Significant Chinese investment in its biotechnology industry has resulted in a shift in the biopharma licensing market over the last five years. In 2020, the overall value of licensing deals for assets originating in China was roughly $5 billion; in the first nine months of 2025, over one-third of licensing spending has involved Chinese-developed drugs, reflecting total licensing deal value in excess of $58 billion—and analysists predict that percentage to continue to rise by the end of the year. As multinational companies (MNCs) continue to bet on China as the source of the next best-in-class disease treatment, understanding common themes and legal frameworks in China in-licensing deals can help facilitate dealmaking.
Unexpected Pressure Points
Although every deal (and licensor and licensee) is different, MNCs experienced in licensing product candidates from U.S. and European biotechs may be surprised at the prioritization of issues by Chinese biopharma companies. For example, Chinese biotechs often have an increased focus on payment terms (e.g., non-refundability) and upfront payments; certainty of immediate investment is viewed within the Chinese market as validation of the underlying technology. On the other hand, Chinese biotechs tend to focus less on future uncertainties, such as milestones and royalties, and consequences of termination—meaning that they tend to have fewer objections to typically heavily negotiated provisions like licensees’ diligence or reversion obligations. Other provisions, like governing law and dispute resolution, take on outsized importance when factoring in geopolitical tensions and the ability to enforce judgments.
Unfamiliar Regulatory and Legal Environment
China’s unique regulatory and IP regimes can also raise unfamiliar issues prior to and after signing.
Regulatory. Both completed and contemplated clinical trials in China, which have become desirable for MNCs due to increased speed and lower cost, require compliance with Chinese law (most notably China’s regulation of personal data and human genetic resources). This can range from limited oversight to filing requirements or even pre-approval for clinical trial initiation. To ensure that the MNC has unrestricted access to arising clinical data of sufficient quality for U.S. or European regulators, careful coordination between the Chinese licensor and MNC licensee is required. Moreover, restrictions on the transfer of the Chinese equivalent of INDs and MAAs, requirements with respect to the nationality of Chinese marketing authorization holders, and limitations on cross-border drug manufacturing in China necessitate advanced planning to ensure program viability post-signing.
IP. Key differences in the Chinese IP regime, combined with common corporate practices and ownership structures among Chinese biotechs, often leads to familiar concerns (and mitigations) with respect to (i) ownership of key licensed IP and related rights and (ii) protection of the licensee’s confidential information. Provisions in the definitive agreement should also address China’s IP requirements, including with respect to statutory pre-emption rights, joint ownership of certain Chinese patents and employee invention compensation.
Key Takeaways
We expect that Chinese biotechs will continue to play an increasingly important role in the pharmaceutical licensing field. Familiarity with typical pressure points and unique aspects of China’s legal and regulatory regimes can facilitate dealmaking and decrease the likelihood of unexpected issues during the life of the license or collaboration. Freshfields’ life sciences lawyers in Beijing, Hong Kong and the U.S. are actively monitoring these issues.
