China's biotech licensing boom will reach record levels in 2026, as pipelines swell

As global drugmakers cut costs before patents expire, they are increasing their search for China's experimental medicines. Industry analysts predict that licensing deals this year will reach a new record.

According to Pharmcube, the value of such deals signed by companies within Greater China - including Hong Kong, Macau, and Taiwan – rose tenfold from 2021, to an unprecedented $137.7 Billion.

Mainland China is at the forefront of this search. Global drugmakers such as Novartis Merck and GSK signed major agreements in China last year.

Tom Barsha of BofA Securities' Asia Pacific M&A, who advised on these deals, said that the total value of licensing-out transactions is expected to double in the next 18-24 hours.

The global pharmaceutical industry is focusing on identifying the next generation of innovative drugs in China and considering various transaction structures.

Tony Ren, the?head? of Asia healthcare research for Macquarie Capital predicts a cautious growth of 40%-50% this year. He also expects that assets from a drug class considered to be a backbone of oncological treatment will attract?interest from international drugmakers.

A licensing agreement gives a company rights to develop, produce or commercialize a pharmaceutical product or technology of another company in exchange for monetary payments or milestones. This reduces development risks.

SURGING DELIVER SIZES

Pharmcube data shows that the average deal size in this year is $1.3 billion, which is 76% higher than the 2025 level and six times greater than the 2021 average.

This?jump? is largely due to AstraZeneca’s experimental weight loss drug deal worth up $18.5 billion with CSPC Pharmaceutical Group, and AbbVie’s licensing deal of up to $5.6 Billion with RemeGen last month for a?experimental tumour treatment.

The total value of the deal is typically a combination upfront fees, milestones and royalties.

Already in 2026, there have been 38 deals announced. In the past year, 186 out-licensing deals were announced.

This week, Madrigal Pharmaceuticals of the United States announced a deal with Suzhou Ribo Life Science to develop experimental programmes for liver disease.

Chinese biotech companies will receive an upfront payment worth $60 million. Total payments could reach up to $4.4 Billion if certain milestones have been met.

Ribo's chief financial officer said that during its Hong Kong listing, in January, the company would be conducting various negotiations with multinational pharmaceutical firms and Chinese companies on drug development as part of its "growth strategy".

Strong in molecular research

Macquarie Capital analysts say that while China is behind in biology, it has a strong chemistry sector. Multinational firms can license promising molecules to China at a lower cost than internal R&D.

In a recent report, they said that "Many multinationals" (MNCs) consider China to be an integral part of global R&D.

This is particularly true for firms that are cutting costs while facing patent cliffs.

Vision Lifesciences' 2026 Biotech Licensing Outlook, published in December, stated that China is the leader in specialised molecule types, accounting for almost 90% of global antibody-drug conjugate licensing activity.

ADCs are a group of cancer drugs that work like guided missiles, delivering chemotherapy directly to tumor cells and limiting the exposure of healthy tissue.

Goldman Sachs analysts, in a note published recently, named Hansoh Pharmaceutical Group as one of the companies that expect solid earnings growth based on?out-licensed program based upon their pipelines of drugs.

A LARGER UP-FRONT FEE

The upfront fees that global pharma has to pay for drug development rights has also increased as deals have grown larger.

Ren explained that this may be partly because some of these deals are for more advanced drug candidates, but Chinese companies also ask for higher valuations as the demand for and recognition of their assets have improved.

Pharmcube data revealed that the average upfront fee was $77,7 million, up from $38,8 million in 2025, and three times higher than in 2021.

Ren stated that "as prices (of something) increase, the demand for it usually decreases."

Price is not always the first thing that comes to mind when negotiating pharma deals.

(source: Reuters)