Sriparna Roy and Sneha S K
4 min read
(Reuters) -US drugmakers are licensing molecules from China for potential new medicines at an accelerating pace, according to new data, betting they can turn upfront payments of as little as $80 million into multibillion-dollar treatments.
Through June, US drugmakers have signed 14 deals potentially worth $18.3 billion to license drugs from China-based companies. That compares with just two such deals in the year-earlier period, according to data from GlobalData provided exclusively to Reuters.
That increased pace is expected to continue as US drugmakers look to rebuild pipelines of future products to replace $200 billion worth of medicines that will lose patent protection by the end of the decade, analysts, investors, a banker and a drug company executive told Reuters.
"They are finding very high-quality assets coming out of China and at prices that are much more affordable relative to perhaps the equivalent type of product that they might find in the United States," said Mizuho analyst Graig Suvannavejh.
In May, Pfizer (PFE) spent $1.25 billion upfront for the right to license an experimental cancer drug from China's 3SBio (TRSBF). That is the largest such deal this year and could be worth up to $6 billion in payments to 3SBio if the drug is successful.
Regeneron Pharmaceuticals (REGN) in June paid $80 million upfront in a potential $2 billion deal for an experimental obesity drug from China's Hansoh Pharmaceuticals.
The total cost of licensing agreements, including low upfront payments and subsequent larger payouts, averaged $84.8 billion in the US, compared with $31.3 billion in China over the past five years, according to GlobalData.
A licensing agreement grants a company the rights to develop, manufacture, and commercialize another company’s pharmaceutical products or technologies in exchange for future target-based, or "milestone", payments while mitigating development risks.
China's share of global drug development is now nearly 30%, while the US share of the world's research and development has slipped 1% to about 48%, according to pharmaceutical data provider Citeline's report in March.
Chinese companies have licensed experimental drugs to US drugmakers that could be used for obesity, heart disease and cancer, reflecting abundant Chinese government investment in pharmaceutical and biotech research and development.
While small molecules, like oral drugs, have been the most commonly licensed, there has been a notable shift toward novel treatments such as targeted cancer therapies and first-in-class medicines, Jefferies analysts said in a note in May.
