As Chinese companies push beyond “me-too” drugs and the country lays out a new five-year plan targeting a $522 billion–strong biotech industry by 2030, experts say more predictable funding and regulation could help the U.S. maintain its edge.
Emerging from stealth earlier this month, Boston-based Solstice Oncology highlighted its origins in a trans-Pacific exchange that’s grown commonplace. The startup licensed its lead asset, colon cancer candidate porustobart, from Chinese biotech Harbour BioMed in February in a deal worth more than $100 million upfront and potentially upwards of $1 billion. Such deals are helping to fuel the rapid growth of Chinese biotech, which is also the beneficiary of decades of focused support by its government.
There’s ample reason to believe that trend will continue: Last week, the Chinese government released a new five-year plan that lays out a goal of $521.8 billion in combined revenue for its domestic biotech industry by 2030. It also aims to originate at least 25% of first-in-class drugs on the global market by that date.
Meanwhile, out-licensing from Chinese biotechs has surged since the start of the COVID-19 pandemic, from 35 such deals worth a total of $989 million in 2019 to 186 deals worth $137.7 billion in 2025, according to data from PharmCube. Evaluate has predicted that Chinese assets will make up more than two-thirds of total deal value this year, up from less than 5% five years ago.
“The number of licensing deals have radically accelerated, wherein large pharmaceutical companies are increasingly turning their business development to China,” Jeremy Levin, executive chairman of Ovid Therapeutics, told BioSpace. “The shift of pharmaceutical licensing activity toward China-originated assets is now an established fact, and two years ago it was far less pronounced.”
Such licensing deals may be a boon to companies like Solstice Oncology, but the rise of Chinese biotech has prompted considerable handwringing about U.S. competitiveness.
“We have to start thinking about what it means if we so erode our innovation base here in the U.S. that we are dependent on a potential adversary for life-sustaining medications,” Caitlin Frazer, executive director of the National Security Commission on Emerging Biotechnology (NSCEB), told BioSpace last month.
How China gained momentum
The Chinese government’s prioritization of biotech traces back to a 2006 mention of related terms in a medium- and long-term planning document, said Alexander Brown, a senior analyst at the Mercator Institute for China Studies (MERICS). The sector has continued to crop up in government planning documents in the two decades since. While experts say it’s difficult to quantify how much the Chinese government puts into its domestic biotech sector, Brown and a MERICS co-author estimated the investment was at least 20 billion renminbi (about $3 billion) in 2023.
One difficulty in quantifying the government’s support is that it goes beyond direct investment in startups, Cyriac Roeding, CEO of the cancer therapeutics firm Earli, said in an interview. “The Chinese government does a lot of things in many different ways, not just direct investments, but also purchases, like getting into the game as a customer, or cheaper supplies,” he explained.
Levin said the Chinese government’s biotech strategy has taken decades to execute. First, it established the ability to manufacture medications. Next came domestic contract research organizations (CROs). “That gave them the ability to make a molecule and then to test it,” Levin said. “As they did that, they studied very carefully how we approved drugs. And so they established and continually refined their drug approval process in China.”
In step three, China launched clinical trials “in a way that complemented their testing of drugs in the CRO-like environment,” Levin said. “They established a highway which was high speed for the development of so-called lookalikes or bio-betters,” medications based on the mechanism of action of existing drugs developed elsewhere. In step four, the government launched programs aimed at attracting researchers who’d gained valuable training and experience abroad to return and put their skills to work domestically. These programs cover a range of science and engineering fields in addition to biotech.
Some commenters have used the specter of Chinese competition to argue for more streamlined regulation of clinical trials in the U.S. On the flip side of the same coin, two lawmakers called for increased FDA oversight of Chinese study sites and scrutiny of data collected there after several clinical trial deaths in the country. But none of the experts who spoke with BioSpace cited a superior regulatory process as a factor in the rise of the Chinese biotech industry.
“Yes, [regarding the] FDA, there’s a lot of things that can be done better. No question,” Roeding said. But that’s not going to reorient the trajectories of the U.S. and Chinese biotech sectors. Rather, he argued, you have to follow the money.
A funding double-bind
Roeding pointed out that the billions poured into licensing deals with Chinese companies represent money not going to innovative early-stage research happening stateside. That compounds what he sees as the major factor holding U.S. biotech back as China rises: a lack of consistent funding.
While he conceded that boom and bust cycles have always characterized private investment in U.S. biotech, he said funding for early-stage, innovative research is far worse than in the past because of a prolonged post-COVID bust and because AI ventures are now attracting the vast majority of venture capital investment, leaving little leftover for biotech. And while currently the “XBI looks great,” Roeding said, most investment that does reach biotech goes to clinical-stage companies rather than earlier-stage work.
“This industry is deeply suffering from the lack of consistency. That’s our biggest problem,” Roeding said. “Consistent funding for innovation that has long cycles of time, much longer than others, is critical.”
To accomplish that, he argues for the creation of a publicly funded sovereign wealth fund. Its investments should be concentrated in bust cycles and in bridging the “valley of death” between early, NIH-funded research and clinical validation, he said. “And now you can start flattening the [boom-and-bust investment] curve and you can be internationally competitive.”
Moreover, Roeding added, “the beautiful thing about it is if it’s done right. . . . It’s actually going to pay itself back and more. Society is going to make money off this.”
Levin has a different take. A lack of appreciation for biotech and a failure to differentiate it from pharma mean that the former sector suffers from price-control policies such as the IRA and Most Favored Nation, as well as a health insurance industry that often pushes the cost of drugs onto patients, he said.
Then to add insult to injury, Levin continued, the FDA substantially reduced its workforce last year, laying off about 20% of employees. That loss of institutional knowledge caused what he called “structural damage” that risks widening an already established competitive gap as China moves rapidly in biotechnology.
That said, Chinese biotech faces barriers of its own, Levin noted, especially in their capability to scale, to fully develop drugs on their own and to reach overseas markets. “And that’s why we’re seeing a huge takeoff, also, of out-licensing deals in recent years,” Levin told BioSpace.
“So it’s not all rosy for the Chinese biotech sector,” he continued, “but certainly this long-term government backing and just the fact that they’re able to do research and do certain processes in China at a higher scale, at a cheaper cost, at a faster speed than in other countries is really a core reason why they’re rising so quickly.”
The new five-year plan, he said, demonstrates that “China has moved well beyond trying to become faster and better at drug development. It now wants to discover important new medicines in China, develop them there and build companies that sell them around the world. That represents a fundamental change in China’s ambition for its pharmaceutical industry.” Even if it falls short of its “extraordinarily ambitious” 25% first-in-class target by 2030, “What matters is what China will have built along the way.”
“When China decides to make something a priority, it follows through with strategy, planning and investment,” Roeding said.
A geopolitical lever?
Levin postulated that the Chinese government plan for the rise of biotech culminates with a fifth step in which a Chinese company develops a groundbreaking medication—he gives the example of a cure for Alzheimer’s—but withholds it from the U.S. if relations between the two countries are tense at the time. In other words, China could use life-sustaining medicines as a bargaining chip, just as it has with magnets, solar technology and rare earth metals.
Roeding warned that Chinese dominance could become an issue even when there is no competitive intent involved, namely if supplying a drug domestically needs to be prioritized. He pointed to the COVID pandemic, when each country prioritized its own supply of vaccines. Becoming dependent on a drug sourced from China would make the U.S. vulnerable to supply chain issues.
Brown agreed it’s a possibility the Chinese government could use a crucial drug as a strategic lever. In his view, that’s more likely to work after a Chinese drug is already established in the U.S. or another market, rather than with a newly launched medication. But he said there are ways to mitigate that risk, such as stockpiling drugs and encouraging Chinese companies to set up manufacturing facilities within the country where their drugs will be sold.
Brown noted it’s still the case that companies in the U.S. and other Western countries have a “huge advantage” over their Chinese counterparts: the market size of their home countries. And accessing U.S. and European markets has been key to some of the Chinese industry’s biggest success stories.
“That places a question mark on [Chinese companies’] development going forward: whether or not access to those markets will remain open, or whether or not China itself will take measures to expand its own market,” Brown said.
“[T]he wrong American response is to try to hold China back,” Levin said. “We need to look at what we are doing at home.”
