China Biotech Update: From Fast Follower to Global Leader

Review of 2025

For China's biotech industry, 2025 was a transformative year, marking its leap from "fast follower" to "fast leader." This leap was achieved under the dual challenges of tightening domestic venture capital environment and rising U.S. regulatory pressure.

Explosive Growth in Out-Licensing

The most notable feature of 2025 was the continued strong growth in out-licensing of China's innovative drugs. The total value of out-licensing deals for the year exceeded $135.7 billion, more than doubling from $51.9 billion in 2024. Global pharmaceutical giants, including GlaxoSmithKline $GSK(GSK.US) , Merck $Merck(MRK.US) , and AstraZeneca $AstraZeneca(AZN.US) , are increasingly relying on China's R&D pipelines, especially in areas like Antibody-Drug Conjugates (ADC) and bispecific antibodies. However, biotech venture capital financing remains far below the 2021 peak.

Biotech's 'DeepSeek Moment' Arrives

The 'DeepSeek Moment' in biotech was a buzzword in 2025. Akeso Biopharma's $AKESO(09926.HK) Ivonescimab defeated the world's best-selling drug Keytruda in a head-to-head lung cancer clinical trial. This event, dubbed biotech's "DeepSeek moment," clearly indicates that China's innovative drugs not only have cost advantages but have also surpassed in terms of efficacy, fundamentally changing Western capital's perception of China's R&D capabilities.

U.S. Biosecure Act

The Biosecure Act, as part of the National Defense Authorization Act for Fiscal Year 2026, officially took effect on December 18, 2025. Compared to the initial draft, the final version's mandatory requirements were weakened. The names of companies such as WuXi AppTec $WUXI APPTEC(02359.HK) and WuXi Biologics $WUXI BIO(02269.HK) were removed from the main text of the Act. Instead, the U.S. Office of Management and Budget is to publish a list of "biotechnology companies of concern" by December 2026. Additionally, the Act includes a grandfather clause, allowing designated companies to continue fulfilling existing contracts for their clients for up to five years after the ban takes effect.

To address these geopolitical challenges, the WuXi group is accelerating its global "dual-sourcing" and "global dual-plant" strategies. Among them, WuXi Biologics' $WUXI BIO(02269.HK) Irish plant achieved profitability ahead of schedule, with strong and sustained demand for manufacturing services, highlighting the company's operational resilience based on globally diversified infrastructure layout.

Past performance is not indicative of future results. Investors may not get back the full amount invested. Performance calculations are based on net asset value at the end of the calendar year, using net asset value as the benchmark. These figures reflect the increase or decrease in the fund's value during the indicated calendar year. Performance data is calculated in RMB, includes ongoing charges, but does not include trading fees you may need to pay on the Hong Kong Stock Exchange. The fund tracks the Solactive China Biotech Index. Fund inception date: July 24, 2019.

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