Cross-border licensing activities seem to gather momentum to commercialize foreign drugs in the Chinese market. According to Pharmcube's database, cross-border licensing deals of innovative drugs aiming for China's market saw an overall growing tendency from 2017 to 2021.1 In 2021 H1, China has made 50 in-licensing deals, among which the top 10 add up to $5,197.5 million in value.2
Licensing deals do have advantages for promoting foreign drugs in China, but they are not shortcuts. Prudent work still needs to be done before making the deals.
What are Licensing Deals in Pharma Industry
In a licensing deal, the licensor permits the licensee to research, register, produce and/or commercialize drugs, and/or use the licensor's brand, trademark, and/or technology in a targeted territory.
The licensee shall make upfront payments, promise milestone payments, and agree on future loyalties to the licensor.
In an in-licensing deal to China, the licensor is a foreign company, and the licensee is a Chinese company. The two parties will make a written agreement on promoting a product in China.
Licensing Deals See Robust Growth
Biopharma deals witnessed strong growth from 2017 to 2020. Chinese companies also engaged themselves into more and more cross-border deals from 2015 to 2019.
According to Mr. Feng Zhou, who spoke at the CRAC-HCF 2021 Pharma Session, licensing deals are what Chinese companies favor in cross-border transactions. Among the licensing deals involving Chinese companies, in-licensing deals take bigger part than out-licensing ones.
China's In-Licensing Deals
Oncology is the hottest therapeutic area for China's in-licensing deals, accounting for 56% in 2020's deals3 and 52% in 2021 H1's deals. Oncology also takes 8 places out of the top 10 in-licensing deals in 2020.
Oncology-related deals are popular because China is indeed a huge market for anti-neoplastic drugs. In 2020, the anticancer drugs' market share in China's public healthcare centers and retail drug stores rose to 10.01%, with a sales volume of 145.874 billion yuan (about $22.83 billion).4
Top 10 China Biopharma In-Licensing Deals in 2020
Source: MSQ 2020 China Biopharma Global Transactions and IPOs Review
Deal Source Region
Deal Value (US$ mln)
Ji Xing Pharma
China Medical System
China Grand Pharma
3D Medicines Inc
3D Medicines Inc.
Advantages of Licensing Out to a Chinese Partner
Leveraging the Chinese partner's knowledge of local market and regulations.
For deals licensing out the right of developing a drug product: keeping the research in China at the same pace as the overseas research; applying for marketing approval from China's National Medical Products Administration as soon as possible.
For deals licensing out the manufacturing rights: sparing the foreign company from building up production pipelines.
Advice for Foreign Companies Making Licensing Deals
Do market research to know the current and potential competitors in China.
Choose a good partner by evaluating capabilities in aspects like R&D, production, and sale.
Consult an attorney to avoid pitfalls in the agreement.
Contact BaiPharm for Consulting Services
BaiPharm, a pharmaceutical regulatory consulting service provider based in China, has multiple strengths:
Experienced in market entry projects of finished drugs, APIs, excipients, and packaging materials.
Having a global network of offices, business representatives and experts across China, Japan, South Korea, the US, and Europe to offer 24-hour services to clients.
Multi-language translation services covering Chinese, English, Korean, Japanese, German, and Italian.
For drug registration / MAH consulting / GMP / GVP/ medical translation services, welcome to contact BaiPharm.
Related: Licensing Deals Involving Chinese Pharma Companies in H1 2022