-Introduction–
$43 billion shock and $8.4 billion inquiry
In March 2023, a thunderous announcement shook the global pharmaceutical industry. Pfizer, a giant in the COVID-19 vaccine sector, declared it would acquire Seagen, the “pioneer” of antibody-drug conjugates (ADC), for a staggering $43 billion. This is not only the largest merger in the pharmaceutical sector since 2019 but also a coronation for ADC technology. The signal is clear: the era of ADC drugs has officially arrived.
The shockwave of this announcement crossed the Pacific, stirring up a storm in the realm of Chinese biotechnology. Just a few months later, in December 2023, a local biotech company, Bai Li Tian Heng, announced a deal that sent shockwaves through the industry: they licensed their ADC new drug to the American giant Bristol-Myers Squibb (BMS) for a total price of up to $8.4 billion. This deal set a record for the highest upfront payment of $800 million for a single innovative drug license from China.
The market erupted. Media headlines were filled with praises like “A New Milestone for Chinese Innovative Drugs Going Global” and “A Glorious Moment for Local Biotech.” However, beneath this glory lies a more complex and sharper question: is this a testament to the rise of Chinese biotech strength, or a collective “sellout” for survival under brutal competition? Is this glamorous “sellout” a strategic vision or a desperate gamble for survival?
This is not just an analysis of a business transaction; it is a vivid portrayal of the life-and-death struggle of Chinese innovative pharmaceutical companies. Behind it lies the brutal involution of technological routes, the perilous gamble of capital, and the difficult choices of Chinese biotech on the world stage regarding survival and dreams.
–01–
The “Involution” Dilemma: Why is Everyone Competing to “Sell Out”?
The story of “selling out” is essentially a story of “involution.” To understand this, we must first recognize a representative figure of countless entrepreneurs—Dr. Li.
Dr. Li, a well-respected scientist who returned from abroad, founded his own company five years ago with the dream of creating world-class new drugs, specifically targeting the promising ADC field. The team worked tirelessly, burning through funds and overcoming numerous technical challenges. However, just as their product was about to enter clinical trials, a harsh reality emerged: dozens of companies in China were developing similar technologies targeting the same points. This field was no longer a blue ocean but a bloody battleground.
“It felt like being in a dark forest, where every shadow could be a competitor,” Dr. Li recalled, his voice weary. “You have to run desperately, not to win, but to survive. Money is burning, investors are becoming more cautious, and the window of opportunity is closing. Selling part of the project to a multinational corporation (MNC) was not our initial plan, but it might be the only option left to stay in the game.”
Dr. Li’s dilemma is a microcosm of the entire Chinese ADC industry. The trend of “going global with licenses” is not coincidental but a necessary outcome of extreme involution.
From 2021 to April 2024, there have been over 25 “License-out” transactions in China’s ADC field, with disclosed total amounts nearing $40 billion. This explosive growth is astonishing. In addition to Bai Li Tian Heng, other significant transactions include:
– Kelun-Biotech and Merck (MSD): In a series of collaborations, Kelun-Biotech licensed multiple ADC projects to the global pharmaceutical giant Merck, with a potential total value exceeding $11.8 billion. This collaboration serves as a model for deep binding between Chinese biotech and MNCs.
– Rongchang Biologics and Seagen: In 2021, Rongchang Biologics licensed its HER2-targeted ADC drug, Vadastuximab, for $2.6 billion to then-ADC leader Seagen. This transaction marked a significant event for Chinese ADC drugs entering the global market.
Why is everyone competing to “sell out”? The reasons are complex and profound:
1.1. Homogenization of Targets and “Involution”:The “Me-too” phenomenon is particularly severe in the ADC field. Popular targets like HER2, TROP2, and CLDN18.2 have become battlegrounds for fierce competition. Dozens or even hundreds of companies are squeezed into a narrow field, and the ultimate result of homogenized competition is brutal price wars and extremely high failure risks. At this point, licensing projects to MNCs with global commercialization capabilities undoubtedly becomes an attractive exit strategy.
2.2. Arms Race of Technological Platforms:ADC technology is evolving at an unprecedented speed. Technologies that are leading today may fall behind tomorrow. This forces companies to continuously invest massive amounts in R&D to maintain technological advantages. The vast funding required for this “arms race” burdens many startups. The upfront payments from “License-out” provide crucial “ammunition” for this competition.
3.3. The “Last Mile” of Commercialization:New drug development is a marathon that takes ten years and costs a billion dollars. For the vast majority of Chinese biotech companies still in the “burning money” phase, completing global commercialization independently is nearly impossible. Collaborating with MNCs, leveraging their mature global clinical, regulatory, and sales networks, is the most realistic path to realizing asset value.
In this context, “selling out” is no longer a derogatory term but a rational strategic choice. It is a survival wisdom to disperse risks, obtain funding, and maximize one’s technological value by leveraging global partnerships in an extremely competitive environment.
–02–
The Capital “Gamble”: Is it Sharp Insight or a Reluctant Bet?
From the perspective of capital, every “License-out” transaction is a thrilling gamble. Whether it is Chinese biotech or global MNCs, they are betting on technology, markets, and the future.
Let us step into the shoes of Mr. Wang, an investor who has long focused on the biopharmaceutical sector. For him, the Bai Li Tian Heng deal is both exciting and anxiety-inducing.
“When you see such a deal being made, your first reaction is excitement; it validates your investment logic,” Mr. Wang explained. “But then comes the anxiety. Is this the peak? Can the company replicate this success? The upfront payment is real money, but the bulk of the deal is milestone payments, which are conditional on the future. This is a gamble.”
This “gambling nature” is the essence of the “License-out” model.
– For MNCs, this is a precise bet to fill product lines. Multinational pharmaceutical companies generally face the dilemma of the “patent cliff,” where many blockbuster drug patents expire, urgently needing new products to drive growth. Instead of relying entirely on internal R&D, acquiring or licensing innovative biotech assets from outside is a more efficient and controllable path. They are betting that the technology they acquire will grow into a “cash cow” in the future. The phased payment model allows them to effectively control risks; if the project fails, they can cut their losses in time.
– For Chinese biotech, this is a fateful gamble concerning survival and development. The upfront payment is “lifesaving money.” It allows companies not only to survive but also to invest in the next generation of technology platforms and other pipeline assets. They are betting that part of the future revenue from a drug will exchange for a longer-term, more innovative future for the company. This is using part of a “dream” to exchange for resources to achieve a greater “dream.”
The structure of the transaction also reflects the dynamics of this game. Total transaction amounts often reach tens of billions of dollars, with the upfront payment typically accounting for only 5%-10% of the total; the majority is linked to subsequent R&D, regulatory, and sales milestones. This means that Chinese biotech must continuously deliver results to fully realize the value of this “contract.”
This model is a double-edged sword. It provides a validated and funded pathway but also means that in subsequent development, Chinese companies largely become the “senior CRO” (Contract Research Organization) for MNCs, with the actual share of sales revenue still a distant future.
Therefore, the completion of the transaction is not the end but the starting point of another, more arduous race.
–03–
The “Life and Death Line” of Technology: The Invisible Platform War
Behind the dazzling transaction numbers and complex business models lies the ultimate factor determining success or failure: technology. In the second half of the ADC war, the technological platform is the true “life and death line.”
To understand this, we need to listen to the voices of scientists, who are the true “swordsmiths” behind these innovative drugs. Dr. Chen is the chief scientist of an ADC company, and his daily work revolves around optimizing the technological platform.
“For a long time, the market’s focus has been on targets, with everyone chasing popular targets,” Dr. Chen pointed to a complex molecular structure diagram on the screen and said, “But now, the game rules have changed. When everyone is crowded around the same target, how do you stand out? The answer is the platform.”
ADC drugs can be simply understood as a “biological missile” composed of three parts:
1.1. Antibody: Like a “guidance system,” it is responsible for accurately identifying and binding to specific proteins (antigens) on the surface of cancer cells.
2.2. Payload: The “warhead” is a cytotoxic drug that effectively kills cancer cells.
3.3. Linker: The “connector” is responsible for linking the antibody and the payload. It must remain stable in the bloodstream to avoid premature release of the “warhead” (which could harm healthy cells) and must precisely release the “warhead” upon entering cancer cells.
The “technological platform” is the unique combination and design process of these three components. Even minor differences in platform technology can lead to significant differences in drug efficacy and safety, thus determining its commercial value.
For example, the “Drug-to-Antibody Ratio” (DAR) is a key parameter. A DAR that is too low may result in insufficient efficacy; too high may lead to excessive toxicity. The stability of the linker is also crucial. An unstable linker can cause severe side effects and is a major reason for the failure of many early ADC drugs.
Those companies that succeed in the “License-out” competition are all masters of platform technology.
– Bai Li Tian Heng’s platform, with its innovative linker technology, is highly praised for achieving high DAR values while maintaining stability, potentially leading to better therapeutic windows.
– Kelun-Biotech’s platform has proven its ability to continuously produce high-quality ADC candidates through multiple successful transactions with Merck.
– Rongchang Biologics’ Vadastuximab owes its success to a profound understanding and optimization of ADC technology.
The ADC war is no longer merely a “target selection battle” but a “platform battle.” Those who can develop safer, more effective, and differentiated drug platforms will survive this life-and-death struggle and ultimately emerge victorious. The essence of the “sellout” is the realization of this technological advantage. MNCs are not just buying a drug; they are recognizing and betting on a technology platform capable of continuously producing future products.
-Conclusion–
The Path Beyond “Selling Out”
Let us return to the initial question: Is the wave of “License-out” a highlight moment or a collective “sellout”?
The answer is, it is both, and it is neither.
It is a highlight moment because it proves that Chinese biotech has, for the first time in a cutting-edge technology field, accumulated enough capital to compete and collaborate on equal footing with global giants. The ability to “sell out” itself is a testament to value.
But at the same time, it also reflects the harsh reality of “involution” and a capital winter, a strategic choice woven from ambition and helplessness.
The “sellout” is not the end but a process. It is the “funding” that Chinese innovative pharmaceutical companies use to navigate the arduous journey of R&D. It is a necessary means for them to leverage their core technological advantages, participate in global market division, exchange for future innovative capital, and ultimately “survive.”
The future of Chinese biotech does not lie in who can “sell” for a higher price, but in who can truly establish a world-class technology platform capable of continuously producing innovative drugs. It lies in moving from “selling assets” to “selling platforms,” and ultimately achieving “selling products” under their own brand globally.
The life-and-death battle of ADC is far from over; “License-out” has only opened the curtain. The real showdown will unfold in laboratories, at the bedside, and in the market. Those companies that master the art of technological innovation will ultimately carve out a path beyond “selling out” and write the next chapter of Chinese innovative drugs.
「I am “Medical Intelligence Hardcore Talk,” bringing you the academic background of Peking University + ten years of practical experience in medical investment, aiming to be your “frontier technology translator”:
AI in healthcare is not just an algorithm frenzy; we need to clarify the underlying logic that hospitals pay for;
Hard technology is not just about patent stacking; we need to uncover the real pain points in mass production;
Medical investment is not just about data listing; the game between founders and capital is what’s truly “exciting.”
Refusing to waste words, only extracting dry goods, and I can also help you see through the windfall from an investor’s perspective and connect with networks~ If you find it useful,
Hurry up and follow, and also share it with friends who need it~
」