China's Drug Innovation Surges with Record Trials, Deals and Approvals as US Scrutiny Mounts

China's pharmaceutical industry has cemented its position as a global drug development powerhouse, setting records in clinical trials, out-licensing deals and innovative drug approvals in 2025 and the first half of 2026, even as U.S. lawmakers move to tighten oversight of Chinese biotech investment.

Clinical drug trial registrations in China hit a record 5,215 in 2025, more than double the 2020 figure, according to the National Medical Products Administration. Of those, 57.5% were trials for new drugs, an 18% year-on-year increase. Trials were concentrated in Beijing and Shanghai, as well as in the provinces of Guangdong and Jiangsu. Chinese companies and institutions initiated or funded 93% of all registered trials, and about 92% were conducted within China. China has topped global innovative drug clinical trials since 2023, launching 2,069 new innovative drug trials in 2024, or 44% of the global total. It also accounted for more than half of late-stage oncology study activity by 2025, with over 90 oncology studies from Hengrui Pharma alone presented at the 2026 American Society of Clinical Oncology meeting.

China's innovative drug out-licensing deals reached about US$110 billion in the first half of 2026 across 81 deals, already 80% of 2025's full-year total, according to data from the National Medical Products Administration. The licensed products covered oncology, metabolism, immunology and neurology, with main licensee companies from the US, Britain, France and Italy. In the first five months of 2026, Chinese biotech firms struck 169 licensing deals worth a combined US$93 billion, an 87% jump from a year earlier, according to HSBC research.

Regulatory approvals have accelerated. In the first half of 2026, 38 innovative drugs received market approval, with 31, or over 80%, domestically developed, according to the Ministry of Industry and Information Technology. These included the world's first CAR-T therapy for solid tumors, the world's first bispecific antibody against rabies and the world's first invasive brain-computer interface device. The NMPA approved 19 innovative drugs so far this year, including 15 from Chinese manufacturers, after approving a record 76 innovative drugs in 2025, up from 48 in 2024.

In one breakthrough, a new drug jointly developed and submitted for marketing approval globally in China, the US, Japan and other countries was approved for market launch in China first. The orexin 2 receptor selective agonist, designed for type 1 narcolepsy patients aged 16 and above, is the first drug of its kind to move from original target discovery through simultaneous international multi-center clinical trials to regulatory approval and market launch in China. Clinical data from global trials involving 19 countries and regions showed the drug can improve core symptoms of the disease and is expected to become a first-line treatment option in the future.

China's pharmaceutical industry showed stronger innovation capacity and steady growth in the first half of 2026, with value-added industrial output of major pharmaceutical enterprises rising 6.4% year on year and biopharmaceuticals posting double-digit growth. Export delivery value exceeded 210 billion yuan (about US$30.91 billion), up 9% from a year earlier, with higher value-added products accounting for nearly one-fifth of total exports. The ministry has supported 21 pharmaceutical companies in building smart factories and has cultivated more than 300 green factories.

UCB's CEO said China has moved from manufacturing to clinical trial expertise and is now becoming a source of discovery and innovation, noting that roughly one in four new drugs discovered globally now comes from China and that ratio might rise to two in four. UCB recently signed an agreement to establish the China Integrated Operation Center in Suzhou Industrial Park. The NMPA launched fast-track review pathways in the Provisions for Drug Registration issued in 2020, later incorporated into regulations under China's Drug Administration Law, which took effect in May.

The surge has drawn attention in Washington. The Senate Special Committee on Aging held a hearing on July 15 examining foreign ownership and control of the U.S. pharmaceutical supply chain, with witnesses testifying that China surpassed the United States in several biotechnology metrics between 2024 and 2025, including deal value and clinical development activity. Committee leaders introduced the bipartisan Pharmaceutical Investment Oversight and Accountability Act, which would require the Federal Trade Commission and the Committee on Foreign Investment in the United States to submit annual reports to Congress on foreign investment in pharmaceutical manufacturing and related technologies. Witnesses also expressed concerns about Chinese investment in U.S. biotechnology companies, data transfer from U.S. clinical trials, and U.S. dependence on Chinese suppliers for pharmaceutical ingredients.