Novartis A deal worth up to $7.8 billion has been signed, the latest in a series of partnerships between major pharmaceutical companies and Chinese biotech companies.
The Swiss pharmaceutical giant has entered into a licensing agreement with China-based Avogen Biosciences for its lead asset, an early-stage experimental treatment for autoimmune diseases, Avogen announced in a statement on Friday.
With patents on top-selling drugs generating hundreds of billions of dollars in sales facing a “patent cliff” in the early 2030s, China is giving Western biopharmaceutical companies hope of discovering the next blockbuster drug.
Novartis’ usually stable stock fell last month by the most since 1987 after several clinical trial setbacks, raising questions about the company’s ability to develop and source new drugs to offset looming patent expirations.
As part of the deal with Avogen, the company will pay $575 million upfront for worldwide rights to the Chinese company’s messenger RNA therapy and $7.2 billion in additional milestone payments. It will also have the exclusive option to license Abogen’s assets developed on the RNA platform.
Licensing deals have emerged as a preferred way for Western drug companies to exploit Chinese science, allowing them to buy the rights to experimental drugs without having to buy out the companies developing them.
Luchun Ji, a partner at Sidley, told CNBC that such agreements can reduce risk for big drug companies because licenses can be terminated if a drug disappoints or development priorities change. For Chinese biotech companies, upfront payments and milestone payments, on the other hand, provide a source of funding while allowing them to continue developing drugs in their home market.
“The speed of innovation in China, the speed of clinical trials, is really, really fast,” Ji said, attributing this development primarily to regulatory reforms by China’s drug regulator, the NMPA, which he said has “completely overhauled its system in the last few years.”
He added that early-stage clinical development has become faster and cheaper, coupled with the return of overseas-trained Chinese scientists, allowing the country’s biotech companies to generate the data needed to attract the world’s largest biopharmaceutical companies.
far from lonely
Novartis announcement comes after Danish weight loss drug maker Novo announced earlier this week that it has entered into an exclusive licensing agreement with Hengrui Pharma for up to $2.6 billion for its early-stage, once-weekly GLP-1/GIP tablet.
Novo is under pressure to find a successor to its semaglutide series, which includes blockbuster products Wigovy and Ozempic, as its share price has plummeted over the past two years amid increasing competition in the anti-obesity space.
british GSK announced in mid-September that it would acquire blood cancer treatments from China’s Chimagen Biosciences for up to $750 million.
Chris Sheldon, head of business development at GSK, told a healthcare investor event in London last month that while the company was not targeting any specific region for innovation, China’s share of new biotech innovation was rapidly increasing.
ING estimates that China will account for around a third of new molecules in the world’s pharmaceutical pipelines in 2026, up from 4% in 2014.
The bank expects the value of Chinese biotech outlicensing deals to exceed $250 billion in 2026 as foreign demand for pharmaceutical assets increases.
Medicines developed in China are increasingly being drawn into the development programs of major global pharmaceutical companies.
AstraZeneca announced earlier Friday that it had entered into a partnership with summit therapeutics This is to test tumor treatment drugs.
Together with Daiichi Sankyo, the company plans to test a combination of AstraZeneca’s cancer drug Datroway and Summit’s ivonecicimab, developed by Chinese biotech company Akeso and licensed to Summit, on multiple tumor types.
AstraZeneca has committed to investing $15 billion in China by 2030 to expand both manufacturing and research and development there. In the past few months, the company has signed several licensing deals with Chinese biotech companies with a potential value of more than $1 billion.
