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Multinationals signal tighter drug deal budgets as China biotech leans on licensing
Dealmaking has overtaken IPOs and pre-IPO fundraising as a key funding path for cash-starved Chinese biotech, while healthcare IPO proceeds totaled HK$14.1 billion in Hong Kong and 2.12 billion yuan on China A-shares in the first half.
South China Morning Post Economy reports that record cross-border licensing deals helped some Chinese biotech companies move into profitability in the first half of the year, but multinationals are now indicating they plan to tighten their drug acquisition and deal spending. According to analysts cited by the outlet, deals with global partners have become the primary funding option for cash-starved Chinese biotech firms that need capital to advance drug discovery, clinical development, and regulatory approval. The outlet also notes lingering questions about whether dependence on overseas licensing income can remain sustainable over the long term. The report quotes Jefferies’ Cui Cui saying Chinese biotech assets remain cost-effective versus global peers, and suggests that greater selectivity from big pharma could make Chinese assets look even more attractive. It also cites Macquarie Capital’s Tony Ren comparing the scale of licensing deals with IPO proceeds. On capital markets activity, Deloitte data cited by SCMP Economy show healthcare and drug companies raised HK$14.1 billion, or US$1.8 billion, through 11 first-half listings in Hong Kong. The outlet adds that EY data show six biotech and healthcare firms raised a combined 2.12 billion yuan through initial listings on mainland China’s A-share market.