Global drugmakers are intensifying efforts to license experimental medicines originating from the greater China region - including Hong Kong, Macau and Taiwan - as they seek lower-cost development options and to diversify pipelines ahead of patent expirations. Data show a dramatic expansion in deal value and size that industry advisors say could continue into the near term.
A rapid rise in licensing value
According to data from Pharmcube, the total value of licensing deals signed by companies in the greater China region rose nearly tenfold from 2021 levels to a record $137.7 billion last year. Mainland China has been the prominent source of assets behind much of this activity, with multinational firms such as Novartis, Merck and GSK among those that completed major agreements during the period.
Bankers and analysts tracking the market say momentum is expected to persist. Tom Barsha, head of Asia Pacific M&A at BofA Securities, who has advised on these kinds of transactions, said:
"The total value of these licensing-out deals is on track to double again over the next 18-24 months."
Barsha added that multinational pharmaceutical companies are concentrating efforts to identify the next generation of innovative drugs emerging from China, and that a range of transaction structures are being explored.
Deal counts and sizes climbing
Deal activity has increased in both volume and scale. So far in 2026, 38 out-licensing agreements have been announced. For context, 186 such deals were signed in 2025 in the greater China region.
The average deal size for this year has already reached $1.3 billion as of this week, representing a 76% increase from 2025 and roughly six times the average deal size observed in 2021, per Pharmcube. The uplift in average deal size has been driven in part by recently announced large deals, including AstraZeneca’s experimental weight-loss drug transaction with CSPC Pharmaceutical Group worth up to $18.5 billion, and AbbVie’s licensing deal with RemeGen for an experimental tumor treatment worth up to $5.6 billion.
Industry reporting notes that total deal value typically combines upfront fees, milestone payments and royalties.
Recent examples underscore the trend
Another example from 2026 involved U.S.-based Madrigal Pharmaceuticals entering a licensing pact with Suzhou Ribo Life Science for experimental liver-disease programmes. Under that agreement, Ribo will receive an upfront payment of $60 million, with the programmes potentially generating up to $4.4 billion in total payments if specified milestones are met.
Ribo’s chief financial officer indicated at the company’s Hong Kong listing in January that the company planned to pursue negotiations with multinational pharmaceutical companies and domestic Chinese firms on drug development projects as part of its growth strategy.
Where China contributes most
Analysts say China’s comparative strength lies in chemistry and molecule research, even while the country may lag in certain aspects of biology. Macquarie Capital analysts have pointed out that multinational corporations are increasingly considering China as part of their global R&D infrastructure, noting this shift is particularly relevant as some firms cut costs while facing looming patent cliffs.
Industry advisory firm Vision Lifesciences reported in its 2026 biotech licensing outlook published in December that China accounts for nearly 90% of global antibody-drug conjugate (ADC) licensing activity. ADCs are a class of oncology medicines designed to deliver chemotherapy agents directly to tumor cells while limiting exposure to healthy tissue.
Goldman Sachs analysts recently highlighted Hansoh Pharmaceutical Group among companies expected to generate solid earnings growth from out-licensed programmes based on their drug pipelines.
Upfront fees and valuations are rising
As the market for China-origin assets has strengthened, the upfront fees paid by global pharmaceutical firms to secure development rights have climbed. Pharmcube data show the average upfront payment reached $77.7 million this year - about double the $38.8 million average in 2025 and roughly three times the 2021 level.
Tony Ren, head of Asia healthcare research at Macquarie Capital, said he expects more measured growth of 40% to 50% this year in deal values, and singled out assets from a class of drugs viewed as central to oncology treatment as likely to attract attention from global drugmakers.
Ren also noted that larger upfronts may reflect both the inclusion of more advanced-stage candidates in deals and higher valuations being sought by Chinese firms as demand and perceived asset quality have risen. He observed:
"As the price of something (goes) up, demand usually decreases. There could be more non-China licensing, but price is generally not the top of mind when it comes to pharma deals."
Implications for market participants
The expansion of licensing activity out of China is altering how multinational pharmaceutical companies are sourcing innovation. Firms facing patent expirations are increasingly looking to China for molecules that can be licensed at lower overall R&D cost compared with fully internal development. Transaction structures and valuations are evolving alongside a growing recognition of China-origin drug candidates.
At the same time, observers caution that higher prices for sought-after assets could change deal dynamics and potentially prompt some firms to broaden sourcing beyond China.
Note on licensing terms - A licensing agreement grants rights to develop, manufacture or commercialize another company’s pharmaceutical products or technologies in exchange for an upfront payment and/or future target-based milestone payments and royalties, thereby shifting some development risk to the licensee.