Chinese biotechs signed $135.7 billion of out-licensing deals with Western pharma in 2025, more than double the $51.9 billion figure from 2024. Roughly a third of big pharma's total licensing spend in the first half of the year involved assets sourced from China. GlaxoSmithKline, Novartis, and AstraZeneca were among the buyers. 

The driver is the cost of a Phase I in the West. US trials take longer to enroll, cost more per patient, and carry more operational overhead than the same protocol run in Shanghai or Suzhou. China recruits faster because its large public hospitals funnel treatment-naive patients into single-site studies. Its regulator, the NMPA, operates an implied license policy that automatically clears a trial if no objection is raised within 60 days. China joined the International Council for Harmonisation in 2017, which means the FDA now accepts Phase I data from Chinese sites for many programs. This is seen in drugs like Amgen’s Xgeva, which was approved in China based on a global Phase II study with no Chinese investigators, showing that this kind of clinical data carries international regulatory weight.

The cost delta sits at the Western and Chinese Phase I work. A biotech company that reaches proof-of-concept in China raises less money earlier, gives away less equity, and then raises the larger round once the data is in hand and the valuation has stepped up. Summit Therapeutics ran this playbook with ivonescimab, a PD-1/VEGF bispecific antibody in-licensed from Akeso for $500 million upfront. When the China-only Phase III study showed superiority over Keytruda in non-small cell lung cancer, Summit's market cap moved accordingly.

Management teams we speak with are increasingly framing their capital-ask differently as a result. Across recent conversations with management teams, we see a clear shift away from fully Western clinical programs toward more capital-efficient, China-inclusive strategies. Five years ago, a Series B pitch defended a $40 million raise on the basis of getting through IND-enabling work and a Phase I/IIa in Boston. More and more pitches are pointing toward a reduced raise, sometimes incorporating a Chinese clinical site, and a milestone-based path to either a higher-mark Series C or an out-licensing transaction to a US strategic. Investors are spending less time on the total capital envelope and more time on how many dollars of dilution it takes to get to the readout that moves valuation, which is why trial geography has become a line item in the financing plan.

Boards and investors are focused on a few practical controls: the quality of the Chinese CRO, whether the protocol is transferable to an FDA filing, and the IP structure behind the asset. Companies that manage those well are earning better terms, while those that treat China as a cost-cutting shortcut without local execution depth are often repriced later in the process, typically at the next financing. The risk most operators underestimate is political. Outbound investment screening, CFIUS-adjacent rules on biotech assets, and BIOSECURE-style legislation can reset the economics of a program without warning, particularly where they restrict trial execution or data transfer across jurisdictions. Teams that navigate this well usually have a second CRO relationship in the West and a pre-negotiated trial transfer protocol sitting in the drawer.

For investors sitting on large-cap pharma exposure, the out-licensing flood has a portfolio implication that often does not show up in the headlines. Stifel’s estimate that roughly 37% of big pharma’s in-licensed molecules in 2025 came from China underscores how the industry is replacing its pipeline ahead of the looming patent cliff. The $200 billion of revenue at risk between 2025 and 2030 is being partially refilled from Chinese laboratories at upfront payments that run 60 to 70 percent below Western comparables. 

Using China as a development partner compresses early-stage spend, enables FDA-ready datasets, and allows for more efficient sequencing of financing around value-inflection studies. Western-only Phase I programs are raising at a discount to peers executing the same asset through China, reflecting a clear shift in capital allocation. From our perspective, this gap is unlikely to close in the near term.

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