Chinese biotechs appear to be entering a new stage as they venture beyond a primary reliance on licensing deals and tap into deep foreign pockets.
“The capital markets have really opened up in China,” said Michael Rome, managing director and head of the therapeutics investment team at Foresite Capital. “This is evident if you just look at the [Hang Seng Biotech Index].”
The index, which tracks the top 30 biotech firms listed in Hong Kong, rose more than 64% in 2025 thanks to renewed market enthusiasm and growing interest in China’s rapidly accelerating drug development industry.
Changes to the listing rules for biotechs introduced in 2018 made it easier for Chinese companies to secure financing.
“Before, that path wasn’t really open to a majority of biotech companies,” Rome said.
Access to capital from public markets means drug developers are no longer tethered primarily to licensing deals, although they still figure prominently, Rome said. In 2025, Chinese biotechs notched a record $138 billion in out-licensing agreements in 2025 as overseas pharmas bolster their pipelines. But Chinese companies are increasingly exploring other avenues.
“It means companies have more options,” Rome said. “If they have an asset and they're trying to finance their business, they’re not necessarily dependent on a pharma company or even a venture capital firm.”
Alternative financing offers them more control and allows them to innovate because they retain greater ownership of promising therapies.
“It’s becoming more similar to the U.S. in that respect, where companies have multiple financing options,” he said, adding that it also opens the door to other types of agreements. “I think you’re going to see more deals in the future that end up being true M&As instead of licensing deals.”
Pivoting toward innovation
China’s internal goals are helping drive these changes, including a push to increase drug access for its own population. Regulatory reforms and other changes by the Chinese government also have fostered biotech growth. They no longer primarily focus on generic drugs, but rather to establish a foothold on the cutting edge.
Drugs gaining popularity worldwide are also growing in China.
“We're seeing now all the drugs that have become large drugs in the U.S. and global markets, like PD-1 inhibitors for cancer [and] GLP-1s … now actually starting to become blockbusters in China right now,” Rome said.
China has become a leading innovator in oncology, with assets making up 51% of total antibody-drug conjugates in development and 48% of bispecific monoclonal antibodies. One bispecific , ivonescimab, licensed by Summit Therapeutics, has already shown early signs that it could compete with Merck & Co. blockbuster Keytruda.
The nation is also at the forefront of development for T cell engagers in autoimmune diseases, Rome said. A similar approach using CAR-T cell therapy has seen some early success. While the technology has to be validated in the clinic, T cell engagers could offer similar efficacy without some of the more serious side effects, offering a safer, more patient-friendly therapy, Rome said.
Managing geopolitical risks
While many stakeholders are eager to take advantage of Chinese advances, there are downsides, including guarded U.S.-China relations and regulatory uncertainties. The FDA continues to be measured in its approach to China-based trials, Rome said.
“The [FDA’s] position has been relatively consistent with respect to wanting a majority of patient data in the U.S. when you go for registrational trials,” Rome said. “Our perspective is that you still need to adhere to the precedent that the FDA has given in the past.”
There are also geopolitical risks to consider.
“We're watching the situation very closely,” Rome said. “I think this is going to complement a lot of science going on right now in the U.S., and our hope is that we get close cooperation between the two countries, because we think ultimately that's going to advance more drugs to patients going forward.”
