Big Take Sep 20, 2026 17m 6m saved
With Robert Langreth, Senior Reporter at Bloomberg · Amber Tong, Asia biopharma reporter at Bloomberg
Merck is running 17 late-stage trials on a cancer drug it did not discover. A Chinese company did, the drug is already approved in China, and Merck licensed it.
For decades the biggest medicines came out of American and European labs, and Chinese firms made the generics and shipped the raw chemicals that went into everyone else's products. Robert Langreth says that has changed far enough that somewhere between a third and half of the world's experimental drugs now originate in China.
"Think of some of the big U.S. Drug companies. They're sort of like Netflix, a kind of insatiable need for new content."
Robert Langreth, senior reporter at Bloomberg, on The Big Take Asia, has covered biotech and health care for 30 years; Amber Tong covers Asia's biopharma industry for Bloomberg and reports on the deals from the Chinese side of the table.
The full episode is covered here so you can skip it.
Here are the 8 insights that matter.
Key Takeaways
Merck's next cornerstone cancer drug came from a Chinese licensor and is already in 17 late-stage trials
It is approved in China, and the Chinese trial data is part of why Merck wanted it
Between a third and half of the world's experimental drug pipeline now comes from China, depending on how you count
One drug executive's summary of why: "you can go twice as fast at half the cost in China"
China rewrote its drug rules in 2015 and then squeezed generic margins through the national insurance system, which pushed even the old guard into innovation
The forcing function on the American side is the patent cliff — Keytruda loses US protection in 2028
Licensing is cheap at the front: $500M to option an early-stage drug, $10B if it works everywhere
Langreth's framing is that China is becoming the early-stage research arm of the US drug industry
The worry in Washington is erosion, not theft: Chinese firms learn the trade and eventually stop needing the deals
1. Merck's Borrowed Drug
Every summer the cancer field meets in Chicago at ASCO, and this year's most-discussed drug belonged to Merck — but only by contract.
ASCO is where new cancer data gets its hearing
This is like the world's biggest cancer conference with 20,000 or 30,000 people in attendance.
Robert Langreth
Merck already sells the world's best-selling cancer treatment. The drug it is now building around is called SAC-TMT, and Langreth said the company has put it at the center of its development program.
Merck has 17 late-stage trials running on one licensed molecule
That drug has become one of the cornerstone drugs it's testing. It's testing in 17 late-stage trials in lung cancer and breast cancer and other tumors.
Robert Langreth
Merck did not discover it. Sichuan Kelun-Biotech did, and the drug is already approved in China — which is the part that made it attractive.
The Chinese data came with the molecule
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.
Robert Langreth
2. Up The Value Chain
Tong's framing for why American drug makers keep shopping in China is demand-side rather than supply-side.
Big pharma needs a constant supply of new products
Think of some of the big U.S. Drug companies. They're sort of like Netflix, a kind of insatiable need for new content. And they found in recent years that China is a great place to go to, to buy, early stage drugs at a lower price. And a lot quicker, too.
Amber Tong
The precedent everyone in the industry cites is Akeso, a Chinese biotech whose lung cancer drug beat Merck's own Keytruda in a Chinese trial in 2024. This year the same molecule, licensed to Summit Therapeutics, reached the main stage in Chicago.
A China-only trial became a featured presentation at the biggest cancer meeting
For one of the first times, a drug exclusively tested in China in a phase three trial was one of the featured presentations there. It was a drug from Summit Therapeutics that was licensed from a company in China called Akeso.
Robert Langreth
Langreth walked through where Chinese pharma used to sit: generic copies and active pharmaceutical ingredients, the raw chemicals that go into a finished pill.
A third to half of the global pipeline now comes from China
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. So there's just a lot of innovation going on. There's a lot to choose from.
Robert Langreth
3. The 2015 Reset
Tong dated the turn to a single regulatory year.
Beijing rebuilt the approval system around international standards
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.
Amber Tong
The second half of the policy was financial. Beijing made generics less profitable through the national insurance system, so the incumbents had to move.
The incentive was pointed at innovation and away from copies
The authorities reformed the national insurance system to incentivize innovative drugs and really squeeze the profit margin of generics. 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.
Amber Tong
4. The Patent Cliff
The other half of the story is a revenue problem inside the buyers.
Patent expiries are about to expose the industry's biggest revenue lines
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.
Robert Langreth
The show's reporting put a number on Merck's own exposure: Keytruda loses its US patent protection in 2028, and the drug produced more than $31 billion of sales last year.
The buying is about plugging a hole that is already dated
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.
Robert Langreth
Langreth described how a licensing deal actually works — the seller hands over the formula and the data, and the buyer runs its own trials, manufactures the drug and eventually sells it under its own brand. The reason the buyers like it is the payment schedule.
The money is back-loaded, which is what makes it cheap to try
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.
Robert Langreth
5. The Deal Wave
The show's own reporting carried the deal count. Nearly half of global pharmaceutical licensing deals last year involved Chinese companies, against 16% in 2022. In May, Bristol-Myers signed a collaboration with Hengrui Pharmaceuticals worth as much as $15.2 billion; weeks later Pfizer signed a cancer deal with a different Chinese company worth as much as $10.5 billion, with the Chinese side running the initial trials. Bloomberg Intelligence data put US-China licensing deals at 32 through July this year, on track to pass last year's record of 45.
Langreth's own summary of the arrangement
So there's increasingly, it's becoming like an early stage research arm of the U.S. Drug industry. That's one way that you could think of it.
Robert Langreth
6. Twice As Fast, Half Cost
The reason the deals keep coming is time. China has large patient pools and big research hospitals that can recruit quickly, and a regulatory process built to mirror the FDA's. American companies still have to run their own US trials under FDA scrutiny, but the early data arrives sooner.
Speed to data is speed to market, and that is the whole argument
That means even drugs that might be similar to what's being developed elsewhere, you can get the clinical data faster, and that means you can potentially bring it to market faster. And for the drug industry, time is kind of money.
Robert Langreth
Tong relayed the blunt version she had heard from a drug company executive.
The industry's own shorthand for the trade
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.
Amber Tong
7. What China Gets Back
Tong's answer to why the Chinese side signs is partly commercial and partly reputational.
They cannot reach the biggest market on their own yet
The U.S. Is the biggest market for pharmaceuticals in the world. And if these Chinese companies, their drugs have the potential to be sold in the US, that can become a really important and promising source of revenue. 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.
Amber Tong
The other half is that a deal is a credential. Kelun-Biotech's parent company was best known a decade ago for making IV fluids.
A Western licensing check is an endorsement they can show investors
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.
Amber Tong
The money itself is the proof, and it is shown to investors
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.
Amber Tong
8. Training Your Rival
Langreth put the objection in terms of competitive position rather than security.
The fear is that the expertise transfers along with the molecule
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. They can just sell them themselves.
Robert Langreth
The end state is Chinese drug giants that no longer need a partner
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. And then because we've trained them for U.S. Drug makers, it could mean a slow erosion of their dominance.
Robert Langreth
There is a supply-chain version of the same worry, and it is about trials rather than factories.
A geopolitical break would cut off the clinical work itself
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. And the early stages of those are increasingly being done in China in some of these deals.
Robert Langreth
Members of both the Senate and the House introduced bills over the summer that would put biotech investment in China under the same government scrutiny as semiconductors and AI. Langreth said the diagnosis is not the hard part.
Even the China hawks do not agree on the remedy
I talked to a senator. Senator Young said, hey, this is a threat that's glowing red. But like what to do about all these deals, even on the China hawks, that's a subject of debate.
Robert Langreth
Tong gave the argument against restrictions, which is that the seller has somewhere else to go.
Block the US deals and the drugs go to Europe instead
So it's a tricky proposition because if you just like restrict or put some kind of restrictions on deals in U.S. Companies and Chinese companies, well, the Chinese companies might just go to our European rivals and license it to like, a company in Europe. So it's an intense debate right now, and no one's quite figured out what the right answer should be.
Amber Tong
Bonus Insights
The scale question is still small, and the projection is not
Drugs discovered by Chinese companies were 4% of FDA approvals over the past five years, according to the show's reporting, which also cited a Morgan Stanley projection that the figure reaches 35% by 2040. The reporters' own framing was that the dependence is a future problem rather than a present one.
In-house discovery was already losing ground before China
Langreth said big pharma has been shifting from internal drug discovery toward external innovation for decades, and licensing is the most common mechanical form of it. The COVID vaccine Pfizer sells came out of a licensing and development partnership with Germany's BioNTech.
Tong's own answer to the political question
In an ideal world, the only common enemy is the disease. Doesn't matter where the drug comes from. If it cures cancer, if it cures cardiovascular disease, if it saves people's lives, it's a good drug.
Amber Tong
The bottom line from both reporters is that American drug makers are buying Chinese science because a patent cliff gives them no time to discover their own, and the cost of that trade is not a stolen molecule but a slow transfer of the skills that make molecules.
Products, Companies & Tools Mentioned
Merck (The buyer at the center of the story: licensed SAC-TMT from a Chinese company and now has it in 17 late-stage trials)
Sichuan Kelun-Biotech (Discovered SAC-TMT and licensed it to Merck; its parent was best known a decade ago for making IV fluids)
Keytruda (Merck's best-selling cancer drug, more than $31 billion of sales last year, losing US patent protection in 2028)
Akeso and Summit Therapeutics (Akeso's lung cancer drug beat Keytruda in a Chinese trial in 2024; Summit licensed it and presented the China-only phase three data at ASCO)
Hengrui Pharmaceuticals and Bristol Myers Squibb (Signed a collaboration in May worth as much as $15.2 billion, one of the largest of the China licensing wave)
Pfizer and BioNTech (Pfizer signed a $10.5 billion cancer deal with a Chinese company weeks after the Bristol-Myers one; its COVID vaccine came from a licensing partnership with BioNTech)
ASCO (The annual cancer meeting where the Chinese-origin drugs were the topic of the year)
The Food and Drug Administration (US companies still have to run their own trials in US patients under its scrutiny, whatever the Chinese data shows)
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