Could new US investment curbs complicate China’s biotech licensing surge?

Chinese biotech companies are encountering new obstacles in their international growth as the United States considers imposing restrictions on outbound investments, according to analysts. The draft rules introduced by the US Treasury Department last week could make it more challenging for Chinese biotech firms to secure direct investments from the United States or establish joint ventures, notes David Zhang, an analyst at Trivium China.

The proposed measures would subject a wide range of transactions involving "countries of concern," including China, to heightened scrutiny. These transactions encompass the acquisition of equity stakes and the formation of joint ventures. US Treasury Secretary Scott Bessent emphasized that the rules aim to prevent adversaries from utilizing US investments to develop technologies that could jeopardize national security.

The move reflects growing US concerns over China's burgeoning biotech industry. In the current year alone, the value of out-licensing deals involving Chinese-developed innovative drugs has reached $130 billion, nearing the full-year total for 2025, according to China's National Development and Reform Commission. Importantly, the Treasury Department has not yet targeted conventional drug licensing deals, which analysts believe have been a significant catalyst for China's biotech expansion.

Industry experts suggest that companies are likely to adopt alternative structuring methods for cross-border deals to circumvent the new regulations. In recent years, cross-border biotech transactions have increasingly evolved into co-development arrangements and broader platform partnerships, as Chinese firms have amplified their resources and ambitions.

Concurrently, Beijing has proposed its own export control measures aimed at biotech technologies, including artificial intelligence, gene therapy, and photovoltaics. These restrictions would prohibit exports of certain cell and gene therapy platforms as well as small interfering RNA technology platforms. While both US and Chinese measures are reportedly narrower than anticipated, they are expected to compel companies in both nations to reassess and safeguard the flow of capital and core intellectual property, according to industry experts.

The US and China's measures have been described as exhibiting a "curious symmetry," with each seeking to restrain investments that could bolster the other's technological capabilities. However, the proposed US restrictions remain uncertain due to opposition from certain industry stakeholders. Biotechnology Innovation Organisation President John F. Crowley has expressed concerns about the potential for overly restrictive measures that could create uncertainty for innovators and investors, and possibly undermine US biotech competitiveness.

Despite bipartisan political pressure for stricter regulations, including licensing deals, industry experts anticipate that some form of biotech restrictions will proceed, albeit with ambiguity regarding the extent of the US Treasury's ultimate objectives.