US Draft Rules to Permit Most Pharma Licensing Deals with China, Sources Say

The U.S. government is developing rules for pharmaceutical company investments in China that are expected to preserve the ability to conduct most licensing deals for Chinese-developed drugs, according to three sources briefed on the matter. This approach would represent a significant departure from tighter restrictions imposed on other industries and would be less stringent than what some lawmakers have advocated.

Proposed Regulations

The rules, which are being drafted by the U.S. Treasury Department, are likely to permit U.S. drugmakers to invest in promising new medicines from Chinese companies, the sources said. The primary exceptions would be for treatments related to pathogens or biotechnology that could potentially be weaponized.

Sources, who requested anonymity as the process is not public, cautioned that the rules have not been finalized and could be subject to change. They also noted it is unlikely the Treasury will release the new rules ahead of a meeting between Chinese President Xi Jinping and U.S. President Donald Trump scheduled for next week.

Market Impact and Key Deals

The stakes are high for the pharmaceutical industry, as continued access to Chinese innovation helps fill the drug development pipelines of major U.S. firms. According to research firm GlobalData, outbound licensing deals in Chinese biotech were valued at $115 billion last year.

Ad

This trend has accelerated, with nearly half of all U.S. deals to license drugs from foreign companies in 2025 being with Chinese entities. Recent major collaborations include:

• Bristol Myers Squibb signed a partnership with Jiangsu Hengrui Pharma potentially worth up to $15.2 billion.
• Pfizer announced a collaboration with Innovent Biologics covering 12 oncology programs valued at up to $10.5 billion.

Competing Interests in Washington

The proposed rules reflect a deep divide in Washington over how to manage economic competition with China. Major pharmaceutical companies have argued against broad restrictions, warning that they could be cut off from a critical source of new medicines. In a recent interview, Pfizer CEO Albert Bourla stated he does not believe licensing medicines from Chinese firms creates a national security concern, saying, "The important thing is to have a new medicine."

Conversely, some smaller biotech companies and lawmakers view these investments as a national security risk that cedes U.S. leadership in drug development. Jason Kelly, CEO of Ginkgo Bioworks, has argued that current investment levels could lead to a "strategic dependence on China for innovative drugs." This view is shared by lawmakers like Rep. John Moolenaar (R-MI), who has urged the Treasury to use a 2025 national security law to crack down on such transactions.