McDermott Will & Schulte’s Paris partners, Emmanuelle Trombe and Anthony Paronneau, explain why life sciences companies need a strategy for engaging with China.

China’s place in the global biotechnology ecosystem has changed fundamentally. Not long ago, it was viewed primarily as a destination for manufacturing and generic development. Today, it is increasingly where innovative science is being discovered, developed and commercialised.

For life sciences companies, investors and dealmakers, that changes the conversation. Whether China should feature in a global innovation strategy is no longer the key question. The market has already answered that. The challenge now is understanding how to engage with China’s biotech ecosystem in a way that captures opportunity while managing legal, commercial and geopolitical risk.

China has become a source of innovation

China’s emergence as a biotech powerhouse reflects years of investment in research infrastructure, government support, the return of internationally trained scientists and the rapid adoption of technologies such as artificial intelligence. Just as importantly, the nature of China’s competitive advantage has changed. It is no longer simply about cost.

What we hear consistently from companies active in the market is that China’s greatest strength is its ability to execute. Turning promising science into clinical data is often the biggest challenge in biotech, and China’s ecosystem has become exceptionally good at moving programmes forward quickly through efficient decision-making, sophisticated research infrastructure and access to deep scientific and engineering talent.

That speed creates value. Earlier proof-of-concept data enables companies to make investment decisions sooner, attract partners earlier and reduce development risk. In a more selective financing environment, shortening development timelines can make a material difference.

The quality of innovation has also evolved. Chinese biotech companies are increasingly producing differentiated assets that attract interest from multinational pharmaceutical companies and investors. For businesses looking to strengthen their pipelines, China is becoming a source of innovation rather than simply a place to develop existing programmes more efficiently.

China’s biotech rise

Why Europe is a natural partner

China’s strengths do not diminish Europe’s role; they make collaboration more compelling. Chinese biotech companies increasingly want partners that can help them navigate international regulation, commercialise products globally and access Western capital markets. European companies, meanwhile, are looking for innovative assets, efficient development pathways and opportunities to replenish pipelines. Those ambitions are highly complementary.

Clinical development illustrates this well. China’s ability to recruit patients quickly, particularly in oncology and other high-incidence diseases, can significantly accelerate development programmes. At the same time, global regulatory expectations continue to require diverse patient populations, meaning multinational trial strategies remain essential. China is becoming an increasingly important component of global development programmes.

This shift is also changing how transactions are structured. Licensing remains an important model, but it is increasingly complemented by joint ventures, NewCo structures and other strategic collaborations that better align incentives and share risk. In our experience, successful cross-border partnerships depend less on legal structure than on both parties having a clear understanding of their commercial objectives from the outset.

Designing deals for a more complex world

As collaboration becomes more sophisticated, so do the issues companies must address. Intellectual property, governance, regulatory compliance and data management all require careful planning, particularly where multiple jurisdictions are involved. Strong intellectual property protection remains fundamental, but success increasingly depends on building transaction structures that support collaboration over the long term.

Geopolitics has undoubtedly added another layer of complexity. Foreign investment screening, export controls, data localisation requirements and evolving biotechnology legislation have all increased scrutiny of China-related transactions. Yet these developments have changed how deals are designed rather than whether they happen. Clients are increasingly focused on allocating rights appropriately, protecting intellectual property and building sufficient flexibility to respond to future regulatory developments.

There is also a broader consideration. While China has become an increasingly important engine of innovation, the commercial economics that underpin biotech research remain global. Returns generated in markets such as the United States continue to fund much of the venture investment and high-risk research that drives scientific progress. As governments consider reforms to pricing and reimbursement, maintaining incentives for innovation will remain critical.

China’s growing importance reflects a biotechnology industry that is becoming more interconnected, with different regions contributing distinct strengths. For European life sciences companies, success will depend less on deciding whether to engage with China than on developing a clear strategy for doing so. Those conversations are already taking place in boardrooms across the sector, and they are likely to shape the next generation of biotech partnerships.