US weighs preserving most pharma licensing deals with China

The US is drafting rules on pharmaceutical investment in China that would probably preserve the ability of American drugmakers to strike most licensing deals for Chinese medicines, according to three people briefed on the process.

The approach would depart from the Trump administration's tightening of commercial ties with China in other industries under new national security legislation. It would also fall short of the restrictions sought by some lawmakers.

The rules, being drawn up by the Treasury Department, are likely to let US companies invest in promising drugs developed by Chinese groups, provided they are not linked to pathogens or biotechnology that could be weaponized, the people said. They asked not to be named because they were not authorized to discuss the matter. The rules are not final and could change, particularly if President Donald Trump intervenes.

The stakes are large. Outbound licensing deals in Chinese biotech were worth $115bn last year, according to GlobalData, and the rules could allow billions more in transactions that refill Western drug pipelines and supply capital to Chinese companies. Almost half of US in-licensing deals with foreign groups in 2025 involved Chinese companies, a trend that has continued this year. Bristol Myers Squibb (BMY) has signed a partnership with Jiangsu Hengrui Pharma (600276.SS) worth up to $15.2bn, while Pfizer (PFE) has announced a collaboration of up to $10.5bn with Innovent Biologics (1801.HK) covering 12 oncology programs.

Xi Jinping, China's president, is due to meet Trump in the US next week. The four people briefed said it was unlikely Treasury would publish any rules on pharmaceutical investment beforehand. Neither Treasury nor the White House would comment. The contents of the proposals have not previously been reported.

Big pharma has lobbied hard against broad curbs. Pfizer and other large drugmakers have met administration officials in recent months, including Treasury Secretary Scott Bessent, arguing that sweeping restrictions could cut US companies off from a fast-growing source of new medicines, the people said.

Albert Bourla, Pfizer's chief executive, said he had raised China and national security with Bessent, Secretary of State Marco Rubio and officials from the Department of Health and Human Services. He does not believe licensing medicines from Chinese groups poses a security risk and said it should not be restricted. "I don't think that that's the way to compete with China, to try to slow them down," he said. Where a drug is developed is irrelevant, he added: "The important thing is to have a new medicine."

Some midsize and smaller biotech companies, which often depend on licensing deals with big pharma, are pressing for the opposite. Jason Kelly, chief executive of Ginkgo Bioworks (DNA), which provides laboratory services to biotech groups, has told Treasury officials that the US and European drug industries will suffer in the long run if outbound investment to China continues at its present pace. Kelly, who chaired a congressional advisory committee on biotech competition in 2023 and 2024, asked: "Are we okay with a strategic dependence on China for innovative drugs? Because that's what we are currently doing with this offshoring."

Several lawmakers share that view. John Moolenaar, the Michigan Republican who chairs the House Select Committee on the Chinese Communist Party, has urged Treasury to use the COINS Act, a 2025 national security law restricting outbound investment, against pharmaceutical deals, even though the industry is not named in it. He and Debbie Dingell, a fellow Michigan Democrat, are co-sponsoring a bill to tighten Treasury oversight of biotech investments, licensing agreements and joint ventures involving Chinese companies, driven less by traditional security concerns than by a desire to stop China dominating biotech innovation.

In a May letter to Treasury, Moolenaar wrote that US capital flowing to Chinese biotech groups through licensing deals, joint ventures and equity investments was "fueling China's strategy" and aiding its rapid ascent up the pharmaceutical value chain.

Others in Congress are sceptical that curbs would work. Jake Auchincloss, the Massachusetts Democrat whose district is home to many life sciences companies, said efforts to slow China's drug industry by limiting American spending were bound to fail. "China is spending 100 billion dollars on biotechnology. China has brilliant scientists," he said. Of those pushing for restrictions, he added: "These are people who think that you can drag and drop semiconductor policy to biotechnology policy. You cannot."