In early June, a thought-provoking scene emerged in the US Congress.

Michigan lawmakers from both parties have jointly proposed to formally include biotechnology within the scope of the Comprehensive Foreign Investment National Security Act (COINS Act). If this legislation, called the National Security Investment in Biotechnology Act (BINSA), is approved, authorization agreements and even equity investments between US pharmaceutical companies and their Chinese counterparts will be reviewed by the Treasury and Defense Departments.

What hurts American politicians is the wave after wave of cross-border transactions. In May alone, BMS signed a joint development agreement with Hengrui Pharmaceutical with a potential value of up to $15.2 billion, and Pfizer also reached a total of over $10.5 billion in cancer drug cooperation with Sinovac Biotech.

The combination of two transactions has made hawks in the United States feel uneasy about their scale.

BINSA's proposal lawmakers believe that US pharmaceutical companies are entering into "dangerous agreements" with Chinese biotech companies, threatening the future of the US pharmaceutical industry.

In fact, this is not the first time the United States has made a stern statement on the issue of blocking Chinese new drugs, and the recent cooperation between Chinese and American pharmaceutical companies is not the first time involving huge amounts of funds. At the end of 2023, BMS announced a $8.4 billion agreement with Baili Tianheng, with the core of the transaction being an EGFR/HER3 dual antibody ADC BL-B01D1. Two and a half years later, on June 22, 2026, this world first drug was approved in China.

From the current situation, the probability of BMS getting it right is high. This giant holds exclusive development and commercialization rights for BL-B01D1 in the United States, and the FDA has officially granted the drug breakthrough therapy qualification, with related market applications expected to be quickly put on the agenda.

The pharmaceutical industry seems to have become the next battlefield in the wave of decoupling between China and the United States. However, Bloomberg's analysis suggests that blocking Chinese new drugs could not only cost American patients their health, but also potentially hand over future markets to competitors in Europe and Japan.
The current political game surrounding biotechnology deserves careful examination.

01、A map that is being rewritten

To some extent, the global pharmaceutical industry is undergoing a transformation.

In 2020, American and European pharmaceutical companies paid less than $5 billion in licensing fees to their Chinese counterparts; By 2025, this number will climb to approximately 136 billion US dollars, an increase of over 27 times in five years. This is a microcosm of the collective shift of the entire industry.

Behind this movement is a real structural leap in the Chinese pharmaceutical industry.

Over the past decade, China has undergone systematic reforms to its drug regulatory system, gradually aligning domestic standards with international standards such as the FDA and significantly speeding up the approval process.

Secondly, talent is also returning. A large number of Chinese scientists who have received training in top Western laboratories have chosen to return to China to start their own businesses, bringing back cutting-edge research and development concepts and methodologies.

At the same time, China's large population base has led to a much faster recruitment rate for clinical trials than in the West. According to the analysis of consulting firm McKinsey, the cycle of advancing clinical trials in China is 50% to 70% faster than in the West, and the cost is much lower.

These structural advantages have given rise to a remarkable scale of research and development.

According to a study published in the Journal of the American Medical Association by researchers from Georgetown University, there were approximately 800 early-stage drug development projects in China in 2015, and by 2024, the number had exceeded 6000, an increase of over 600%. During the same period, the number of such projects in the United States increased from about 5000 to 7000, but its global share decreased from half to one-third. More notably, in the second quarter of 2025, the number of early-stage drug development projects in China surpassed that of the United States for the first time.

In addition to changes in quantity, the accumulation of quality cannot be ignored.

According to Citeline, a pharmaceutical intelligence agency, by 2025, China will be the world's first to launch new drugs that treat diseases with novel mechanisms of action. Analysts from Bernstein Research, a subsidiary of Credit Suisse, have also noticed that the gap between the proportion of similar pioneering drugs in China's drug development pipeline and developed markets is continuously narrowing.

 

 

This change led Bloomberg to bluntly state in a commentary in April that the old global pharmaceutical order, which was dominated by the West in the past, has quietly disintegrated.

The current landscape is an industry with the United States and China as the two poles - this restructuring has profound implications for patients and policy makers around the world. The wall that Washington is considering to block is precisely the innovative door that has begun to reshape the global health landscape.

 

02、Behind panic buying

The key driving factor for a large number of buyers, including MNCs from the United States, to rush to China to seek authorization is the patent cliff they are currently facing.

 

 

In the coming years, several of the world's best-selling drugs will have their patents expire one after another. Once generic drugs flood in, the revenue of original pharmaceutical companies will face a cliff like decline. This patent cliff drives major pharmaceutical companies to anxiously search for potential new drug pipelines worldwide. In this context, obtaining authorization for competitive drugs at a lower cost provides a shortcut to filling the pipeline gap.

That's right, even though BMS has partnerships with Hengrui Pharmaceutical, Pfizer, and Sinovac Biotech worth over billions of dollars, they are still in a certain undervalued range.
The price advantage of innovative assets from China is quite significant. Compared to similar drugs worldwide, prepayments for authorized transactions from China are usually about 60% to 70% lower, and the total transaction size is about 40% to 50% lower.

This price difference, coupled with the increasingly improving research and development quality of Chinese pharmaceutical companies, has made "buying drugs in China" the most reasonable financial choice for many multinational pharmaceutical companies.

The mode of cooperation between multinational pharmaceutical companies and China is also evolving.

The most common arrangement is that Chinese pharmaceutical companies are responsible for early detection and initial clinical trials, while multinational pharmaceutical companies purchase authorizations outside of Greater China and undertake expensive global clinical validation, regulatory approval, and market promotion in the later stages.

In recent years, there have been deeper forms of cooperation in the industry, such as the Co Co and NewCo models. The former involves joint development, while the latter involves investors setting up a separate company in the United States specifically to develop assets authorized from China, thereby avoiding direct policy risks. However, this has also become a focus of attention for legislators.
The heat of this rush to buy can be seen from specific cases.

In October last year, Takeda Pharmaceuticals and Sinovac Biotech signed a cooperation agreement worth over $11 billion to jointly promote the development of multiple late stage cancer drug candidates. In this year's cooperation with Pfizer, both parties have set up rights such as sharing development costs and profits, in partnership with Xinda Biotechnology.

In the first two months of 2026 alone, authorization agreements signed between Chinese pharmaceutical companies and multinational corporations exceeded $50 billion, setting a record for the highest single quarter in five years.

 

 

Behind this competition is the true judgment of the market - the drugs provided by Chinese companies are not low-quality, insignificant alternatives, but drugs with competitive and even leading potential in multiple key therapeutic fields.

The logic of the pharmaceutical industry has always been to follow the best science. At this year's ASCO Annual Meeting, the PD-1/VEGF dual antibody ivonescimab developed by Kangfang Biotech presented clinical data from China for the first time in the most important plenary session of the conference, symbolizing that Chinese drug research achievements are entering the world's top scientific stage.

 

03、Who will get hurt when a wall is built?

The US government is attempting to block Chinese new drugs. Once BINSA is approved, the impact will go far beyond just a few transactions being suspended.

From the perspective of American patients, the most direct cost is that the opportunity to obtain new therapies may be delayed or even disappear. If a new drug can effectively prolong life or improve the treatment effect of a certain disease, simply because its place of origin is China, it is increasingly difficult to justify it ethically.

Bloomberg's article criticizes that this approach will prevent patients from accessing the best medical care - a concern that is becoming increasingly difficult to ignore as China becomes the world's most important source of new drugs after the United States.

The blow to Chinese pharmaceutical companies must also be taken seriously.

As the world's largest single pharmaceutical market, the United States has long been the main source of authorization fee income for China. According to Bernstein Research's estimates, once the United States fully decouples, Chinese pharmaceutical companies' licensing revenue from new licensing transactions may decline by 50% to 80%.

This income is not only profit, but also a source of capital to support future research and development. Losing this funding flow may directly compress the ability of Chinese pharmaceutical companies to continue investing in early research and development, forming a negative cycle on the research and development side.

However, in this game of innovation decoupling, China may not necessarily suffer the most.

Bloomberg pointed out that when American pharmaceutical companies are forced to withdraw from the authorized market in China, these opportunities will not disappear out of thin air, but will flow to other global players. Japanese companies such as Takeda Pharmaceuticals, Astellas, and Eisai, as well as European companies such as Roche and AstraZeneca, will receive more favorable conditions to promote the development of these drugs in markets outside the United States and seek FDA approval to enter the US market.

This path is not without precedent, as Takeda has operated in a similar way before. At present, Takeda has established a strong enough influence in the United States and is one of the largest life science employers in Massachusetts.

That is to say, the restrictions imposed by the United States ultimately created a situation where American pharmaceutical companies lost the opportunity to obtain the best drugs at the best prices, while European and Japanese competitors were able to benefit from it and ultimately profited from FDA approval in the US market. American patients pay the price of waiting, while American companies pay the price of competition, with strategic benefits approaching zero.

In addition, there is another parallel legislative track in Congress that is more radical.

The wording of the report in the House of Representatives' 2027 FDA Appropriations Act even proposes to prohibit the FDA from accepting clinical trial data from China to support new drug research applications. When this proposal is implemented, the impact is likely to be even broader - not only affecting bilateral authorization transactions, but even global pharmaceutical companies that have already conducted multi center trials simultaneously in China and the United States will face fundamental challenges in data compliance.

 

04、The two ends of industrial policy

This geopolitical game around the pharmaceutical industry reflects a more macro industrial policy competition.

The rise of China's pharmaceutical industry is by no means accidental.

As early as 2015, "Made in China 2025" included new chemical drugs, monoclonal antibodies ADC、 Protein and peptide drugs, vaccines, and personalized medicine are listed as key breakthrough directions.

Afterwards, a series of supporting reforms continued to be implemented, including accelerating the approval process, recognizing multi regional clinical trial data, implementing a market authorization holder system, decoupling research and development from production, and allowing innovative startups to outsource their manufacturing processes to CROs and CDMOs.
According to OECD data, China surpassed the United States in total R&D expenditure as early as two years ago.

 

On the other hand, in the United States, policy is moving in a different direction.

 

The Trump administration continues to cut federal research funding. Major scientific funding agencies such as NIH are facing significant reduction pressure, which not only affects basic research but also causes the loss of top scientists. And it is these fundamental studies that provide the seeds for future business breakthroughs.

The contrast between accelerating construction and self consumption is particularly clear in the pharmaceutical industry.

It is worth noting that there is a profound tension between the collaborative logic of the global pharmaceutical industry and the confrontational logic of geopolitics. The report by "Wired China" quotes researchers as pointing out that the close cooperation between the Chinese and American pharmaceutical industries actually goes against the trend of decoupling from other technology industries: scientists and investors will chase after good science, and now a large number of good science comes from China.

Bloomberg's editorial believes that what the United States should do more is to effectively strengthen its long-term research and development investment.

Of course, legislators' concerns are not without supporters. But the problem is that when the power of policy tools far exceeds the actual risks, and when a one size fits all wall blocks drugs that could have brought benefits to patients, the cost is no longer just economic.

The ultimate product of the pharmaceutical industry is not a commodity, but a treatment plan and an extended lifespan. In this dimension, any industrial policy must face a fundamental ethical question: who will pay for the waiting of patients?

From the current legislative process, BINSA is still in the proposal stage, and the US Treasury Department has not officially initiated the evaluation process to include biotechnology in the COINS Act control. The implementation of formal regulations is expected to take place as early as March 2027. The policy direction is still unclear, and pharmaceutical authorization between China and the United States is rapidly advancing during the policy vacuum period. Industry participants are racing against time to lock in existing transactions.

There won't be a simple winner in this game.

But what can be certain is that if the United States really builds a decoupling wall in the pharmaceutical industry, it may not only be Chinese drugs that will ultimately stand outside the wall - there will also be lost deals for American companies, delayed treatment for American patients, and a new round of global pharmaceutical landscape that could have been led by the United States but handed over to Japan and Europe.
 

Reference:

1. Baili Tianheng, the first year of dual antibody ADC activation; Same freehand brushwork
2 A Biotech Wall Around China Would Come at a Cost； Bloomberg
3 China's Pharma Dominance Is Just Beginning； Bloomberg
4 House bill aims to crack down on China biotech deals； BioPharma Dive
5 A divisive bill seeks to limit biotech investment in China； Fierce Biotech
6 As calls for COINS Act expansion grow, will new rules sweep up China biotech licensing?； Fierce Biotech
7 China Biotech Deals Are in the U.S. Congress' Crosshairs: Here's What Life Sciences Companies Need to Know； Freshfield
8 US Lawmakers Move to Screen China Biotech Deals； PharmaSource
9 US Treasury assesses options to screen investments in China biotech； Crypto Briefing10、9. Pharma Bets Big on Chinese Drugmakers； The Wire China
11 China biotechs 'reshaping' US biopharma as outlicensing deals rise 11%: Jefferies report； Fierce Biotech
12 Takeda stakes more than $11B on cancer drugs from China； BioPharma Dive