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U.S. Treasury Drafts Rules to Keep Biotech Licensing Flow with China
By Drooid · · How we work
Policy Shift Signals Softer Stance on Chinese Drug Deals
The U.S. Treasury Department is preparing investment rules that would let American pharmaceutical companies continue licensing most Chinese drugs, while barring those linked to pathogens or weaponizable biotechnology. The draft excludes investments tied to pathogens or dual-use biotechnology. Tony Ren, head of Asia Healthcare Research at Macquarie, described the approach as a considerably softer stance than the restrictions outlined in two U.S. bills earlier this year.
Market Reaction Fuels Biotech Rally
After news of the draft rules emerged, Chinese biopharma stocks rose sharply in Hong Kong and the Hang Seng Biotech Index gained more than 5 percent. Nomura’s head of China healthcare research Jialin Zhang said investors now appear largely immune to intermittent geopolitical concerns and expects out-licensing activity to remain strong.
Deal Activity Highlights Growing Interdependence
GlobalData estimates that nearly half of all U.S. overseas drug-licensing deals in 2025 involved Chinese firms. In May, Pfizer disclosed a partnership with Innovent valued at up to $10.5 billion, covering 12 oncology programs. Nomura data show a record 81 China-U.S. out-licensing agreements worth a combined $110 billion were completed in the first half of 2026.
Strategic Context of China’s Five-Year Plan
China’s 15th five-year plan emphasizes globalization for its pharmaceutical and biotech sectors, encouraging companies to expand overseas collaborations. The anticipated U.S. rule change aligns with this policy direction, differentiating biotech from sectors such as artificial intelligence and semiconductors where the United States has tightened restrictions.
Outlook
The draft rules remain subject to final approval, but analysts suggest that, if implemented, they will sustain the momentum of China-U.S. biotech partnerships and keep the sector insulated from broader trade tensions. The Treasury expects to finalize the rules later this year.
