China healthcare and pharmaceuticals Report Interpretation

Overview

This event commentary assesses reports of potential US approval for pharmaceutical licensing agreements with Chinese counterparts. Nomura considers the development positive for China healthcare investment sentiment and believes it supports continued China-US out-licensing activity.

Core views

Reuters reported on 18 September that the US Treasury Department was developing rules that would allow US pharmaceutical companies to pursue in-licensing agreements with Chinese counterparts. Nomura frames this as a constructive reversal in tone relative to earlier adverse proposals that could have hindered cross-Pacific life-science collaboration. The report argues that actual deal activity has remained resilient despite geopolitical concerns. According to NMPA data cited by Nomura, Chinese companies completed a record 81 out-licensing transactions valued at USD110bn in 1H26. Reuters also reported that Chinese companies accounted for half of US in-licensing deals. Nomura attributes this resilience to the value proposition Chinese firms offer in novel-drug development. Nomura believes investors have become largely less sensitive to intermittent geopolitical concerns than when decoupling proposals first emerged in the prior September. The reported US policy development therefore provides additional reassurance and is viewed as positive for sector investment sentiment, particularly for Chinese pharmaceutical and biotechnology companies. The report also links this view to China's 15th Five-Year Plan, which identifies globalization as a key objective for pharmaceutical and biotech companies; Nomura expects China-US out-licensing to continue benefiting from this favorable environment. The firm further argues that warmer US-China relations in life sciences would indirectly benefit Chinese CRDMOs, which faced significant geopolitical headwinds during 2024-2025. Improved collaboration conditions could therefore extend the positive effect beyond drug developers to outsourced research, development and manufacturing service providers.

Analysis framework

Nomura evaluates a reported US policy development against prior geopolitical proposals, current China-US licensing activity and the strategic policy backdrop. It uses transaction count and value data, plus the reported share of US in-licensing deals involving Chinese companies, to support its conclusion that cross-border collaboration remains resilient and sentiment-positive.

Key data

• China out-licensing transactions81 transactionsRecord-high number completed in 1H26, according to NMPA data cited by Nomura.
• China out-licensing deal valueUSD110bnTotal value of the 81 transactions completed in 1H26.
• Chinese share of US in-licensing dealsHalfReuters reported that half of US in-licensing deals involved Chinese companies.

Impact & implications

Nomura sees the prospective rules as reducing concern around cross-Pacific licensing and reinforcing a favorable environment for Chinese pharmaceutical and biotech companies. It also expects indirect support for Chinese CRDMOs through warmer life-sciences relations.