The U.S. Treasury Department is drafting rules for biopharmaceutical companies investing in China that would likely preserve their ability to sign most licensing deals for drugs originating in the country, according to three people familiar with the matter.
The move would mark a notable departure from the tighter restrictions Washington has imposed on other sectors — from semiconductors to electric vehicles — under a broader national-security drive, and would fall short of the sweeping curbs some lawmakers have sought.
If finalized, the rules are expected to allow U.S. companies to invest in cutting-edge new medicines being advanced by Chinese firms, provided the work is not related to pathogens or biotechnology that could be weaponized, the sources said.
The rules have not been completed and remain subject to change, particularly if President Donald Trump weighs in, the people said, speaking on condition of anonymity because they are not authorized to discuss the process publicly. They added that Treasury is unlikely to unveil any new pharmaceutical investment rules before Chinese President Xi Jinping meets with Trump in the U.S. next week. Treasury and White House officials declined to comment.
The deliberations come as China has rapidly emerged as one of the world’s most important sources of innovative medicines. In the first half of 2026, Chinese companies accounted for eight of the world’s ten largest out-licensing deals, worth a record $110 billion, according to people familiar with the data.
Nearly half of all U.S. licensed-drug import deals in 2025 were struck with Chinese companies, according to research firm GlobalData, a trend that has continued into 2026. Bristol Myers Squibb this year signed a partnership with Jiangsu Hengrui Pharma worth up to $15.2 billion, while Pfizer announced an up-to-$10.5 billion collaboration with Innovent Biologics covering 12 oncology programs.
By June, Chinese companies had signed 81 out-licensing deals with overseas partners, spanning cancer, obesity, autoimmune and neurological disorders. The largest deal to date is an $18.5 billion licensing agreement between CSPC Pharmaceutical and AstraZeneca.
Industry executives and researchers attribute the surge to a confluence of factors. A senior official at the State Key Laboratory of Bioactive Molecules and Druggability Assessment pointed to China’s 2015 drug regulatory reform as a turning point that dramatically shortened the time and cost of bringing innovative medicines to market, alongside the buildout of one of the world’s most complete pharmaceutical R&D ecosystems.
Developing the same medicine in China typically costs 30% to 50% less than in Europe or the United States, industry data shows. Pfizer has said clinical development in China can run roughly three times faster at about half the cost — a critical advantage as U.S. drugmakers race to refill pipelines ahead of $200 billion in drug patent expiries by the end of the decade.
“What China does well is find mistakes faster,” the official said, describing parallel testing of multiple candidates, rapid validation, and large patient pools that allow clinical recruitment in roughly one year, versus two to three years in the West.
Guangdong-based Akeso became the first Chinese pharmaceutical company to outperform the world’s best-selling cancer medicine in a head-to-head clinical trial — a moment many in the industry see as proof that Chinese innovation can compete at the highest level. Still, gaps remain in original target discovery and breakthrough science.
Major drugmakers, including Pfizer, have met with Trump administration officials in recent months — including Treasury Secretary Scott Bessent — to argue against broad restrictions, warning that such limits could cut U.S. companies off from a fast-growing source of new medicines. “I don’t think that that’s the way to compete with China, to try to slow them down,” Pfizer CEO Albert Bourla said in an interview. “The important thing is to have a new medicine, and I don’t see any national security concerns for something like that.”
Representative Jake Auchincloss, whose Massachusetts district is home to many life-sciences firms, said attempts to slow China’s pharmaceutical industry by curbing U.S. spending are bound to fail. “China is spending $100 billion on biotechnology. China has brilliant scientists,” Auchincloss said. “These are people who think that you can drag and drop semiconductor policy to biotechnology policy. You cannot.”
Geopolitical pressures are rising — Washington is separately proposing tighter rules on the use of Chinese clinical data. Yet the market is moving in the opposite direction, with cross-border licensing deals accelerating. That, analysts say, signals deepening confidence in China’s scientific research capabilities, not just its manufacturing.
The final shape of the Treasury rules remains uncertain. But whether the restrictions land narrow or broad, one thing is clear: China’s weight in the global pharmaceutical innovation landscape is no longer something Washington can simply shut out.
