New contenders, old headwinds: global biotech looks to China

Western biotech faces a tougher funding climate, while Chinese firms move faster and aim higher, reshaping the industry’s global balance.

Welcome back to Biotech Blueprint. This week, we take a closer look at China’s growing footprint in biotech, and what it means for an industry facing realignment across the U.S., Europe, and beyond.

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The biotech sector in the West is going through a tough recalibration. In the U.S. and Europe, funding has thinned, investor enthusiasm has cooled, and a growing list of companies are scaling back operations. The boom years driven by pandemic-era breakthroughs have given way to a more cautious, capital-constrained environment.

The biotech sector in the West is going through a tough recalibration. In the U.S. and Europe, funding has thinned, investor enthusiasm has cooled, and a growing list of companies are scaling back operations. The boom years driven by pandemic-era breakthroughs have given way to a more cautious, capital-constrained environment. Increasing hesitation has negatively impacted the XBI biotech index which has fallen nearly 25% over the past 6 months.

Adding to the uncertainty is the growing threat of tariffs and an “America first” agenda on pharmaceuticals. While Trump’s recent trade announcement exempted the sector (for now), the White House suggests that medicines could be next. The “Biosecure Act” was proposed to control the competition to US biotech by limiting use of technology from countries “of concern”, including China. While still not passed, this bill may dramatically cut competition, impede the supply chain, and reduce innovation. A recent congressional biotech commission stated the U.S government should invest $15 billion to be competitive with Chinese biotech.

A new concern on the horizon is the potential for expanded U.S. tariffs on Chinese pharmaceutical ingredients and contract research services. Many biotech companies rely on Chinese partners for active pharmaceutical ingredients, manufacturing, and preclinical research. These are partnerships that have helped control costs and accelerate development. If trade restrictions tighten, companies could face higher expenses and slower timelines. We are cautiously optimistic that it won’t get that far, but if it does, the timing couldn’t be worse for a sector already under pressure.

Meanwhile, China’s biotech industry is moving on a different trajectory. Despite facing its own set of challenges ranging from pricing pressure and geopolitical scrutiny, Chinese biotech firms are steadily expanding their reach, refining their pipelines, and, in some cases, edging closer to the global stage.

This deep dive explores how China’s biotech ecosystem is evolving in the shadow of a broader downturn in the West. We examine the companies worth watching, the regulatory and market structures shaping their progress, and how China’s biotech ambitions might fit (or clash?) with a changing global industry.

Source: Tara Jacoby / WSJ

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The freeze after the fever

After a record-breaking run in 2020 and 2021, biotech companies in the U.S. and Europe are now facing a sharp and sobering downturn. The pandemic-fueled surge in investment and public interest has faded, replaced by tighter capital, lower valuations, and a much more cautious funding environment. Many of the companies that once rode the covid wave to IPOs are now trading well below their debut prices or have been forced into restructuring.

Venture capital has grown more selective, and the IPO window remains firmly shut for most early-stage players. Regulatory scrutiny is intensifying too, with the U.S. Federal Trade Commission challenging M&A deals more aggressively and the Inflation Reduction Act introducing uncertainty around future drug pricing. For biotech firms with long clinical timelines and no revenue, the path to sustainability has narrowed.

The sector is in a period of reset. Companies across the U.S. and Europe have responded to market pressures with layoffs, program cuts, and narrowed pipelines. Innovation continues, but the environment has become more selective and an increasing number of deals with Chinese companies are occurring. Investors are cautious, and partnerships with big pharma are harder to secure.

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What’s hot in Chinese biotech

While the West is cooling off, China’s biotech sector is still generating heat. That’s not to say it’s protected from global challenges but compared to the setbacks facing the U.S. and Europe, Chinese firms have continued to attract capital, make regulatory progress, and push programs forward at a pace that’s drawing international attention.

What’s driving the relative momentum?

First, there’s scale. China now graduates more STEM PhDs than any other country (over 50k annually, according to the U.S. National Science Board) outpacing the U.S. and rapidly narrowing the gap with the EU combined. This surge in talent is matched by an acceleration in research output, both in publications and patents. Chinese scientists are consistently publishing high-impact papers across various biotechnology fields, outpacing their counterparts in the U.S. and EU. Additionally, as the Chinese government has prioritized the commercialization of academic innovations, an increasing number of these discoveries are being licensed and patented, further driving technological advancements.

China’s scientific infrastructure has also matured significantly over the past decade, with major investment flowing into research hubs in cities like Shanghai, Beijing, and Guangzhou. While top tier Western institutions still lead in basic science and early-stage innovation, Chinese universities and biotech firms are becoming increasingly competitive in applied research, especially in areas like oncology, cell therapy, and synthetic biology.

Second, policy support remains strong. The Chinese government has identified biotech as a strategic priority, both for health sovereignty and economic growth. Initiatives like Healthy China 2030, combined with reforms at the National Medical Products Administration, have streamlined drug approvals and opened the door to accelerated pathways for innovative therapies.

And then there’s the market. China’s aging population and rising middle class create a huge domestic demand for better, more advanced therapies. Unlike in the U.S., where price sensitivity and payer pushback often slow uptake, Chinese firms can test products in a relatively receptive local market before expanding abroad.

Put simply, Chinese biotech companies aren’t playing catch-up anymore. They’re setting their own tempo. Firms like BeiGene, Innovent, and Junshi Biosciences are developing not just biosimilars, but first-in-class and globally competitive assets. Some are already out licensing innovative programs to Western pharma, flipping a script that, until recently, flowed only one way.

Of course, none of this guarantees long term dominance. The sector still faces hurdles like geopolitical uncertainty or intellectual property concerns. But the trend line is clear. In a global market where capital is scarce and timelines are long, China’s strategic, state-supported, and increasingly self-sufficient biotech machine is becoming harder to ignore.

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A regulatory environment in transition

China’s regulatory environment has come a long way. Reforms at the National Medical Products Administration have significantly reduced clinical trial approval timelines and opened the door to conditional and priority pathways, particularly for innovative therapies. While transparency and consistency still lag behind Western regulators like the FDA or EMA, the overall direction is clear: faster approvals, greater openness to global standards, and a more innovation-friendly framework, although still under strong state oversight.

Another key factor behind China’s clinical trial success is its ability to enroll patients rapidly and cost-effectively. The country’s extensive hospital network and streamlined patient access give it a distinct advantage over North American and European counterparts significantly accelerating development timelines - a persistent challenge for Western markets.

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China’s global biotech ambitions

China’s biotech sector isn’t just expanding. It is producing companies that are beginning to reshape how the global industry sees innovation coming out of the East. A decade ago, the narrative was still about copycats and contract manufacturers. Today, a small but growing group of firms are licensing out novel assets to big pharma, developing therapies that are superior to current standard of care, building global clinical footprints, and even winning FDA approval for first-in-class therapies.

BeiGene leads the charge. Founded in Beijing in 2010, the company has become the face of China’s global biotech ambitions. Its cancer drug Brukinsa, a BTK inhibitor, has secured approvals in the U.S., Europe, and beyond, making it one of the few Chinese-developed therapies to go truly international. BeiGene has invested heavily in cross-border R&D hubs and even built a major manufacturing facility in New Jersey. Its strategy is to operate as a global biotech company that happens to be Chinese.

Innovent Bio, based in Suzhou, has built its reputation on smart partnerships. Its immuno-oncology portfolio includes Tyvyt, co-developed with Eli Lilly, and the company is steadily building a reputation for pushing competitive biologics into the Chinese market while retaining global optionality through outlicensing deals.

Meanwhile, WuXi AppTec and WuXi Biologics have become the infrastructure backbone not just of China’s biotech sector, but of the global pharma supply chain. As contract research and manufacturing giants, they provide drug development services for hundreds of companies worldwide, including many in the U.S. and Europe. Their scale, speed, and vertical integration have made them near-indispensable players, though recent geopolitical scrutiny has put them in the crosshairs of U.S. policymakers.

Then there’s the new guard. Junshi Biosciences developed China’s first domestically approved anti-PD-1 antibody and continues to expand its pipeline in oncology and infectious disease. I-Mab briefly made headlines with a splashy CD47 antibody deal with AbbVie, proof that Chinese science can draw serious attention, but the deal later collapsed, a reminder that cross-border biotech partnerships still carry risk.

Hutchmed, with roots in both Hong Kong and mainland China, has emerged as one of the most credible late-stage players. Its oncology pipeline is progressing through global regulatory pathways, and its focus on solid tumors puts it in direct competition with Western biotech peers.

What binds these companies together isn’t just geography, it’s momentum. With growing confidence in their scientific capabilities, they’re scaling quickly and increasingly competing in global markets once dominated by Western firms.

China’s biotech sector is evolving quickly, backed by talent and policy support. While questions around regulation and geopolitics persist, its growing role in the global landscape is clear. For investors, it’s worth watching not only for risk management, but also long-term opportunity.

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DISCLAIMER: This content is for informational purposes only. It should not be taken as legal, tax, investment, financial, or other advice. The views expressed here are my own and do not reflect the opinions of any company or institution.

DISCLOSURE: I have no business relationships with any company mentioned in this article.