In the past, China purchased licenses to sell medicines from Western companies. But today, China sells its own medicines to the West. The previously attractive market has changed profoundly, says China lawyer Mark Schaub on the website of his law firm King&Wood. “For many international companies if the question is “How do we sell into China?” then they may be increasingly playing yesterday’s game,” he writes
Mark Schaub:
In 2025, the direction of deal flow changed. Chinese biotechs signed approximately US$135 billion in outbound licensing deals, licensing their own molecules to multinational pharmaceutical companies. By contrast, inbound licensing (i.e. where Chinese companies acquired rights to foreign drugs) fell to below US$1 billion. This is not a narrowing gap. The tide has turned.
The reason is straightforward. Large multinational pharmaceutical companies are approaching a patent cliff, with exclusivity over many of their highest-selling products coming to an end and no pipeline to replace the lost revenue. After more than a decade of sustained investment in R&D, China’s biotech sector increasingly has what the doctor ordered: clinical-stage assets in oncology, metabolic disease and antibody engineering, often developed faster and at significantly lower cost than comparable Western programmes.
This shift requires multinational pharma and medtech companies to rethink what a China strategy actually means. If China becomes a sourcing market and not simply a distribution market this means you need different relationships in China and different transaction structures.
Sourcing requires due diligence on your counterpart’s intellectual property, clinical data, manufacturing capability and regulatory compliance. It means thinking like a buyer rather than a seller. Many international companies have commercial teams that have spent decades developing expertise in selling into China but buying innovation requires a different set of commercial and legal capabilities.
For many international companies if the question is “How do we sell into China?” then they may be increasingly playing yesterday’s game. The more important question for 2026 may be “How do we buy from China and how do we structure this business to protect our interests and preserving strategic flexibility?”
More at the website of King&Wood.
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