By Kane Wu and Andrew Silver
HONG KONG/SHANGHAI, Feb 13 (Reuters) – Global drugmakers are stepping up their search for China‑developed experimental medicines as they cut costs ahead of patent expirations, with industry analysts predicting licensing deals will surge to a fresh record this year.
The value of such deals signed by companies in the greater China region – which includes Hong Kong, Macau and Taiwan – rose nearly tenfold last year from 2021 to an unprecedented $137.7 billion, according to data provider Pharmcube.
Mainland China has overwhelmingly been at the centre of that search, with global drugmakers including Novartis, Merck and GSK inking major agreements last year.
“The total value of these licensing-out deals is on track to double again over the next 18-24 months,” said Tom Barsha, head of Asia Pacific M&A at BofA Securities, who has advised on such deals.
“There is strong focus among global pharmaceutical companies to identify the next generation of innovative drugs pipeline in China, with various transaction structures being contemplated.”
Tony Ren, head of Asia healthcare research at Macquarie Capital, predicts a more cautious 40%-50% growth this year and expects assets from a class of drugs considered a backbone for oncological treatments to draw interest from global drugmakers.
A licensing agreement grants a company the rights to develop, manufacture or commercialize another company’s pharmaceutical products or technologies in exchange for an upfront fee or future target-based – or “milestone” – payments, thus mitigating development risks.
SURGING DEAL SIZES
Underscoring the increased pace of foreign interest, the average deal size this year has already reached $1.3 billion as of this week, up 76% from 2025 levels and about six times the average in 2021, Pharmcube data showed.
The jump is largely thanks to AstraZeneca’s experimental weight-loss drug deal worth up to $18.5 billion with CSPC Pharmaceutical Group and AbbVie’s up to $5.6 billion licensing deal with RemeGen for experimental tumor treatment last month.
The total deal value is typically a combination of upfront fees, milestone payments and royalties.
So far in 2026, 38 out-licensing deals have already been announced. Last year, a total of 186 such deals were signed.
This week, U.S.-based Madrigal Pharmaceuticals announced a licensing deal with Suzhou Ribo Life Science for experimental liver-disease programmes.
The Chinese biotech will get an upfront payment of $60 million, with total payments across the programmes potentially reaching up to $4.4 billion if certain milestones are met.
Ribo’s Chief Financial Officer said at its Hong Kong listing in January that the company planned to carry out various negotiations with multinational pharmaceutical companies and Chinese firms on drug developments as part of its growth strategy.
STRONG IN MOLECULE RESEARCH
While lagging in biology, China has strength in chemistry and multinational firms can license promising molecules from China for less than the cost of internal R&D, according to Macquarie Capital analysts.
“Many MNCs (multinationals) are considering China as an integral part of their global R&D infrastructure,” they said in a recent report.
“This is especially true as some firms cut costs whilst facing looming patent cliffs.”
China leads the world in specialised molecule types, accounting for nearly 90% of all global antibody-drug conjugate (ADC) licensing activity, industry advisory firm Vision Lifesciences said in its 2026 biotech licensing outlook, published in December.
ADC is a class of cancer medicines that works like guided missiles by directly delivering chemotherapy into tumor cells while limiting exposure to healthy tissue.
Goldman Sachs analysts in a recent note named Hansoh Pharmaceutical Group among companies that project solid earnings growth from out-licensed programs based on their pipeline of drugs.
LARGER UPFRONT FEES
As deals get larger, the upfront fees global pharma must pay to secure drug development rights have also surged.
That may partly be because some out-licensing deals involve more advanced-stage drug candidates, but Chinese firms are also asking for higher valuations as demand for – and recognition of the quality of – their assets has improved, Ren said.
The average upfront fee amounted to $77.7 million this year, doubling from $38.8 million in 2025 and about three times the level in 2021, Pharmcube data showed.
“As the price of something (goes) up, demand usually decreases,” Ren said.
“There could be more non-China licensing, but price is generally not the top of mind when it comes to pharma deals.”
(Reporting by Kane Wu in Hong Kong and Andrew Silver in Shanghai; Editing by Miyoung Kim and Kevin Buckland)
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