The US is no longer the lone leader in the battle against disease. China has become the world's second most productive engine for translational drug development. In 2024, it overtook the United States in clinical trial volume for the first time, registering 7,100 trials to the US's 6,000, and now accounts for 39 percent of global trial registrations1.
The addition of Chinese-discovered molecules increases the global drug pipeline by a third. Patients around the world benefit. In fact, it couldn’t come at a better time to offset Europe’s declining investment in innovation. That said, some fear China’s rise in biotech may mirror some other industries and result in a hollowing out of American leadership and the loss of American jobs.
These concerns have led to calls to no longer allow US companies to in-license Chinese IP. This policy idea, while well intentioned, would only accelerate China’s rise and the decline of American leadership. There are better approaches to ensure America maintains its position as the global biotech innovation leader, while benefiting from the addition of China to a battle for health that is too big for any single country to tackle alone.
China’s rise to biotech innovator followed the Western model for success. Willingness to reimburse branded medicines at higher prices and aggressive price cutting for generic medicines provided the necessary incentives to push companies to pursue innovation. Regulatory reforms since 2015 cut China's first-in-human trial approvals from 501 days to 87. In fact, China has become so efficient that early-stage trials now run at roughly half the time and 50 to 60 percent lower cost than in the United States.2 The development engine that resulted is producing iterative best-in-class innovation that has demonstrated the potential to raise the standard of care for a variety of diseases, in particular cancer and immunology.
As China's biotech capabilities have grown, the US Congress and the Treasury department are debating whether to restrict American licensing of Chinese IP. This would backfire. It would push licensing to European companies who would acquire those assets for ex-China development and commercialization. If European companies are also discouraged from licensing, it will incentivize Chinese companies to forward integrate and directly serve as many international markets as they are allowed to access, something they currently accept not doing under existing license agreements. It would also deprive Americans of future novel medicines that could alleviate human suffering.
Some argue that in-licensing early-stage assets discovered by Chinese scientists will reduce American scientific employment. On the contrary, licensing deals create American jobs. Clinical trials, regulatory submissions, and commercialization require the largest numbers of pharmaceutical jobs: clinical operations, biostatistics, regulatory affairs, medical affairs, manufacturing scale-up, and commercial infrastructure. When a US company in-licenses a Chinese asset at the end of Phase 1, it often begins building these teams in the United States.
Beyond jobs, the development process itself generates durable American assets. The knowledge generated through that process - the clinical data, the manufacturing know-how, the regulatory precedent, and the commercial relationships - is retained by the US licensee. It becomes the foundation for the next wave of iterative innovation. Ownership of the IP means ownership of the learning, and that is how scientific leadership compounds over time.
The primary threat to American leadership is the “translational wall” that has been built up over the past two decades. This wall is comprised of an increasingly long and bureaucratic list of requirements that slows down and increases the cost of preclinical and Phase 1 trials. Blocking US companies from licensing Chinese assets does nothing to lower that barrier. It reduces the assets flowing through a system that already needs to move faster, while leaving the underlying problem untouched.
The Legislative and Regulatory Landscape
On June 2, 2026, Representatives John Moolenaar and Debbie Dingell introduced the Biotech Investment National Security Act (BINSA). The bill would amend the COINS Act, enacted in December 2025, to add biotechnology to outbound investment screening. Licensing deals, joint ventures, and equity investments with Chinese entities would all require Treasury and Defense Department review. Treasury does not need to wait for BINSA to act. The COINS Act already grants the Secretary discretionary authority to add new sectors through rulemaking.
The National Security Argument
Supporters of BINSA argue that US capital, licensing deals, and technical collaboration are helping China build capabilities that could weaken US supply-chain security and drug-development leadership.
China's leverage in the physical pharmaceutical supply chain is real. Approximately 80 percent of the world's active pharmaceutical ingredient supply traces through China, a genuine vulnerability that can be addressed by requiring that manufacturing takes place in the U.S. or allied countries. This is a legitimate policy goal, and the current licensing structure has already moved to address this as licensors themselves have an interest in ensuring supply chain security. In fact, Western licensee ownership of ex-China manufacturing are now a standard condition across the deal landscape.
Over the past three years, China in-licensing has been competitive. US-based pharmas (Bristol Myers Squibb, Merck, and Pfizer) have won three of the six largest deals, with AstraZeneca, GlaxoSmithKline, and Takeda the other three. In all of these deals, the Western licensee has taken over the development, manufacturing, and commercialization rights outside China, moving the asset fully under FDA oversight and Western commercial control.
Chinese licensors accept manufacturing and IP transfer as conditions of allowing medicines to reach Western patients. As a result, Western companies also retain control of regulatory pathways and commercial distribution. In this way, current deals already implement the kind of geopolitical protections other industries have sought. China implemented similar policies for US companies seeking access to the Chinese market across various industries.
These deal structures address the manufacturing vulnerability. Innovation leadership is a separate matter.
Drugs are IP-protected molecules. When a Chinese-discovered drug candidate is licensed to a US company, manufacturing, IP enforcement, regulatory submissions, and commercial operations all move under US control, governed by FDA standards and US courts. The supply chain follows the licensee. That is structurally different from rare earths, semiconductors, or batteries, where controlling the physical production process is the moat. A drug candidate discovered in a Chinese laboratory cannot be weaponized against American patients the way a rare earth mine or a chip fabrication plant can be turned off. Blocking US partnerships will not prevent China from developing pharmaceutical capacity. That capacity already exists and will continue to grow regardless of US policy. In fact, if the US were to no longer license early-stage assets, this would serve as a catalyst for China to build fully integrated global pharmas instead of satisfying their domestic ambitions and letting the US do the same, as is happening now.
Manufacturing re-shoring requirements and innovation pipeline restrictions are different policy instruments targeting different vulnerabilities. Conflating them produces a policy that addresses neither.
The Case Against Restriction
The case for restriction rests on what economists call the fixed-pie fallacy: the belief that innovation exists in fixed supply, and that another country’s gains must come at America’s expense.3
Chinese companies have neither the regulatory infrastructure nor the commercial ambition to bring their drugs to the US market independently. Restriction would not likely keep those medicines from American patients, but it would change who benefits from bringing them here. A Chinese company generates proof-of-concept data, a European sponsor, for example, licenses the asset, runs late-stage trials, and files with the FDA. American patients receive the medicine. American companies, employees, investors, and tax revenues do not.
Currently, US investors and pharmaceutical companies are capitalizing on Chinese biotech innovation. American firms are the dominant acquirers of Chinese-origin assets globally.4 The risk is that Congressional and Treasury action could shut down the pipeline that US companies are leveraging, and delay access to new medicines that American patients need.
Why would you want to change a relationship where we're winning right now? - Rod Wong, MD, Managing Partner and CIO, RTW Investments, LP5
Cancer is one of the leading causes of death in the United States, and promising next-generation treatments are being developed in China. For example, Akeso's ivonescimab became the first drug to beat Keytruda® in a randomized Phase 3 head-to-head trial conducted in China, demonstrating superior progression-free survival in first-line non-small cell lung cancer. Updated data at ASCO 2026 showed a 34 percent reduction in death risk in combination with chemotherapy.6,7 The pathway to American lung cancer patients runs through Akeso’s U.S. partner, Summit Therapeutics, a Nasdaq-listed company currently running global registration trials and has filed an application with the FDA to market the drug in the US.
The U.S. Can Compete and Collaborate with China
Competing with China's development efficiency requires modernization. Four reforms would close the gap on American terms.
Continue to invest aggressively in basic science. NIH funding is the foundation of the American innovation pipeline. We spend four to five times more than China on basic science research. As a result, the US remains unrivaled in first-in-class innovation.
Speed up translational development. This is the most important way in which the US has slipped. In fact, long before China’s emergence, the US had been losing its translational lead to the UK and Australia. To reverse course, we should lean into our natural advantages in technology and as the world’s flag bearer in regulation. AI-assisted trial enrollment can compress timelines materially. Broader adoption of Phase 1-3 umbrella protocols, already frequently used in oncology, should extend across therapeutic areas. These reforms are already in use in the best-run programs and need to become the default.
Rationalize Phase 1 dose-finding. Over time US Phase 1 trials have become more conservative and slower, with no demonstrated safety benefit. That gap is bureaucratic rather than scientific. Closing it would accelerate every program that enters the American development system.
Modernize FDA manufacturing standards for new modalities. Cell and gene therapies are evaluated against standards designed for small molecules and biologics, a prior generation of science. Seventy-four percent of FDA Complete Response Letters issued between 2020 and 2024 cited manufacturing and quality deficiencies rather than safety or efficacy concerns. Updating CMC requirements to reflect the actual biology of advanced therapies would reduce delays and costs without adding to patient risk.
These reforms deploy FDA expertise as a competitive advantage.
We had gotten bureaucratic and slow because we had no challenger, and so let's acknowledge that, and let's get fast, and let's lean into our strengths. - Rod Wong, MD, Managing Partner and CIO, RTW Investments, LP8
Conclusion: More Innovation Benefits Everyone
Cancer, cardiovascular disease, obesity and rare diseases do not recognize national borders, and the medicines that will extend human life over the next decade will come from laboratories around the world. China's emergence as a major force in drug development accelerates the discovery of new treatments, creating opportunities for US companies to in-license, develop, and bring those medicines to American patients. The United States can maintain its strong track record of innovation by modernizing its clinical and regulatory infrastructure to match the speed and efficiency the moment demands, while allowing U.S. companies to leverage biomedical advances that come from abroad. Getting that balance right is how American leadership in medicine endures.
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Statements reflect RTW’s views and opinions as of the date of publication and not as of any future date. All expressions of opinion are subject to change without notice and are not intended to be a forecast of future events or results.
1Information Technology and Innovation Foundation (ITIF). "Fact of the Week: China Has Surpassed the US in the Number of Drug Clinical Trials, with 1,100 More Trials Listed." June 9, 2025. https://itif.org/publications/2025/06/09/china-surpassed-us-number-drug-clinical-trials-1-100-more/. Citing data from the World Health Organization International Clinical Trials Registry Platform (WHO ICTRP).
2China's Trial Advantage: Tracking Nation's Growth in Pharma Innovation and Global Investment." Pharmaceutical Executive, May 2026. Citing peer-reviewed cost-per-patient data for Phase III non-small cell lung cancer trials: approximately $25,000 in China vs. $69,000 in the United States. https://www.pharmexec.com/view/china-s-trial-advantage-tracking-nation-s-growth-in-pharma-innovation-and-global-investment
3Perry, Mark J. "The Fixed Pie Fallacy." AEI Carpe Diem, American Enterprise Institute, December 23, 2006. https://www.aei.org/carpe-diem/the-fixed-pie-fallacy/
4ARC Group. "China Innovative Pharma Going Global." 2025 China Healthcare Industry White Paper. https://arc-group.com/china-innovative-pharma/
5RTW’s Rod Wong on how China has (and hasn’t) changed his firm’s investment strategy,” Endpoints News, June 25, 2026
6Akeso. "Ivonescimab Monotherapy Decisively Beats Pembrolizumab Monotherapy Head-to-Head." Press release, May 30, 2024. https://www.prnewswire.com/news-releases/ivonescimab-monotherapy-decisively-beats-pembrolizumab-monotherapy-head-to-head-achieves-statistically-significant-superiority-in-pfs-in-first-line-treatment-of-patients-with-pd-l1-positive-nsclc-302159842.html. Published in The Lancet, March 2025
7ASCO: Akeso's Ivonescimab Bests PD-1 Inhibitor in Lung Cancer Chemo Combos, Slashing Death Risk by 34%." Fierce Pharma, June 2026. https://www.fiercepharma.com/pharma/asco-akeso-ivonescimab-bests-pd-1-inhibitor-squamous-nsclc-overall-survival
8RTW’s Rod Wong on how China has (and hasn’t) changed his firm’s investment strategy,” Endpoints News, June 25, 2026
