Half of Everything: The China Licensing Wave Meets the Policy Machine

Bronze guardian lion in front of a palace hall in the Forbidden City, Beijing.
By Ignacio Sancho-Martínez, PhD | 5 October 2026

On September 21, 2026, the Hang Seng Biotech Index rose more than 5%; CNBC reported gains of 6-7% for Innovent and 8% for Akeso [1]. The move followed a Reuters report that Treasury was drafting rules likely to let most pharmaceutical licensing with China continue. The report relied on three people briefed on the work; Treasury had not published the proposed rules [2].

For a buyer negotiating a China-sourced license, that leaves two questions: could new rules make the transaction harder to complete, and could existing law restrict the work needed to develop the asset? Congress is considering broader biotechnology screening [3], while BIOSECURE has already established federal contracting and funding restrictions that phase in later [4][5]. A valuation needs to account for both, alongside the clinical milestones that determine how much of an announced deal value will ever be paid.

1. Deal counts and values depend on the tracker

Published licensing totals differ because sources count different kinds of deals, in different markets and over different periods. The growth is substantial within individual datasets, but combining their totals can give a misleading picture of its size.

PharmExec recorded 10 or fewer new-drug out-licensing deals per year in 2017-2019, followed by 39 in 2020, 43 in 2021, 51 in 2022, and 70 in 2023 [6]. GlobalData reports $16.6 billion in China-origin licensing value in 2023 and $41.5 billion in 2024. Those amounts imply 150% growth, although the release gives a conflicting 66% figure [7]. Congressional findings cited in the proposed BINSA legislation put the narrower US-EU total below $5 billion in 2020 [8].

For 2025, GlobalData reports $115 billion, while the congressional findings report about $136 billion [3][8]. NMPA data cited by Nomura put the first half of 2026 at 81 deals worth roughly $110 billion, including eight of the global top ten deals [9]. That half-year total is already about 80% of the higher full-year 2025 estimate, although the difference in sources prevents a precise growth comparison.

Deal-count and deal-value series for China-origin out-licensing, with full-year and partial-year observations separated.
Figure 1. Panel A shows PharmExec full-year out-licensing counts for 2019-2023, with 2019 shown as a bound [6], and separates the H1 2026 count [9]. Panel B compares the more-than-$35-billion full-year 2023 lower bound [6], GlobalData’s 2023-2024 totals [7] and $115 billion 2025 estimate [3], the congressional US-EU 2020 figure and 2025 estimate [8], and the $135.655 billion full-year 2025 and $106.3 billion H1 2026 VBInsight figures [10]. It shows separately the NMPA/Nomura H1 2026 figure of $110 billion [9] and excludes the narrower NSCEB US-only H1 2025 total [11]; sources use different scopes and periods, so the estimates are not a continuous series.

NextPharma, for example, counted 213 China-related deals of all types in 2024, worth $57.1 billion, with nearly half classified as licensing out [12]. The NSCEB report covers a narrower market: 14 US deals worth $18.3 billion in the first half of 2025, compared with two in the first half of 2024 [11]. A BD team estimating what it might spend on replacement assets needs a dataset covering the kinds of licenses it expects to pursue. It also needs to keep half-year observations separate from annual totals.

Deal shares provide a separate view. CNBC cites DealForma estimates that Chinese companies accounted for none of the Big Pharma deals with at least $50 million upfront around 2018, 20% in 2023, and about 30% in 2024 [13]. DealForma’s first-quarter 2025 roundup puts Chinese biotechs at 42% of major licensing deals [14]. GlobalData puts Chinese partners at nearly half of US overseas in-licensing in 2025 [3]. These reports use different categories, so the percentages should not be treated as one continuous series. GlobalData also reports that six of the ten largest deals since 2020 occurred in the first nine months of 2025, and identifies AstraZeneca as the most frequent Big Pharma acquirer of China-origin assets in its dataset [15].

DealForma and GlobalData estimates of China-origin deals, each labeled with its own period and denominator.
Figure 2. CNBC’s DealForma series covers Big Pharma deals with at least $50 million upfront: about 0% involving Chinese companies around 2018, 20% in 2023, and 30% in 2024 [13]. The separate 42% point comes from DealForma’s Q1 2025 roundup of major licensing deals [14]. GlobalData reports that large pharma sourced 28% of its in-licensed innovator drugs from China in 2024 [7], while a separate report puts China at nearly half of US overseas in-licensing in 2025 [3]. The chart keeps these categories distinct rather than joining them into one series.

2. Headline deal value is mostly contingent

Announced “biobuck” totals combine upfront cash with payments conditional on development, regulatory, or commercial milestones. A headline maximum is not the amount received, and an undisclosed upfront is unknown rather than zero.

Summit's Akeso license for ivonescimab was valued at up to $5 billion, including $500 million upfront, or 10% [16]. BMS's deal with Baili for BL-B01D1 was reported at $8.4 billion with $800 million upfront, or 9.5% [17]. Merck's LaNova deal for LM-299 was reported at $3.29 billion with $588 million upfront, or 18% [18].

Pfizer's 3SBio agreement for SSGJ-707 was announced at up to $6.05 billion, with $1.25 billion upfront, or 21%, plus a separate $100 million equity investment [19]. VCBeat reports BMS-Hengrui at $15.2 billion across 13 programs, with about $600 million upfront, or 4% [10]. BioBucks reports Pfizer-Innovent at $10.5 billion across 12 oncology programs, with $650 million upfront, or 6% [20]. Those small upfront shares leave most of the announced value dependent on outcomes that may be years away. Valuing the milestones requires their payment conditions and timing, as well as the probability that the asset reaches them.

Maximum deal values and reported upfront payments for ten China-origin licensing deals, with undisclosed upfronts marked separately; the panel also compares Evaluate's average upfronts in 2022 and early 2026.
Figure 3. Maximum announced values and disclosed upfronts for the ten deals discussed here [10][16][17][18][19][20][21][22][23]. Hatched bars indicate that the payment split is undisclosed; they do not imply a zero upfront. Evaluate's average upfront rose from $52 million in 2022 to $172 million in early 2026, a 230.8% increase [24]. Changes in the deal mix prevent a like-for-like price comparison.

Merck's license for Hansoh's preclinical oral GLP-1 program follows the same payment pattern: up to $2.01 billion in total, with $112 million upfront [21]. Lilly's Innovent collaboration has an announced value of up to $8.85 billion and a $350 million upfront payment [22]. Novartis's agreement for BoomRay's preclinical radioligand is worth up to $900 million, with the upfront amount undisclosed. It was Novartis's second early China-origin radioligand license in nine months, after Zonsen in January 2026 [23]. AbbVie's RemeGen agreement for RC148 was reported at $5.6 billion with a $650 million upfront payment, about 11.6% of the headline value [10].

The evidence behind these amounts varies. Summit-Akeso and Pfizer-3SBio have primary announcements [16][19]; the Hengrui and Innovent upfront amounts come from trackers rather than company releases [10][20]. That distinction matters when an amount is being used as a comparable for another negotiation.

The stage mix also matters. More than half of the out-licensed deals tracked in late 2023 were preclinical or Phase 1 [6], and some of the large 2026 agreements bundle early-stage and preclinical programs [10]. Evaluate's rising average upfront therefore cannot tell us, by itself, how much more buyers are paying for an otherwise comparable asset. Differences in development stage and the number of programs licensed can change the average as well.

3. What US policy permits and restricts

US policy raises two separate issues for a licensing deal: whether the transaction requires screening, and whether federal money can support work involving particular suppliers. Treasury's reported draft and the proposed BINSA legislation concern the first question. BIOSECURE addresses the second. A permissive licensing rule would not remove BIOSECURE obligations.

Under the approach reported by Reuters, most pharmaceutical licensing and investment with China would continue, with restrictions focused on assets related to pathogens or weaponizable biotechnology [2][25]. Treasury and the White House declined to comment, and the reported draft remains unpublished. Its eventual wording could differ from the account in the press.

Treasury already has a way to expand screening. The COINS Act, enacted in December 2025 as part of the FY2026 National Defense Authorization Act (NDAA), codified outbound-investment screening for AI, semiconductors, and quantum technologies. It left biotechnology out, but Section 809 allows Treasury to designate additional sectors through regulation [26].

Congress could also expand the law. BINSA, introduced in June 2026 by Representatives Moolenaar and Dingell and Senators Ricketts and Slotkin, would add biotechnology to COINS and cover licensing deals and joint ventures [3][27]. Morgan Lewis and Freshfields describe notification as a possible initial requirement. Even without a prohibition, notification could add review time, diligence work, and costs to a transaction [26][27].

Industry lobbying is divided. Large drugmakers, including Pfizer, have opposed broad restrictions, while smaller biotechs and some lawmakers have pressed for tighter controls [3]. Incubate executive director John Stanford distinguishes ordinary molecule acquisitions from weaponizable biology: “No one wants US investors subsidizing the development of biological weapons.” The July report carrying his comments put China licensing announcements in the first five months of 2026 at $43 billion [28].

BIOSECURE has a different scope. Enacted on December 18, 2025 as Section 851 of the FY2026 NDAA, it restricts federal contracting and the use of federal funds involving equipment or services from designated “biotechnology companies of concern” [4]. An ordinary commercial license is not automatically prohibited because the originator is Chinese. The relevant questions include which entities perform the work and whether federal contracts or funding bring that work within the statute.

Implementation takes time. The Office of Management and Budget must publish its initial list by December 18, 2026. The schedule then allows 180 days for guidance and a year for a Federal Acquisition Regulation amendment, followed by a further 60-to-90-day phase-in. The prohibitions therefore begin in 2027 or later, depending on implementation [5]. Certain pre-existing commercial agreements have five-year grandfathering protection, and the law provides exceptions for public-health-emergency countermeasures [5].

The outbound-investment program predates these proposals. Executive Order 14105 established it in 2023, and Treasury's implementing rule took effect on January 2, 2025 [29]. BIOSECURE followed a separate legislative path: it stalled in December 2024 before returning through the FY2026 NDAA a year later [4]. Companies now need to follow both implementation of enacted law and proposals that could change the conditions for future deals.

4. How policy assumptions change the calculation

Consider an illustrative range of $110-$136 billion in potential deal value. The lower amount comes from the first-half 2026 report [9], the upper amount from the full-year 2025 congressional estimate [8]; GlobalData's $115 billion estimate falls between them [3]. Choosing this range is a modeling assumption. It combines different reporting periods, so it is not an estimate of annual deal flow. For a real transaction, the starting value would instead come from the assets and payment terms under consideration.

To demonstrate the calculation, assign a 60% weight to “No modeled loss”: licensing continues without additional screening, and the assessed deals suffer no material loss from federal exclusions. Assign 30% to “Licensing screening”, with an assumed 15% reduction in potential deal value. The remaining 10% goes to “Federal exposure only”, where licensing remains open but some deal value is lost because of federal procurement or funding restrictions.

These are assumptions about the effects on deals, not probabilities that particular laws will pass. BIOSECURE is already law and applies wherever its scope conditions are met. The first and third cases can occur under the same licensing policy; their difference is whether the assessed deals incur a federal-exclusion loss.

The cited legal analyses explain why screening could add costs [26][27], but they do not estimate a 15% reduction or justify the chosen weights. Those values are illustrative. The public data also do not quantify losses from federal exposure in the second or third case. Leaving those losses out makes the following result an upper bound under these assumptions.

At the $110 billion starting value, the contributions are 0.60 × $110B = $66.00B; 0.30 × ($110B × 0.85) = $28.05B; and 0.10 × $110B = $11.00B before the unquantified federal loss. Their sum is $105.05B. At the $136 billion starting value, the same calculation gives $81.60B + $34.68B + $13.60B = $129.88B.

The assumed screening reduction determines how much the weighted result falls. Reducing it from 15% to 10% gives $106.7-$131.9 billion. Raising it to 30% gives $100.1-$123.8 billion. A deal team can use this calculation to see how much its conclusion depends on a disputed assumption, without treating any of these figures as a forecast.

Illustrative weighted model of no modeled loss, licensing screening, and federal exposure cases over a mixed-source reference range.
Figure 4. Illustrative deal-impact cases and sensitivity calculations. The $110-$136 billion starting range is selected from reports covering different periods [3][8][9]. The weighted $105.05-$129.88 billion result excludes unquantified federal losses. BIOSECURE applies wherever its scope conditions are met in all cases [4][5]. The federal-exposure sensitivities change only the third case; they are not estimates of total portfolio exposure.

The federal-exposure sensitivity tests a loss of 5% or 10% of the starting value within the third case. With that case weighted at 10%, a 5% loss reduces the result by 0.10 × 0.05 × the starting value: $0.55-$0.68 billion, leaving $104.5-$129.2 billion. A 10% loss deducts $1.10-$1.36 billion, leaving $103.95-$128.52 billion. Federal losses in the screening case would require an additional deduction. The example cannot determine those losses without information about the individual deals.

5. The deadlines and counterparties to check

A team can begin checking its exposure before the prohibitions take effect. For each program, identify federal grants and contracts, the equipment or services used to perform the work, and the companies supplying them. When OMB publishes its list, that record will help determine which relationships need further review [4][5].

Grandfathering requires a separate legal assessment. Freshfields points to COINS's exclusion of pre-enactment transactions and the general expectation that new administrative rules apply prospectively [27]. BIOSECURE has its own transition provisions for certain existing agreements [5]. Signing early may matter, but neither analysis guarantees that a particular license, later amendment, or service arrangement will be exempt. Counsel needs to identify the provision being relied on and its conditions.

Morgan Lewis expected a proposed US COINS sector-designation rule in late 2026 and identifies March 13, 2027 as the deadline for final regulations [26]. Treasury's outbound-investment guidance dates to December 23, 2025 [30]. These dates provide specific points at which to revisit the assumptions in a pending transaction.

Counterparty designations can also change during negotiations. Ohio State reports that WuXi AppTec was added to the Section 1260H list on June 8, 2026 and that a federal court enjoined the designation on August 7 [31]. That litigation concerns a separate designation process; it does not resolve BIOSECURE's requirements. On the Chinese side, State Council Decree No. 837, effective July 1, 2026, adds outbound-investment rules that also need to be considered when structuring a cross-border transaction [26].

6. Decisions for deal teams, founders, and investors

For BD and transaction teams: build deal-level cases for ordinary commercial activity, potential COINS notification or screening, and federal procurement or funding exposure under BIOSECURE. Map grants, government contracts, vendors, and services for every asset in a bundle before signing. Ask counsel to identify which statutory or regulatory grandfathering provision applies, what conditions it requires, and whether the proposed agreement meets them. Put that analysis and allocation of compliance responsibilities in the transaction documents. Update the analysis when OMB publishes its list, Treasury proposes or finalizes COINS rules, and Congress acts on BINSA.

For Western founders: do not accelerate a transaction solely on the assumption that a later restriction will exempt signed deals. Some existing agreements may qualify for specific transition provisions, but the result depends on the relevant law, timing, and contract. Compare the value of current offers with the risk of delay, diligence costs, and the counterparty’s federal exposure.

For Chinese originators: assess how many prospective licensees could fund and complete the transaction under different regulatory conditions. A buyer that depends on covered federal work may face different constraints from a purely commercial counterparty. Keeping several credible buyers involved reduces dependence on any one company's ability to proceed.

For technology-transfer offices: record which assets have federal funding or procurement links and make the applicable transition provisions part of the license review. Keep the underlying assumptions visible when comparing offers, especially where milestone schedules depend on development work performed by a federally funded institution.

For investors: Nomura describes investors as “largely immune” to geopolitical noise and expects out-licensing to “ride on a high tide” [1]. Test that optimism against the assets you are underwriting. How much of each announced total is upfront? What must happen before the milestones are paid? Which part of the development plan could be affected by screening or federal exclusions? An aggregate licensing total cannot answer those questions for an individual holding.

Evaluating a China-origin licensing opportunity? We build scenario-based valuations with documented payment terms and policy assumptions.

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Sources

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