Dialogue with Finnegan's Wang Ningling: As "Going Global" Enters Deeper Waters, How Can Chinese Pharma Companies Navigate the Patent "Reefs"?

 

In 2008, the U.S. law firm Finnegan, Henderson, Farabow, Garrett & Dunner, LLP established its first office in Shanghai, and attorney Wang Ningling was dispatched by the headquarters to set up the firm's Shanghai office.

 

At that time, China's pharmaceutical industry was still primarily generic-drug-focused, with innovative drug R&D in its infancy, and companies had relatively little exposure to going global or overseas patent strategy. An institution once approached her for overseas operations, bringing an English patent document that was only five pages long. Such a scenario would be almost unimaginable today.

 

In 2025, China's innovative drug overseas BD transactions exceeded $135.7 billion, hitting a record high and accounting for 49% of the global License-out total during the same period. A Huaxin Securities research report indicated that in the first half of 2026, the total value of Chinese innovative drug License-out deals reached $99.7 billion, already approaching 73% of last year's full-year total. Among the global pharmaceutical transaction TOP 10, Chinese companies secured 8 spots.

 

Going global has become an imperative for Chinese innovative pharma companies. But the farther they go, the rougher the waters. As Chinese companies deepen their participation in the global pharmaceutical value chain, patent disputes are becoming an unavoidable issue. Patents are the lifeblood of pharmaceutical companies, and there are significant differences between the Chinese and U.S. patent systems in terms of examination standards, claim drafting, and infringement determination. How to protect innovation achievements while navigating patent pitfalls in the process of going global directly determines whether Chinese pharma companies can truly establish themselves on the global stage.

 

Against this backdrop, Tongxieyi recently interviewed attorney Wang Ningling, Managing Partner of Finnegan's Shanghai Representative Office and President of the Licensing Executives Society International (LESI).

 

With over two decades of deep experience in the intellectual property field, she provides comprehensive legal services to multinational and Chinese domestic companies, including IP portfolio management, due diligence, licensing negotiations, litigation, and trade secret protection. She possesses profound insights into the differences between the Chinese and U.S. patent systems.

 

In the face of the wave of Chinese innovative drug outbound expansion and the legal "reefs" concealed within, Wang Ningling shared her systematic observations and practical advice on IP strategies for Chinese pharma companies going global.

 

 

1: The Awakening of Overseas Patent Awareness Among Chinese Pharma Companies

 

TONACEA: What changes have you observed in recent years in the awareness and strategies of Chinese pharmaceutical companies regarding overseas patent portfolios? Compared with major pharmaceutical markets such as the U.S. and Europe, what gaps still exist in Chinese companies' patent strategies?

 

Wang Ningling : After the establishment of Finnegan's Shanghai office in 2008, we engaged in in-depth cooperation with numerous Chinese pharmaceutical companies, especially innovative enterprises, and thus witnessed the rapid development of IP protection in this field.

 

To a large extent, the background of founders has played a key role in promoting IP protection awareness. Most founders and CEOs of Chinese innovative pharma companies have backgrounds in multinational pharmaceutical companies and possess a deep understanding of IP protection. Therefore, from the very inception of their companies, they have regarded IP as a lifeline. Once R&D yields results, their first choice is to file patent applications rather than rush to publish papers — this cognitive leap is remarkable.

 

In recent years, China has ascended to the forefront of many cutting-edge fields in biomedicine. We are pleased to see that companies are making tangible efforts in patent portfolio development, while also building up a pool of experienced IP professionals internally, many of whom have returned from Europe and the U.S.

 

However, compared with mature markets in Europe and the U.S., gaps still exist. This is not due to a lack of awareness, but rather limited by the funding constraints of small and medium-sized enterprises, which often tend toward a linear approach of "one application for one patent."

 

In contrast, large European and American companies focus on building extensive patent families from a single foundational application. Their perspective is not merely on obtaining a patent, but on assessing future competitive deterrence and the construction of their own rights framework. We hope that Chinese pharma companies can make more far-reaching strategic improvements in this regard going forward.

 

TONACEA: Given the different resource conditions of large pharma companies and small-to-medium biotechs, what are your core recommendations for each? How can SMEs make the most effective overseas patent portfolio and risk prevention decisions with limited budgets?

 

Wang Ningling: For small companies with limited funds, the core recommendation is to strategize upfront and spend the budget where it matters most. The most regrettable situation I have seen is when companies choose low-cost providers to save on drafting fees, only to find that their early application documents become "prior art" that later restricts their core pipeline claims — forcing them to spend several times more later with little recourse.

 

For startups, it is better to write one core patent deeply and thoroughly than to pursue quantity. I once had a client who planned to split one technology into five patent applications, but I advised them to consolidate it into one high-quality application. This not only saved on drafting costs, but with the right strategy, this single application could still give rise to multiple patent families during subsequent prosecution. What companies truly need is substantive protection scope, not paper counts.

 

For large pharma companies, the key is to coordinate across the differences in examination practices among various countries. China, the U.S., and Europe have different patent requirements — a one-size-fits-all "assembly line" approach does not work in biopharma. A multi-dimensional strategic design is needed to avoid higher response costs down the line.

 

TONACEA: There are differences between China and the U.S. in the specific requirements for patent application drafting. What are the common areas of "failure to adapt," and what key points should be noted?

 

Wang Ningling: The differences are mainly concentrated in two aspects. First, the scale of supporting data. China has far higher data requirements than the U.S. Generating data takes time and money, which involves strategic considerations. It's not simply about having more data; it's about striking a balance — at what point to file the application to secure an earlier priority date, and how to structure the presentation of data — all of which require comprehensive planning. However, each case is different, and U.S. data requirements have been gradually increasing in recent years, so generalizations are difficult.

 

Second, the hierarchical design of claims. In China, there is an additional fee for claims exceeding 10, so many clients strictly limit themselves to 10 claims to save costs. The problem is that the enumeration of claims is often insufficient.

 

Take small molecule drug patents as an example. Claims for such patents typically define an entire compound family through a core structure plus a number of substituents. But to control the number of claims, applicants may only list some of the substituents, leaving others unspecified. Although from a technical standpoint, these unspecified substituents might theoretically be covered within the broadest protection scope, during subsequent prosecution in China, adding new substituents to the claims is generally difficult to achieve.

 

In the U.S., it's different. When drafting, we do not treat the number of claims as the primary constraint; rather, we focus on adequately reflecting the scope and layers of protection, leaving sufficient room for claim amendments during prosecution. Specifically, within a single set of claims, we establish multiple progressive layers of protection through the selection of different substituents.

 

2: The Role Evolution from "Passive Defense" to "Active Rights Enforcement"

 

TONACEA: FTO (Freedom to Operate) analysis is seen as an important tool to avoid infringement risks before going global. What are the most common problems and misconceptions Chinese pharma companies have regarding FTO when expanding overseas?

 

Wang Ningling: The biggest misconception is at the cognitive level. Many company CEOs ask: "We spent a lot of money on R&D and have our own patents protecting our core technology — why do we still need to do FTO?"

 

Behind this question lies an insufficient understanding of the nature of patents. FTO is not about whether you have protected your own technology — it's about whether your technology infringes upon the rights of third parties.

 

In practice, FTO is a mandatory item in BD collaborations and investment due diligence. Investors and partners not only ask about your FTO status, but also evaluate the prospects of your pending patent applications. These two issues are particularly critical in biopharma because patents are the industry's lifeline.

 

And here it's important to clarify a common misunderstanding: having a patent does not mean you are free of FTO risk. This risk is especially prominent in large molecule biologics, where multinational companies have drafted very broad patent claims. After completing FTO analysis, many projects may uncover infringement risks. In such cases, what companies need is a response plan, not passive acceptance of the outcome.

 

Another category of issues comes from over-preparation. Some clients initially request a "global FTO," but I usually remind them that this is not practical. Not only is the cost prohibitive, but from a business standpoint, it may not even be necessary — because some countries are not markets the company plans to enter, and partners may not require such coverage. In current practice, the most concentrated markets remain the U.S., Europe, and China.

 

TONACEA: Chinese companies have now completed the role shift from "passive defendant" to "active rights enforcer." What does this transformation mean for the industry? Are there any landmark cases or turning points in the biopharma field?

 

Wang Ningling: This change is not yet particularly evident in biopharma, but it is already very visible in the communications field. Huawei, ZTE, and other companies are no longer defendants in global patent litigation — they have become plaintiffs. Chinese companies are global leaders in 5G and have accumulated a large number of standard-essential patents. This role transformation has naturally occurred alongside China's overall development in high-tech fields.

 

Returning to biopharma, Chinese companies' innovation capabilities are also rapidly improving, especially among startup biotechs. At this year's JPM conference, many Chinese companies made appearances and demonstrated strong performances. Chinese companies are signaling to the world as innovators and patent owners.

 

Of course, communications and biopharma are two completely different arenas. The communications sector develops faster, with a larger volume of patents and different strategies. In biopharma, I personally believe patents hold even greater value because they confer legal market exclusivity — this is the industry's lifeline. Only with strong patent protection can companies reap returns in the market and sustain future R&D investment; otherwise, survival in this industry is difficult.

 

3: A Guide to Avoiding Pitfalls in License-out Negotiations

 

TONACEA: With the explosive growth of License-out transactions, what "traps" do Chinese pharma companies as licensors need to watch out for in IP clause negotiations?

 

Wang Ningling: First, the scope of the license and ownership of improvements. When you own innovative technology and patents, the most fundamental question is to clearly define what you are granting and who owns what is developed in the future — this directly concerns the ownership of "improvements." For innovative pharma companies, the ability to continuously innovate is their lifeblood.

 

If you transfer away all rights through a single transaction, and the partner subsequently fails to advance the project or even breaches the agreement, the licensor will be left in a very passive position. Therefore, the scope of the license must be precisely defined — whether it covers one indication, two, or more. Balancing these issues is not only about risk management but also directly affects deal pricing, and price is always the core of negotiations.

 

Second, indemnification clauses are also an area of concentrated risk. Chinese pharma companies as licensors are typically required to commit to bearing full liability if the product or technology later infringes third-party rights.

 

Many Chinese companies, in order to push the transaction forward, make significant concessions on indemnification clauses, or even directly accept when the other party proposes such requirements, thereby incurring considerable potential risks.

 

It should be noted that FTO does not guarantee that no one will file a lawsuit. If a product performs well in the market, competitors are likely to challenge it. Therefore, when signing indemnification clauses, consideration should be given to adding certain limitations — such as the timing of indemnity activation, the scope and cap of liability — to more effectively control risks. In addition, dispute resolution clauses also need to be designed in advance; these details are all key areas to focus on in subsequent negotiations.

 

TONACEA: We have noticed that in recent years, risk hedging tools such as overseas IP insurance for biopharma companies have emerged in China. How do you view the practical value of these financial tools in IP protection for Chinese pharma companies going global? At what stage and under what circumstances should companies consider introducing such tools?

 

Wang Ningling: The value depends on the professionalism of the underwriter. If the underwriter has a deep understanding of IP litigation and the policy terms can effectively cover huge legal fees and compensation risks, then it is a good buffer mechanism. But if the product is designed purely based on traditional property insurance logic, it often fails to provide effective support when litigation is actually triggered.

 

My advice is that if conditions permit and cash flow allows, companies should consider setting aside a dedicated "litigation reserve fund" — which is more reliable than relying on non-professional insurance policies. If choosing to purchase insurance, be sure to have professional counsel review the policy terms to clearly define trigger conditions and coverage scope.

 

TONACEA: For Chinese innovative drugs, going global is a long-term trend, and companies therefore need to be prepared at all times for patent litigation risks. What kind of regular patent risk warning mechanism should companies establish?

 

Wang Ningling: The core is to establish FTO monitoring synchronized with R&D milestones. Whenever a new drug candidate emerges or a new patent application is filed, infringement risk assessment should be initiated simultaneously, and the results fed back to the business and R&D teams. Companies should manage the entire process in a systematic, milestone-based manner, rather than launching ad hoc efforts only when problems arise.

 

Ultimately, the core value of FTO is to help management make business decisions. An unfavorable FTO result does not mean the project must be terminated — it simply means you now know the risks. How to explain these risks to investors, how to respond to due diligence questions from partners in negotiations, and how to develop response strategies — this is the true significance of FTO.

 

TONACEA: Looking ahead three to five years, what do you see as the biggest challenge for Chinese innovative pharma companies in global IP competition?

 

Wang Ningling: From an IP competition perspective, the first thing I hope to see is more Chinese companies increasing their investment in IP. The value-added effect of IP is very high — once innovation achieves market success, its value is self-evident. This is the fundamental reason why IP protection is held in such high regard in biopharma.

 

But currently, many Chinese companies still have insufficient initial budgets for IP, whether due to funding constraints or lack of awareness. Everyone talks about protecting innovation, but the actual investment at the budgetary level remains limited. However, I also understand that the biopharma field is highly uncertain. If a drug ultimately fails to gain approval, the upfront investment in patent portfolio development may indeed be wasted.

 

But it is precisely this uncertainty that requires decision-makers to strike a balance. For innovation to succeed, corresponding IP protection must keep pace — both are indispensable. My advice has always been: do the best possible strong patent protection. Companies have already invested too much time and effort in inventing. If a technology or product achieves great market success in the future but is constrained by inadequate IP protection, that would be a great pity.

 

— Closing Thoughts —

 

As Chinese innovative drugs move from the periphery to the center, and from being followers to participants in setting global rules, the differences between the Chinese and U.S. patent systems, the hidden reefs of overseas litigation, and the pitfalls of transaction terms remain long-term tests for domestic pharma companies.

 

Only by continuing to increase IP investment and establishing a comprehensive risk management system covering R&D, commercialization, and out-licensing can Chinese innovative drugs truly establish a foothold on the global stage and realize the globalized value of innovation.

 

Chinese pharma companies have never lacked the courage to innovate. What is most urgently needed now is a "legal armor" for innovation achievements.

 

In the face of the rough seas of deep-water globalization, the era of going it alone is over. Building a global industrial ecosystem has become an imperative.