Drug Administration's rules.
It does not remove the American requirement. US companies still have to run their own trials involving US patients under FDA scrutiny; what China shortens is recruitment and the gathering of clinical data.
So the advantage applies even to a drug that is not special. A medicine similar to something being developed elsewhere can still reach the market first, because the data arrives sooner — "And for the drug industry, time is kind of money."
9. What Chinese Firms Get
The show put the 2026 count at at least 32 US-China licensing deals through July, on track to pass last year's record of 45, citing Bloomberg Intelligence.
The first thing is the market. "The U.S. is the biggest market for pharmaceuticals in the world," Tong said, and a drug with the potential to be sold there is a promising source of revenue.
The second is a capability they do not have. "The China biotech industry overall is still very young and they lack the capability, experience, sophistication, what have you, to enter the US or European markets by themselves."
The third is the one that is hardest to buy. "Deals with Western companies, particularly with large multinational companies, help give validation for Chinese biotech companies, because the deals essentially serve as an endorsement of the ability of these Chinese companies to innovate."
"And the American companies, they are paying real money to license their drugs. And that is for a lot of the Chinese companies, a very important badge of honor to show their investors, to show the world that their innovation has passed the rigorous vetting of some of the largest and most premier companies in the world."
How recent the change is, in one company. A decade ago, the parent company of Sichuan Kelun Biotech — the source of the Merck drug — was best known for manufacturing intravenous fluids.
10. The Hollowing-Out Worry
Langreth set out the objection as an industrial one. "The U.S. drug industry, the U.S. biotech industry, it's a world-leading industry, and this is an area we've historically had a competitive advantage."
The fear is about what the buyer teaches the seller. "My perception is basically a worry that the U.S. industry will eventually be disadvantaged if they give away too much of their expertise and Chinese companies learn from them and then in the future, don't have to license them to the U.S. companies."
"I think that's the basic worry, that there'll be Chinese drug giants, making most of the money from these things in the future and not doing the deals."
The host's version of the consequence for investors is a slow erosion of American dominance, with more of the profits from blockbuster drugs made in Chinese laboratories flowing to Chinese firms.
The supply-chain version of the worry is about trials, not factories. "As more and more high value portions of the drug development chain go to China, the worry is if there's any geopolitical conflict, we'll lose access to that crucial parts of the drug development chain, such as all important human clinical trials."
Langreth was careful to mark how hypothetical this still is. "A big question that people are raising is what this all means for U.S. biotech dominance and future access to medications if, and this is a big if because we're really not there yet, but if the world becomes reliant on China to come up with breakthrough medical innovation, what does it mean for countries that don't have the best relationship with China, for example?"
11. Washington Can't Agree
Bills in both chambers would put biotech in the same bucket as semiconductors. Over the summer, members of the Senate and the House introduced legislation subjecting biotech investments in China to greater government scrutiny, which would treat the sector as a strategic sensitive technology alongside chips and artificial intelligence.
The alarm is bipartisan and the remedy is not. "I talked to a senator. Senator Young said, hey, this is a threat that's glowing red." What to do about the deals, Langreth said, is a subject of debate even among China hawks.
The strongest counterargument is about patients. "And the counter argument against any kind of restrictions or review is that, if a company in China invents a cure for ovarian cancer, well, don't you want American patients to have access to it?"
The second counterargument is that restrictions would redirect rather than stop the trade. A Chinese company blocked from licensing to an American buyer can license to a European one instead. "So it's an intense debate right now, and no one's quite figured out what the right answer should be."
12. 4% Now, 35% by 2040
The share that makes the whole argument feel early. Drugs discovered by Chinese companies accounted for just 4% of FDA approvals over the past five years, the host said, but Morgan Stanley projects that could rise to 35% by 2040.
Tong's answer to whether origin should matter is that in principle it should not. "In an ideal world, the only common enemy is the disease. Doesn't matter where the drug comes from." If it cures cancer or cardiovascular disease or saves lives, it is a good drug, and that, she said, is what scientists and doctors are working toward.
She then conceded the world the deals are actually being done in. "That being said, we unfortunately live in an imperfect world. And unfortunately, this topic has become almost politically sensitive."
"But ultimately, if I am a patient, I think at the end of the day, I just want a drug that works."
Bonus Insights
The host framed the stakes for lawmakers as a single question: what happens if an industry that has driven biotech innovation and hundreds of billions in revenue becomes dependent on a geopolitical rival.
Exclusivity and patent expiry are not the same thing, and the show made the distinction explicitly — patents expire at different times in different countries, and marketing exclusivity can lapse years before the patent does.
Neither reporter treated the licensing trade as one-sided. Both described it as a deal each side currently wants, with the disagreement being about what it does to the two industries over a decade rather than about whether it makes sense today.
The bottom line from both reporters is that the trade is rational for everyone signing it and unresolved for everyone watching it: American firms get cheaper, faster drugs into a pipeline threatened by patent expiries, Chinese firms get money and validation, and nobody in Washington has worked out whether the result is a supply of new medicines or the training of a competitor.
Products, Companies & Tools Mentioned
Merck (Licensed SAC-TMT, its cornerstone experimental cancer drug, from a Chinese company, and loses US patent protection on Keytruda in 2028)
Keytruda (Merck's best-selling cancer treatment, more than $31 billion of sales last year, and the drug an Akeso medication outperformed in a Chinese trial)
Sichuan Kelun Biotech (Discovered SAC-TMT; its parent company was best known a decade ago for making intravenous fluids)
Akeso and Summit Therapeutics (The Chinese developer whose lung cancer drug beat Keytruda in a Chinese trial, and the American licensee whose China-only phase three trial was a featured ASCO presentation)
Bristol Myers Squibb and Hengrui Pharmaceuticals (A collaboration signed in May worth as much as $15.2 billion)
Pfizer and BioNTech (Pfizer's $10.5 billion cancer deal with a Chinese company, in which the Chinese partner runs the initial trials; and the German partnership behind the COVID vaccine Pfizer sells)
American Society of Clinical Oncology (The Chicago cancer conference, 20,000 to 30,000 attendees, where the Chinese pipeline dominated the conversation this year)
Food and Drug Administration (US companies still have to run their own trials on US patients under its scrutiny, and China has streamlined its own process to mirror its rules)
Books & Resources Mentioned
Bloomberg Intelligence licensing-deal data (The source for at least 32 US-China licensing deals through July 2026, against last year's record of 45)
Morgan Stanley's projection for Chinese-discovered drugs (4% of FDA approvals over the past five years, rising to 35% by 2040)
Watch the full episode:
If this was worth your time, send it to someone closer to the industry than you are.
Get the latest market chatter as it happens: