Chinese academic labs are now the most contested real estate in drug development. US investors need scientists to publish; Chinese investors need them to stay quiet — and both sides are racing to get there first.
image from Gemini Imagen 4
Out-licensing deals between US investors and Chinese biotech companies surged to $137.7 billion in 2025, up nearly tenfold from 2021, defying Washington's push to decouple from Chinese science. US venture capital firms are now embedding themselves upstream in Chinese academic labs before publication, competing against Chinese VCs who counsel scientists to stay quiet—pioneered by firms like RA Capital with Legend Biotech's BCMA CAR-T therapy Carvykti. Major pharmaceutical acquisitions like AstraZeneca's $1 billion purchase of Gracell and Atlas/Bain/RTW's $400 million Series A for Kailera around Jiangsu Hengrui's GLP-1 candidates demonstrate that innovative drug science continues to originate in China, creating an unresolved tension between geopolitics and commercial opportunity.
American biotech investors have a China problem. The science they need is increasingly inside Chinese laboratories. The political pressure to walk away is also increasing. Neither force is winning.
That tension is the real story behind a surge in out-licensing deals that reached $137.7 billion in 2025, up nearly tenfold from $13.9 billion in 2021, according to Reuters, citing data provider Pharmcube. Average deal size hit $1.3 billion in early 2026, up 76 percent from 2025 levels. The numbers are not marginal. They reflect a fundamental shift in where innovative drug science is originating.
The mechanism underneath the money is the part STAT News reported: US venture capital firms are moving upstream into Chinese academic labs, embedding themselves before scientists publish their findings, competing against Chinese VCs who urge the scientists to keep quiet. The practice has existed for years. RA Capital's work with Legend Biotech is the template.
RA Capital backed Legend Biotech before its 2020 conventional IPO, when Carvykti — a BCMA-targeted CAR-T cell therapy for relapsed or refractory multiple myeloma — was still in the pipeline. The FDA approved Carvykti on February 28, 2022, it arrived roughly a year after Abecma became the first BCMA-directed CAR-T approved in the United States, in March 2021, but it was among the earliest wave of that class. The overall response rate in the pivotal trial was 97.9 percent. RA Capital's early position, upstream in the science, paid off in an approval that generated hundreds of millions in revenue and helped validate an investment model.
AstraZeneca followed a similar script with Gracell Biotechnologies, acquiring the Chinese cell therapy company in December 2023 for $1 billion upfront — a 62 percent premium — and completing the deal in February 2024. That transaction also originated in Chinese science. The molecules were there. US capital found them early.
The Kailera Therapeutics story makes the model legible in plain sight. Jiangsu Hengrui Pharmaceuticals, a Shanghai-based drugmaker, licensed four GLP-1 weight-loss candidates to Kailera in May 2024. Atlas Venture, Bain Capital Life Sciences, and RTW Investments then co-led a $400 million Series A to build a US company around those assets. Kailera filed for an IPO on March 30, 2026, having raised $1 billion in total venture funding. Hengrui retained a 19.9 percent stake — a Chinese manufacturer holding equity in a US vehicle built on its science. The structure is not unusual anymore. It is the market.
GSK paid $1 billion upfront for Aiolos Bio, a company founded in 2023 by Bain Capital Life Sciences and Atlas Venture that had licensed an asthma drug from Hengrui. Hengrui sat inside the deal as the originator. The pipeline was Chinese. The company was American. The buyer was British.
What has changed is scale. China's share of global biotech pipeline reached approximately 27 percent in 2024, up from 24 percent in 2023 and over six times its share a decade ago. Chinese companies account for nearly 90 percent of all global antibody-drug conjugate licensing activity. In the first quarter of 2025, five of thirteen Series A financings were Chinese asset spin-offs, capturing 52 percent of total dollars raised. In 2024, Chinese-originated assets represented 31 percent of global pharma in-licensing deals with more than $50 million upfront — up from virtually zero five years earlier.
The science is not lagging behind the deals. Since 2018, China's output in new drug discovery has tripled, while US output has remained comparatively flat. In 2024, China listed more than 7,100 clinical trials in the WHO registry, versus approximately 6,000 for the United States. China surpassed the US in total R&D spending in 2024 when measured in 2015 US dollar purchasing power parity, according to the World Intellectual Property Organization.
The political environment has not kept pace with the gravitational pull. Congress passed the BIOSECURE Act in December 2025, restricting US companies from working with certain Chinese biotech firms of concern. The intent is decoupling. The commercial logic is pointing the other direction.
RA Capital has already filed to raise a third SPAC — a $50 million vehicle called Research Alliance III — explicitly targeting China biotech, per Renaissance Capital. That is not a firm retreating from Chinese science. That is a firm doubling down, with regulatory risk priced in.
The bind is structural. Venture timelines run on molecule progress — years to IND, years to Phase 2, years to approval. Political cycles run on different time horizons and produce enforcement mechanisms that move even slower. A scientist in Shanghai does not pause their experiments because Congress passed a law. By the time enforcement mechanisms clarify, the deal is structured, the IND is filed, and the molecule is in humans. Biology does not adjust for geopolitics.
For the scientists themselves, the competitive dynamic STAT News identified is playing out in real time. Western investors push toward publication and transparency — it de-risks the asset, attracts follow-on capital, and creates an exit path. Chinese investors have often preferred the opposite: keep the science quiet, keep the team focused, avoid attracting exactly the kind of scrutiny that upstream attention brings. The scientists are caught between two sets of incentives that do not always point the same direction.
The broader question is whether the United States has the research infrastructure to generate equivalent science independently — or whether the political cost of engagement is being matched by the cost of walking away. China's investment in basic research reached $40.6 billion in 2025, up more than 11 percent from the prior year, accounting for 7.1 percent of total R&D spending. Those numbers do not suggest a system approaching diminishing returns. They suggest one still in acceleration.
The deals will keep flowing. The molecules do not wait for policy to catch up.
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Research completed — 0 sources registered. US VCs are moving upstream into Chinese scientific pipelines, embedding in labs before scientists publish. Chinese VCs in some cases urge scientists n
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Headline selected: US Biotech Depends on Chinese Science. Washington Wants It to Stop.
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