The US Treasury Department is developing rules for American pharmaceutical companies investing in China that will likely allow most licensing agreements for Chinese-developed drugs. This framework would primarily restrict investments related to pathogens or potentially weaponizable technologies. This approach marks a potential departure from the Trump administration's broader tightening of business with China in other sectors and is more lenient than the restrictions sought by some lawmakers and smaller biotech firms. However, the proposed rules are not yet finalized and could still change, particularly if President Trump intervenes, according to sources familiar with the process.
American pharmaceutical companies have a significant reliance on Chinese partners for new drugs. GlobalData reported that nearly half of all US in-licensing deals in 2025 involved Chinese companies, a trend that continued into 2026. For instance, Bristol Myers Squibb signed a deal with Jiangsu Hengrui Pharma potentially worth up to $15.2 billion for thirteen early-stage oncology, hematology, and immunology programs. Similarly, Pfizer collaborated with Innovent Biologics on a package that could reach $10.5 billion across twelve oncology programs. These agreements often involve substantial milestone payments and option exercises, meaning the full headline value is contingent on program success.
Analysts emphasize that these deals represent American pharma buying "option value" rather than making direct acquisitions. For example, in the Bristol Myers deal, only $600 million was an upfront cash payment, with the majority tied to future development, regulatory, and commercial milestones. This structure allows US companies to access promising clinical-stage assets relatively cheaply, providing a crucial mechanism to replenish their pipelines. Restricting such deals, analysts argue, would deprive US companies of these assets without preventing them from being acquired by European or Japanese buyers, and would ultimately prolong the wait for new drugs for American patients. The current policy debate highlights a competitiveness issue: Chinese labs are producing clinical-stage oncology assets more rapidly and affordably than the US biotech sector.
The proposed carve-out for pathogens and weaponizable platforms is seen by some as a genuinely defensible national security boundary, avoiding an overreach into industrial policy. However, the timing of these rules, being drafted in the shadow of an upcoming summit between President Trump and President Xi, raises concerns about policy stability. Pharmaceutical research and development operates on ten-year horizons, and a policy that fluctuates with diplomatic events creates significant uncertainty for the industry. Some argue that the Treasury should publish and defend its proposed pathogen-specific line independently of the diplomatic calendar.
