China’s biotech breakthrough: from generics to global intellectual property
As Greater China markets charge into the third quarter with the wind at their backs, there is increasing evidence that 2025 is the year Chinese intellectual property (IP) goes global.
In June, I wrote about the peculiar appeal of a certain doll that had seemingly out of nowhere leapt ahead to become a global pop culture phenomenon. This was the latest example of a successful Chinese entertainment IP, a unique asset with intangible social value, taking off.
Earlier in May, I explored China’s developments in humanoid robotics, an advanced technology segment where the country is dominating. This burgeoning industry is ripe for value creation as robotics developers not only own the production and hardware assets, but also the underlying artificial intelligence IP powering their capabilities.
We know that IP lies at the core of the modern global economy. A 2023 analysis by UCLA Anderson School of Business calculated that intangible assets comprised over 90% of the total assets on the balance sheets of S&P 500 companies1.
Markets increasingly see IP as the catalyst for further growth in Chinese stock valuations, with the latest prominent example being China’s booming biotechnology sector. While Hong Kong’s Hang Seng Index (HSI) finally turned bullish this year and is up over 30% in the year to date, the Hang Seng Biotech Index has nearly doubled.2
What’s behind this surge? The transformation from an industry focused on low-cost generics and mass manufacturing towards high-value innovation was driven by deliberate policy choices and facilitating competition in the domestic market. Regulators took aim at reining in drug prices starting in 2018 with the launch of a national procurement scheme that allowed for centralized negotiating and bulk purchasing. A 2024 study by the Hong Kong University of Science and Technology estimated that the program had saved China’s healthcare system over 500 billion yuan since implementation, nearly all of which were generic drugs3.
Meanwhile, the government’s ambitious “Made in China 2025” announced in 2015 elevated biotech to a national priority, channelling capital and talent into the sector, mirroring efforts in other key areas like renewable energy, robotics and rail technology. Other regulatory changes announced in 2015 were implemented to streamline drug approvals, enforce data integrity, and boost transparency.
Policy support is ongoing. The latest initiative was announced on July 1, when the National Healthcare Security Administration (NHSA) introduced 16 new measures to boost innovative drug development, spanning R&D incentives, regulatory streamlining, hospital access, and reimbursement4.
The result has been a super-charged pathway for Chinese drug innovation and novel therapies. Ten years ago, Chinese companies had just 160 innovative compounds (around 6% of the global pipeline) in global clinical drug assets. Today, they have 36%, ranking second only to the U.S. 5 Between 2020 and 2024, 20 of the world’s top 50 companies generating innovative drug candidates were Chinese, up from just five in the prior five-year period6.
China also overtook the U.S. as the global leader in clinical trials starting in 20217. This occurred even as the US Food and Drug Administration (FDA) and Europe’s European Medicines Agency (EMA) are increasingly granting expedited reviews to Chinese drugs8.
Notably, Chinese biotechs have started selling their IP to global multinationals to test and commercialize around the world, a process known as "out-licensing."
Historically, Chinese biotechs operated as “license-in” players and would buy the rights to early-stage drug candidates from foreign pharmaceutical makers and then try to invest and commercialize the drug in the Chinese market. The industry back then was heavily reliant on foreign innovation to fill its pipelines.
That script has now flipped; Chinese biotechs are now more likely to out-license - developing novel therapies from the rich ecosystem that’s been nurtured in China and then testing outside the country. This approach provides Chinese firms with upfront payments, potential royalties, and - critically - global validation of their research and development capabilities.
This switch has paid off handsomely. Out-licensing deals between global drug manufacturers and Chinese biotechs have exploded in 2025 to US$66bn, more than the entire value of announced global drug licensing deals for all of 2024.9
Each new publicly announced out-licensing deal only adds fuel to the biotech market, and there’s reason to believe the trend will continue.
Many multinational pharmaceutical companies are approaching a “patent cliff” with blockbuster drugs losing exclusivity by the end of the decade. They’ll need to replenish their pipelines quickly and licensing early-stage assets from China offers a faster, lower-risk alternative to in-house discovery.
Could the current protectionist agenda in the US derail the path forward? Perhaps, but Chinese biotechs have already diversified beyond the US for their licensing deals. Since 2023, Europe has become the top destination for China-developed drug pipelines based on out-licensing volume10, while other Asia Pacific markets have also opened.
It’s clear the out-licensing model is proving to be immensely profitable for China’s emerging biotech leaders, but this is only possible because they are producing truly class-leading products built on the back of high-value innovative IP. It’s a similar path from “Made in China” to “Created in China” that we’re witnessing across the economy.
Chinese biotech has immense potential to further drive China’s IP economy, though much work still needs to be done. Achieving pre-eminence hinges on successfully fostering a culture of risk-taking, attracting world-class talent and ensuring sound IP protection. If these components are well-addressed, then Chinese biotech is well-positioned to be a dominant economic force in the years ahead, not to mention an expanding part of Hong Kong’s increasingly diverse equity market.
A version of this article appeared in the South China Morning Post, titled 'Biotech successes helping Chinese intellectual property go global,' published on August 5, 2025.
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