Global Drugmakers Pursue Chinese Deals Amid Tensions

Amid escalating Sino-US tensions, leading global drugmakers are intensifying their search for acquisition opportunities in China. Despite increasing geopolitical friction and regulatory challenges, pharmaceutical giants are keen to strengthen their presence in what remains the world’s second-largest pharmaceutical market.

This year has already seen several significant deals. AstraZeneca’s acquisition of China-based cell therapy developer Gracell Biotechnologies for $1.2 billion and Novartis’ purchase of the remaining shares of SanReno Therapeutics highlight ongoing foreign interest in China’s pharmaceutical sector. Bristol Myers Squibb and Sanofi are also actively pursuing deals in the region, aiming to bolster their drug pipelines and access innovative treatments.

The renewed foreign interest in Chinese drugmakers comes as a relief to local firms struggling with tighter initial public offering rules and increased scrutiny. For many, this interest provides a vital opportunity to cash out and secure investment amidst a challenging economic landscape. Manas Chawla, CEO of London Politica, noted that these acquisitions offer multinational companies a chance to reduce costs, tap into innovative sectors, and leverage China’s vast consumer base. However, he cautioned that geopolitical tensions, particularly from the US, pose a significant risk.

Despite the challenges, the volume of foreign acquisitions in Chinese healthcare companies has dropped to $720 million as of mid-July, marking a 52% decline year-on-year. This reflects broader concerns about regulatory hurdles and the uncertain impact of ongoing data transfer restrictions.