From copycats to cutting edge: Unpacking China’s biotech rise

China’s biotech scene is buzzing with activity and headline-making developments. Mazdutide, a weight-loss therapy developed by biotech giant Innovent, gained approval from China’s medical product watchdog in late June, becoming the world’s first dual glucagon-like peptide-1 (GLP-1) and glucagon (GCG) receptor agonist for weight management.

The year 2025 has been an auspicious one for China’s biotech sector. A string of major products and regulatory milestones has propelled the industry into the global spotlight, accompanied by a wave of biotech listings.

As of August, 14 Chinese biopharma and medical device companies had listed in Hong Kong, raising HK$18.2 billion ($2.33 billion)—already roughly quadruple 2024’s total—with 36 more in the queue.

The capital market interest is only part of a bigger transformation. Once overshadowed by industries like AI and semiconductors, biotech has gradually moved to the forefront of public attention in China.

“Since the beginning of this year, Chinese biotech stocks on the Hong Kong Stock Exchange have jumped more than 100%, fueled by strong growth in business development and licensing deals,” says Dai Jialing, founder of PharmaDJ, an industry intelligence provider. “China now leads in the number of clinical trials and accounts for a third of the world’s licensing deals.”

A national priority

In 2024, China made up about 4.8% of the global biotech market, whereas the US accounted for 35% and Europe 31%, according to a European think tank. But despite its currently small role, the sector is growing in attention at home and internationally.

It was among the 10 strategic sectors mapped out in Beijing’s “Made in China 2025” plan for modernization. And a focus on biotech development also aligns with the government’s “Healthy China 2030” blueprint and the 14th Five-Year Plan, which elevates biopharma to the status of a national pillar industry.

In the early 2000s, many overseas-trained scientists returning to China often joined contract research organizations (CROs), helping multinationals cut R&D costs.

“After CROs became mature around 2010, Chinese pharmaceuticals started to explore novel drug research,” says Dai. “Yet, because of the underdeveloped state of basic research, most firms adopted a ‘fast-follow’ strategy, focusing on ‘me-better’ [a drug similar to an existing therapy but modified to offer improvements in efficacy, safety or delivery] drugs rather than working on projects with best-in-class or first-in-class potential.”

Firms like WuXi AppTec later expanded into contract manufacturing, creating a foundation for China’s own drug innovation.

Today, Chinese biotech firms are not only producing generics but also among those helping push the frontiers of medicine. From CAR-T cell therapies to gene therapy and antibody-drug conjugates (ADCs), local players are beginning to match, and in some cases, even exceed the pace of global innovation.

While estimates vary, according to Pharmaceutical Technology, innovator drug licensing agreements involving Chinese companies reached a record $41.5 billion in 2024. China has also become a significant force in the supply of active pharmaceutical ingredients (APIs), the raw materials used in the production of medications. The nation accounts for approximately 20% of global API output.

A shifting financial landscape

Scientific progress has not necessarily translated into ease of fundraising. Biotech is a capital-intensive business, and China’s funding outlook has darkened since 2021 amid rising geopolitical tensions and a slowing domestic economy.

Venture investment in the sector peaked in 2021 at $15.7 billion before plunging to $4.2 billion in 2024 amid a broader market downturn. This forces many firms, especially startups, to leverage license-out agreements—where a Chinese firm develops an asset and then licenses it out to an overseas partner—as an alternative financing channel.

“By the first half of 2025, a breakdown of business development deal value showed that 32% of innovative drug out-licensing came from China, versus 21% in 2023/2024 and single-digit percentages previously,” said Cui Cui, Head of Asia Healthcare Research at Jefferies.

The public markets regulator also rolled out schemes to encourage financing of biotech startups. The Hong Kong Stock Exchange’s Chapter 18A allows pre-revenue biotech companies to list on the main board. Similarly, Shanghai’s Nasdaq-style STAR Market has attracted innovative drug makers seeking domestic investors. But as windows tighten over IPO pipelines, mergers and acquisitions (M&As) may become another exit route.

High-profile deals have reshaped business strategies. AstraZeneca’s $1.2 billion acquisition of Genexine and BioNTech’s $800 million purchase of Biotheus highlighted multinationals’ appetite for Chinese assets. BioNTech later partnered with Bristol Myers Squibb for a Biotheus-created antibody in a multi-billion-dollar deal.

The significant markup on deals like this led Chinese biotech practitioners to reconsider early asset sales and reshape their business development strategies, according to Dai.

“Mega-deals like these gave companies the funds to continue doing research right up to later phases, acquire more data, and sell at a higher price,” says Dai. “These firms are not so desperate to sell assets on the cheap to sustain their operations anymore.”

Policy catalyst

Government policy has become a steadier force in shaping China’s biotech sector than volatile capital markets. The 2019 “volume-based procurement” scheme slashed generic drug prices, in an attempt to encourage companies to pivot away from low-margin copycats toward innovative therapies. However, it can also have negative side effects like forced price cuts and industry consolidation.

Additionally, inclusion in the National Reimbursement Drug List (NRDL) can significantly boost patient uptake and valuations once new biotherapies are covered by public insurance.

Local governments are also competing to attract biotech firms through cash rewards, subsidies and tax incentives. Shenzhen, for example, offers up to ¥6 million ($835,400) for clinical drug advances, while “high-tech enterprises” nationwide benefit from a reduced 15% corporate income tax rate alongside additional R&D deductions and VAT credits. Government-affiliated “guidance funds” have also emerged to steer private capital into biotech, reinforcing state support for the industry’s growth.

“Local governments have been very active in trying to figure out how they can support the industry,” says Helen Chen, Global Sector Co-Head for Healthcare and a Greater China Managing Partner of L.E.K. Consulting. “They provide infrastructure support such as land, labs, tax incentives, and even set up biotech parks. It’s a full ecosystem approach.”

Breakthroughs and leading players

The results are visible in a string of breakthroughs for Chinese firms. In September 2024, Chinese biotech Akeso’s Ivonescimab, an immunotherapy, outperformed Merck’s blockbuster Keytruda in a Phase III trial for non-small cell lung cancer, as reported by Stat News—an achievement hailed as a “DeepSeek moment” in biopharma. But while Ivonescimab showed a significant improvement in progression-free survival (PFS) in the initial trial, longer-term results presented in September 2025 show it failed to demonstrate a significant benefit in overall survival (OS).

Other firms are betting on obesity and diabetes drugs, such as GLP-1 receptor agonists, following the global excitement around weight-loss therapies. Oncology remains top of mind among developers, followed by autoimmune and CVM (cardiovascular and metabolism).

AI is also reshaping the industry, promising to accelerate drug discovery. “AI now enables us to rapidly search for vast chemical spaces and literature databases to identify promising disease hypotheses, targets and leads,” says Alex Zhavoronkov, founder and CEO of Insilico Medicine, a leading startup specializing in AI drug discovery (AIDD). “As data continues to expand, AI’s capabilities are also growing, often generating insights and innovations that would be nearly impossible for humans to anticipate.”

But despite the promise, timelines are still long. “Clearly, novel assets are coming out [of AIDD]. Even more so, the relevancy is that some AI models will help reduce the effort it takes to validate drug targets,” says Chen. “Regardless of whether we can use AI to come up with brand new first-in-class molecules, there are a lot of steps in this very long drug development process that AI can support.”

Where does China stand globally?

Asked where the Chinese biotech industry is headed next, PharmaDJ’s Dai foresees more collaborations in the form of investment, M&A or licensing deals. According to him, multinationals increasingly scout for assets in China to avoid being blindsided by disruptive pipelines.

“China’s patent filings in areas like cardiovascular drugs now represent around 60% of the world’s total,” says Dai. “For multinationals, missing out on a blockbuster Chinese innovation is a mistake they can ill afford to make.”

Despite robust growth, China’s biotech industry still lags behind the US and Europe, making up 4.8% of the global market in 2024 versus 35% for the US and 31% for Europe, according to a European think tank. Moreover, although dealmaking is recovering from its nadir, it remains more cautious than the US.

“When it comes to commercialization, US pharma companies are far more likely to pay large amounts for assets they see as promising, reflecting higher risk tolerance and an established culture of M&A and licensing,” says Zhavoronkov.

Different risk appetite, however, does not leave Chinese players sidelined. Cui at Jefferies points out that neither China nor the US is likely to resist biotech partnerships, since US pharma keeps the lion’s share of the economics. “Chinese partners are usually entitled to a royalty income of 10%-15% of ex-China sales,” she says.

China may hold a leading position for now, but other emerging markets are closing in. India, once known as the “pharmacy of the world,” making mainly cheap generics, is now pivoting to biotech innovation, with a host of rising stars like Biocon and Serum Institute of India.

As a major exporter of APIs, China supplies Asia, Europe and North America. India, despite its scale, still depends on Chinese raw materials. This has sparked concerns about supply chain disruptions and comparisons to China’s control of rare-earth metals. Yet China’s leverage in APIs is nowhere near its domination of rare earth, making fears of a supply chain bottleneck potentially misplaced.

Barriers to growth

For all its promise, Chinese biotech faces a number of challenges. As with fields like EV, solar and industrial equipment, the sector is getting increasingly crowded, with multiple companies chasing the same drug targets. Scenarios like overcapacity and cannibalism could well play out in biotech. Crowded pipelines risk overcapacity, as seen with the glut of PD-1 inhibitors, while constrained funding will hit firms without true innovation hardest.

Intellectual property protection remains a challenge in China’s biotech sector, where weak enforcement and concerns over data security deter foreign firms from sharing advanced technologies. At the same time, domestic innovators face difficulties monetizing their discoveries, limiting incentives for long-term R&D investment.

In the long run, rosy expectations for biotech’s broader economic benefits may also fall flat. Reliant on a small pool of highly educated professionals, the sector is never a big employer and the overall impact so far is limited.

Nonetheless, some observers disagree. “From labs and manufacturing to clinical upgrades, distribution and patient opportunity costs, some 10.5 million patients across the world stand to benefit over the next decade from the surge of biotech, with $200 billion in investment at stake,” says Chen, citing a study by L.E.K. Consulting.

China’s biotech sector is still nascent, dominated by a few giants while most firms remain small R&D specialists. Many struggle with funding and rely on generics for survival. Commercialization is tough, with fierce competition for NRDL inclusion and high costs to build sales networks, leaving smaller players especially exposed. As Chen notes, the costs are high for them, and the steep learning curve is still underway.

Ethical and regulatory hurdles also abound, scandals have eroded trust and prompted the National Medical Products Administration (NMPA) to step up oversight, but there have still been some issues, including a 2025 scandal regarding large amounts of identical data in generic drug evaluation. Regulatory processes regarding genetic data safeguards and ensuring ethical usage of biotech, while apparently robust, also suffer from biotech’s complex and fast-moving environment.

The road ahead

China has used policy and scale to dominate EVs and solar, but biotech demands deeper expertise, global collaboration and patience. While it may not deliver the same broad economic lift for Beijing, its importance is clear: aging demographics will fuel demand, and China’s push into new areas, particularly AI-driven biotech, shows it is serious about global leadership.

“As demonstrated by Insilico’s achievements, China can discover and validate AI-driven therapies much faster than most global competitors, with the powerful infrastructure and outstanding professional talents,” says Zhavoronkov.