China biotech's ingenuity extends to dealmaking
XLV•China-based drugmakers have signed overseas licensing agreements worth $139.4 billion year-to-date, exceeding last year's full-year record of $138.8 billion. Average deal values and upfront payments have risen as Chinese companies negotiate more sophisticated terms.
1. Licensing deals surge
China-based drugmakers have struck agreements worth just over $139 billion this year to license overseas rights to drug candidates, including treatments for cancer and obesity. The agreements involve global pharmaceutical companies such as AstraZeneca, GSK and Novo Nordisk. The total had surpassed the $138.8 billion recorded for all of last year by October 8, while upfront payments reached $8 billion in the first three quarters, above the $7.2 billion total for 2025.
2. Companies seek better terms
The average agreement this year is worth nearly $700 million, more than 10 times the 2018 figure, although milestone payments contingent on clinical and commercial targets inflate the total. Average upfront payments have also increased. Jiangsu Hengrui licensed an asthma drug to Aiolos in 2023 in a deal worth about $25 million; months later, GSK acquired Aiolos for $1 billion upfront and up to $400 million in milestones.
3. New deal structures
Hengrui later licensed three GLP-1 weight-loss drugs to Hercules, a newly formed U.S. entity backed by Bain Capital, for nearly $6 billion in upfront and milestone payments and a 20% stake. Renamed Kailera Therapeutics, the company listed in New York in April and has a $1.4 billion market capitalization. Other Chinese companies are using similar structures, while Abogen Biosciences recently bundled options into a Novartis licensing deal valued at nearly $8 billion. Deal volumes could keep growing if governments are persuaded that the agreements do not pose a national security risk.
