Illustration: Xia Qing/GT

China's robust biotech innovation is drawing increased investment from multinational pharmaceutical companies. A recent example highlighted by the Financial Times (FT) on Tuesday shows that AstraZeneca, Pfizer and other multinational drug companies have spent a record amount on medicines developed by Chinese biotech firms this year. The FT claims this underscores "how Big Pharma is increasingly reliant on China even as the country faces US tariffs."

The so-called reliance on China, as highlighted by investments in Chinese biotech innovation, can more accurately be described as collaboration. This partnership is driven by the relentless technological advancements of Chinese firms, which contribute to the shared progress of the global biopharmaceutical industry and the well-being of patients worldwide.

Citing a report from Jefferies, the FT has reported that China accounts for 18 percent of global licensing deals for multinational companies this year, an increase from 17 percent last year, reaching its largest share ever. Additional research also indicates a rise in licensing transactions. According to Securities Daily, a study jointly released by PHARMCUBE and Tsinghua University reveals that in 2024, China's innovative drugs completed 94 license-out transactions, totaling $51.9 billion, a 26 percent increase year-on-year.

Some experts suggest that China's innovative drug licensing transactions have entered a "boom phase." The primary reason for this situation is the increased emphasis Chinese biopharmaceutical companies place on research and development (R&D), coupled with China's continuous progress in technological innovation.

The scale and momentum in China's medical R&D patents are undeniable. For instance, from 2019 to 2024, China filed more than 187,000 patent applications in the medical and healthcare sector, a figure that has been rising steadily and now accounts for 51.7 percent of the global total. Artificial intelligence is a key driver of innovation in the industry, representing 32.7 percent of these applications and continuing to grow, according to an analysis of China's medical and healthcare industry.

According to the FT, Jefferies noted that multinational pharmaceutical companies are turning to China because they are facing lower drug prices and expiring patents on blockbuster drugs. The technology from Chinese companies has proven to be more cost-effective. The Wall Street Journal reported in February that Chinese biotech firms are now developing drugs faster and more cost-effectively than their US counterparts. These companies benefit from a highly skilled, lower-cost workforce that enables greater speed and efficiency. Clinical trials in China can be conducted at a fraction of the cost in the US. Additionally, changes in China's regulatory system have streamlined and accelerated the approval process for launching new studies.

Leveraging continuous investment in R&D and a robust industrial chain, Chinese companies have not only made breakthroughs in drug discovery and clinical development but have also become important players in global pharmaceutical cooperation. Chinese firms are increasingly engaging in drug licensing deals and collaborating on clinical trials, manufacturing, and commercialization. 

These partnerships are not only strengthening the global presence of China's biopharmaceutical sector but also fostering a new model of mutually beneficial, innovation-driven collaboration amid shifting geopolitical dynamics. These transactions are voluntarily reached by both parties in accordance with market principles, reflecting sound economic logic and significant development potential.

According to the FT, the US government is finalizing unprecedented tariffs for the pharmaceutical sector. These tariffs, which according to the FT report could be unveiled by the end of July, may pose a threat to the pharmaceutical supply chain and the profits of biopharmaceutical companies. If these companies' profits are squeezed, it stands to reason that their motivation to pursue cost-effective technologies may increase. This suggests that innovative drug technologies from China, known for their competitive pricing, might see increased demand on the international stage.

In recent times, certain countries have employed various trade and restrictive measures in an attempt to "decouple" China from the international supply chain. However, in the biopharmaceutical industry, Chinese biotech companies have not only resisted this "decoupling" but have also fostered deeper international collaboration through advancements in technological innovation.

The rise in licensing transactions by Chinese biopharmaceutical companies, along with their increasingly "sticky" integration into the global pharmaceutical supply chain, is primarily driven by advancements in technological innovation. Despite the future's uncertainties, including trade protectionism from certain countries or other challenges, technological innovation is expected to remain the cornerstone of development for Chinese biopharmaceutical firms. The pace of technological innovation in China is anticipated to continue accelerating.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn