China is rapidly emerging as the world’s busiest source of biotech deals, while the United States appears to be retreating from the very leadership role it once defined. For Australian investors, that changing balance of power could reshape how local innovators secure partners, capital and visibility on the global stage.
Over the first half of 2025, Chinese biotechs accounted for nearly a third of all out-licensing activity worldwide, up sharply from just over a fifth in 2023 and 2024. In dollar terms the surge is even more striking: licensing agreements involving Chinese companies totalled more than US$40 billion last year, a 66% jump over the prior year, with Big Pharma buyers like Novartis and Merck leading the way. Novartis alone signed a deal worth up to US$5.2 billion with Shanghai-based Argo Biopharma, while Merck struck a US$2 billion agreement with Jiangsu Hengrui in March.
These transactions reflect a maturing research and development (R&D) base in China that is producing novel oncology, cardiovascular and rare disease assets attractive to global pipelines. For big pharmaceutical groups facing looming patent cliffs, the message is clear: China is no longer just a generics hub or manufacturing base; it is also becoming a key source of innovation.
America’s pause
The contrast with the US is stark. Federal biomedical funding is under pressure, with National Institutes of Health (NIH) budgets trimmed and universities facing uncertainty over new grants. At the same time, Washington is signalling unease about collaboration with Chinese biotech. The revived BIOSECURE Act would prohibit companies receiving US funding from working with certain Chinese entities, adding another layer of friction to an already fraught geopolitical backdrop.
Even as lawmakers float a US$15 billion boost to shore up domestic competitiveness, the reality on the ground is one of caution. For smaller American biotechs, capital raising is proving harder; for larger ones, the menu of potential partners is being narrowed by politics rather than science.
Australia’s place in the shifting landscape
For ASX-listed biotechs, the changing global deal flow is reshaping how companies position themselves to attract international partners. Rather than simply competing on science, local innovators are increasingly being judged on their ability to deliver clear differentiation, accelerate clinical timelines and demonstrate regulatory reliability.
On one hand, global pharma companies now accustomed to sourcing assets from China may broaden their search for differentiated innovation in other jurisdictions — Australia included. Companies like Prescient Therapeutics Ltd (ASX:PTX, OTC:PSTTF) and Imugene Ltd (ASX:IMU, OTC:IUGNF), with programs in oncology and cell therapy that address clear global needs, could become attractive alternatives for partners wary of Chinese exposure.
Read more: Prescient Therapeutics gains momentum with Phase 2 trial as analysts raise valuation
On the other hand, competition for attention is intensifying. If Chinese firms dominate the licensing table, smaller Australian players will need sharper strategies to stand out: clearer differentiation, faster clinical execution, and a willingness to engage with investors and regulators across multiple geographies.
The funding environment also matters. With US capital constrained and Chinese buyers surging, the question for Australian innovators is whether they can attract dealmakers looking for “safe harbour” partnerships outside politically charged zones. That may mean reframing their pitches — not just around science, but around predictability, transparency and governance.
The bigger picture
The global biotech industry is entering a new phase where geopolitics and economics intertwine with drug discovery. China’s rise as a licensing powerhouse is undeniable, while America wrestles with its own policy contradictions. For investors in ASX biotechs, the implications are twofold: the pathway to global relevance is widening, but so too is the competition.
The next wave of partnerships may hinge less on where science is happening and more on where it is easiest — and safest — to do business. For Australia, that could prove to be both a challenge and an opening.