The new U.S. proposal may weigh on China-U.S. life sciences collaboration sentiment, but the long-term collaboration foundation remains constructive

Overview

This report focuses on a new policy proposal in the United States that could affect China-U.S. life sciences collaboration. On May 21, 2026, the chair of the U.S. House Select Committee on China wrote to the U.S. Treasury, suggesting that biotechnology be added to the prohibited technology list under the Comprehensive Outbound Investment National Security Act. The report analyzes this event against the backdrop of the rapid increase over the past two years in early-stage molecule licensing collaborations from Chinese pharmaceutical and biotech companies to U.S. pharmaceutical companies, using the collaborations between Innovent Biologics and Eli Lilly, and Hengrui Pharmaceuticals and BMS as case studies.

Core views

The core view is: still positive in the long term, but short-term sentiment pressure needs to be watched. Nomura believes that although the final outcome of this proposal cannot be predicted, cross-border life sciences collaboration has strong commercial and research value, and the industry is worth trillions of dollars. Referencing the actual impact of the Biosecure Act, the collaboration framework will most likely remain broadly intact. At the same time, the relatively friendly U.S.-China leaders' meeting in mid-May 2026 may help ease trade escalation and reduce the probability of further decoupling. However, near-term investor sentiment toward healthcare may be pressured.

Analysis framework

The report uses an event-driven and policy-impact analysis framework: it first identifies the content of the U.S. policy proposal, then assesses the potential impact by combining recent licensing transaction cases between Chinese and U.S. pharmaceutical companies, and finally translates the findings into sector sentiment, stock ratings, and valuation risk using the actual impact of the Biosecure Act as a reference.

Methodology notes

• Valuation methodDCF model

  Target price valuation

  Hengrui Pharmaceuticals' target price of CNY87.49 is based on a DCF model, assuming WACC of 8.7%, a perpetual growth rate of 5.0%, and CSI300 as the benchmark index.

• Policy event analysisGeopolitical and regulatory risk assessment

  Impact of the policy proposal on cross-border life sciences collaboration

  The report assesses uncertainty from the perspectives of the U.S. congressional letter, potential Treasury rules, U.S. pharmaceutical companies, Chinese pharmaceutical companies, and investors, and uses the actual impact of the Biosecure Act to judge the resilience of long-term collaboration.

• Rating systemNomura stock rating system

  Buy rating

  Nomura's Buy indicates that the analyst expects the stock to outperform the benchmark index over the next 12 months.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hengrui Pharmaceuticals (600276.SS/1276 HK)

  The Chinese innovative drug company highlighted in the report; it recently signed a major collaboration deal with BMS and was cited in the U.S. letter as one of the cases of deep China-U.S. life sciences collaboration.

  Strengths

  Has innovative drug R&D and BD collaboration capabilities; Nomura rates it Buy; the DCF target price reflects long-term value expectations.

  Weaknesses

  Its share price has not reacted significantly to recent collaboration announcements, and near-term investor sentiment remains weak.

  Comparison

  Similar to Innovent Biologics, it is used as a representative case of Chinese pharmaceutical companies licensing or collaborating with U.S. pharmaceutical companies.

  Risks

  The next round of VBP price cuts, narrowing valuation premium, unsuccessful BD or clinical progress, and escalating geopolitical restrictions.

• Innovent Biologics (1801 HK)

  Its collaboration with Eli Lilly is cited in the report as a case of China-U.S. life sciences collaboration.

  Strengths

  Currently rated Buy, and the chart shows a target price of HKD114.64, above the current price of HKD80.95.

  Weaknesses

  Recent licensing news did not significantly lift the share price, indicating relatively muted market sentiment.

  Comparison

  Together with Hengrui Pharmaceuticals, it represents the trend over the past two years of Chinese pharmaceutical companies licensing early-stage molecules to U.S. counterparts.

  Risks

  Cross-border collaboration policy restrictions, pressure on sector sentiment, and uncertainty in innovative drug commercialization and clinical progress.

• China healthcare and pharmaceuticals sector

  The industry research object of this report, affected by policy uncertainty surrounding China-U.S. life sciences collaboration.

  Strengths

  Life sciences collaboration has global research and commercial value, the industry is enormous, and long-term collaboration demand remains strong.

  Weaknesses

  It is highly sensitive to geopolitical news in the short term, and investor sentiment may be pressured.

  Comparison

  The report compares the current proposal with the actual impact of the Biosecure Act and believes the real impact may be limited.

  Risks

  Expanded U.S. outbound investment restrictions, escalating trade frictions, blocked cross-border BD transactions, and lower valuation risk appetite.

Key data

• Report date2026-05-25The report cover page date is May 25, 2026, and production was completed at 2026-05-25 04:59 UTC.
• Policy event date2026-05-21The chair of the U.S. House Select Committee on China wrote to the U.S. Treasury.
• Proposal contentSuggest adding biotechnology to the list of prohibited technologies under the COINS ActThis proposal may affect U.S. outbound investment and collaboration in China's life sciences sector.
• Hengrui Pharmaceuticals ratingBuyThe report cites Hengrui Pharmaceuticals 600276 CH/1276 HK as Buy.
• Hengrui Pharmaceuticals target priceCNY87.49Based on a DCF model, with WACC of 8.7% and a perpetual growth rate of 5.0%.
• Hengrui Pharmaceuticals current priceHKD61.35 (2026-05-22)The table discloses price and Buy rating; there is an A/H-share currency and target-price convention difference, and the expected upside is not calculated.
• Innovent Biologics target priceHKD114.64The chart shows Innovent Biologics 1801 HK is currently rated Buy, with a target price of HKD114.64 on 2026-02-12 and a current price of about HKD80.95 around 2026-05-24.
• Nomura rating distributionBuy 57%, Neutral 41%, Reduce 2%Nomura Group global equity research rating distribution as of 2026-03-31.

Impact & implications

The direct impact of this policy proposal is to increase uncertainty around cross-border licensing, R&D collaboration, BD transactions, and investment activity in U.S.-China pharmaceuticals and biotechnology. For the China healthcare sector, the short-term impact is mainly reflected in pressure on risk appetite and valuation sentiment; the long-term impact depends on whether the U.S. Treasury adopts the recommendation, how the restriction scope is defined, the feedback from U.S. pharmaceutical companies and investors, and whether U.S.-China relations continue to improve.

Risks

• The U.S. Treasury adopts the proposal and expands restrictions on biotechnology.
• U.S.-China relations deteriorate again and lead to further decoupling.
• Near-term investor sentiment toward the healthcare sector is suppressed by policy uncertainty.
• The next round of VBP price cuts affects pharmaceutical companies' earnings expectations.
• Valuation premium narrows.
• BD collaborations or clinical progress are unsuccessful.
• The target price may not be achieved if macro, market, or company earnings deviate from expectations.

What to watch

• Whether the U.S. Treasury formally includes biotechnology in the prohibited technology list under the COINS Act.
• The response from the U.S. Congress, U.S. pharmaceutical companies, investors, and regulators to the proposal.
• The direction of trade and technology policy after the U.S.-China leaders' meeting.
• Whether subsequent licensing collaborations, BD transactions, and R&D cooperation between Chinese and U.S. pharmaceutical companies slow down.
• The progress of Hengrui Pharmaceuticals' collaboration with BMS and Innovent Biologics' collaboration with Eli Lilly.
• Changes in China healthcare sector valuations and capital risk appetite.
• The next round of VBP policy and the clinical progress of innovative drugs.