One of the largest U.S. drug companies announced this week that it will partner with a Chinese drugmaker to test some of its experimental drugs and discover new drugs, a deal that could mark the next step in cross-continent coordination.
bristol myers squib announced Tuesday a potential multibillion-dollar partnership with Hengrui Pharmaceutical, one of China’s top pharmaceutical companies. The two companies will work together to develop about a dozen drugs, including four discovered by Bristol that Hengrui will send to China to conduct early-stage clinical trials. The two companies also plan to collaborate on discovering new drugs.
“This is a huge signal,” said Michael Baran, head of private investments at healthcare-focused hedge fund Affinity Asset Advisors and a former partner at Pfizer Ventures. He said U.S. drug companies have previously partnered with Chinese companies to develop drugs, including a 2019 partnership with Amgen and BOne.
But he said the Bristol agreement was important because it was more mutual. This has led more U.S. drugmakers to do early drug development in China in an effort to bring treatments to market faster, raising the prospect that Chinese companies could begin to become global powers.
The logo of pharmaceutical company Bristol-Myers Squibb on the facade of its German headquarters in Munich, March 10, 2026.
Matthias Bork | Picture Alliance | Getty Images
By contributing assets and collaborating on new drug development, Bristol and Hengrui will each make China look more like part of a drug company’s global research and development operating system than a source of one-off molecules, Baran said.
American and European biopharmaceutical companies pfizer, Merck and AstraZeneca We’re increasingly looking to China to find the next blockbuster. So far this year, just over half of Big Pharma’s licensing deals have come from China, up from 39% overall last year and 5% in 2022, according to data from Dealforma, which tracks deals in the sector.
The strategy so far has been primarily for big drug companies to license drugs discovered and early tested in China, or to essentially move experimental drugs out of China. Some U.S. companies, such as Eli Lilly, partner with Chinese companies to discover and develop new drugs.
The Bristol deal is different in that it sends some experimental drugs to China.
A worker checks the location of a feeding tray on a pharmaceutical manufacturing truck at Hengrui Biomedical Industrial Park in Lianyungang, China, December 13, 2021.
Photo | Future Publishing | Getty Images
McKinsey senior partner Lieven van der Veken said the Bristol partnership was different from other partnerships in several key ways. This is similar to Hengrui’s recent deal with GSK that gives the British pharmaceutical company access to some of Hengrui’s experimental drugs. But with this agreement, Bristol acknowledges that there are drugs that can be developed more quickly and at lower cost in China. And we are working with Hengrui to come up with new ideas.
“More and more companies are starting to look at this as a global mesh model, basically saying China is not a threat, it’s not another source of innovation, and we have to leverage this to the hilt,” said Van der Veken, global leader of AI, QuantumBlack, at McKinsey. “You’ve got to be involved. You’ve got to be there. And people have tried to do it with local teams, people have tried to make (venture capital)-based investments. This is just the next level.”
Chen Yu, founder and managing partner of crossover fund TCGX, an early leader in bringing Chinese medicine to the United States, said the industry is currently in a period of transformation, with much of the early research moving to China, where it can research twice as many medicines in half the time and one-third the cost.
“For the past 25 years, American investors and entrepreneurs have had the luxury of not having to think about anyone else,” Yu said. “I don’t think there will be a future like that.”
Yu said that by the end of the decade, the idea of conducting early-stage drug discovery in the United States may seem as realistic as manufacturing iPhones in the United States. He sees the early stages of drug development eventually going the way of textile manufacturing, much of which has moved to China.
He said mid- and late-stage trials would need to be conducted in the U.S. to gain approval from the Food and Drug Administration, but conducting early trials in China could allow companies to introduce the drug more quickly than they currently do.
Some companies are already doing much of their early work in China. Ruud Dobber, head of AstraZeneca’s biopharmaceutical business, said the company is conducting most of its early research into experimental cell therapies domestically. And he “absolutely” expects the UK drugmaker to do more across its pipeline.
Opinions are divided over whether China’s rise will help or hurt the U.S. biopharmaceutical industry. Some, like Yu, argue that making medicines faster and cheaper will help people who need them. Groups such as the Biotechnology Innovation Organization, an industry advocacy group, argue that China’s rise could come at the expense of American companies.
One thing they agree on is that China will continue to be a force in drug manufacturing.
