Big Pharma Turns to China Biotech Amid Patent Cliff

Goldman Sachs highlights a growing trend of big pharma companies sourcing assets from China’s biotech sector. With $440 billion worth of drugs losing patents by 2032, Western pharmaceutical firms are turning to Chinese biotech for innovative solutions. Salveen Richter, Goldman Sachs’ lead US biotech analyst, notes that Chinese rivals could accelerate product cycles for Western drugmakers, potentially disrupting the market.

China’s five-year pharma plan, released on September 18, aims to capture at least 25% of global first-in-class drugs by 2030. These are medicines that introduce new mechanisms rather than improving existing ones. While overseas licensing deals for Chinese drugs have exceeded $120 billion in value this year, a 36% increase from the previous year, Richter cautions that most Chinese innovations still focus on enhancing existing drugs, which could lead to market saturation.

AstraZeneca recently invested $2 billion in Summit Therapeutics, a US-listed company that licenses its lead cancer drug from China’s Akeso. Richter suggests that Chinese drugmakers partnering with Western firms could emerge as the next multinational leaders. She also notes that Chinese developers are targeting the obesity market, which has driven Eli Lilly’s stock rally. However, she warns that acquirers may pay smaller premiums for biotechs outside China.

One key test for Chinese drugmakers will be whether their data holds up in Western patients. Richter points to Summit’s HARMONi-3 lung cancer trial against Merck’s Keytruda, with results expected in the second half of 2026. Historically, China has been a supplier of drug ingredients, but its industry is now shifting toward exporting new medicines. By 2030, the country aims to have 50 pharmaceutical companies generating over $1.5 billion in annual revenue.