PwC analysts have warned the speedy evolution of the Chinese biotech sector is creating “heightened risks related to IP security, regulatory compliance and strategic alignment.”
China’s rise as a key source of molecules has gone up a gear in 2025. The pipeline of PD-1/L1xVEGF bispecifics, the hottest mechanism in immuno-oncology, is dominated by drug candidates discovered in China. Bristol Myers Squibb, Merck & Co. and Pfizer have collectively paid more than $3 billion upfront for Chinese bispecifics in recent months—and are chasing a front-runner that also originated in China.
PwC analysts commented on the trend in their midyear outlook for U.S. pharma and life sciences deals. With Chinese assets accounting for more than one-third of molecules licensed by multinational U.S. pharma companies, the analysts see risks amid the opportunities that are available to drug developers.
“The substantial engagement with Chinese biotech firms ... has brought additional scrutiny from a geopolitical and national security perspective,” the analysts said. “The rapidly evolving Chinese biotech landscape, characterized by advanced scientific capabilities and rapid execution in high-potential therapeutic modalities, underscores both opportunities and heightened risks.”
PwC analysts said they believe “the near-term prospects for M&A in the sector remain robust” given the pace of scientific progress and the cash on pharma balance sheets. But the emergence of a “multifaceted regulatory and geopolitical set of challenges” means companies need “comprehensive due diligence and strategic foresight” in dealmaking. Pfizer’s CEO Albert Bourla, Ph.D., recently discussed the need to scrutinize Chinese data.
The PwC report listed disruption at the FDA, cautious capital markets and pressure from activist investors as the other trends that have shaped dealmaking over the past six months. Looking forward, the analysts said biopharma dealmakers will be closely tracking the Trump administration’s pursuit of a “most favored nation” drug pricing policy, ongoing changes at the FDA and the impact of tariffs on the industry.
“The sector’s focus remains on bespoke bolt-on deals to strategically strengthen innovation pipelines amid an increasingly complex regulatory environment,” Roel van den Akker, U.S. pharma and life sciences deals leader at PwC, said in a statement.