Goldman: Big Pharma Eyes China Biotech as Patent Cliff Nears

A Goldman Sachs analysis highlights that major pharmaceutical companies are turning to Chinese biotech firms for new drug assets, with $440 billion in drug patents set to expire by 2032. Salveen Richter, the bank's lead US biotech analyst, believes Chinese competitors could accelerate product development timelines for Western drugmakers.

China's five-year pharmaceutical strategy, unveiled on Sept. 18, aims for at least 25% of global first-in-class drugs—medicines operating through novel mechanisms rather than enhancements to existing treatments—to originate from the country by 2030.

Is China Biotech a Supplier or a Rival for Big Pharma?

AstraZeneca last week committed $2 billion to invest in Summit Therapeutics, a US-listed company. Summit obtains its leading cancer therapy from China's Akeso under a licensing agreement.

Xinhua reported that the total value of overseas licensing agreements for Chinese drugs has surpassed $120 billion this year, marking a 36% increase compared with the same period last year.

Richter noted to CNBC that much of China's drug development focuses on creating enhanced versions of existing medications, which could lead to market saturation.

She also observed that Chinese developers are seeking to establish a presence in the obesity treatment market, which has driven Eli Lilly's stock performance.

According to Richter, buyers may be able to acquire biotech firms outside China at lower premiums over their market values.

“I do think that best-in-class first-in-class innovation around the world will still get rewarded.”

Salveen Richter, lead US biotech analyst at Goldman Sachs, speaking to CNBC

Will China’s Drug Data Hold Up in Western Patients?

Richter cited Summit's HARMONi-3 lung cancer trial, which is testing its therapy against Merck's Keytruda. She said this study will assess whether clinical data from Chinese trials remains valid for Western patients.

Summit anticipates releasing further data on squamous tumors, a form of lung cancer, in the latter half of 2026.

An interim analysis conducted in April did not yield an early positive result, and Summit's shares opened 24% lower the subsequent day.

Richter suggested that Chinese drug manufacturers already collaborating with Western companies could evolve into the next generation of multinational corporations. She indicated she would track them as potential biotech investment targets.

China, traditionally a supplier of pharmaceutical ingredients, now characterizes its industry as transitioning toward exporting novel medicines. Under the plan, Xinhua reported, 50 pharmaceutical companies would achieve annual revenues exceeding 10 billion yuan ($1.5 billion) by 2030.