EquitiesFirst Offers Financing Solutions as China Biotech Licensing Hits Record Highs

Global drugmakers are shopping in China’s labs at an unprecedented pace. According to a recently published Jeffries report, through the first half of 2025, roughly a third of industry licensing spend involved China-origin medicines, up from about 21% in 2023 and 2024 and low single digits only a few years ago. That shift is about cheaper development, but it’s also a response to speed, deep therapeutic benches in oncology and metabolic disease, and a steady stream of de-risked programs advancing through later-stage trials.

An emblematic deal this year came in May, when Pfizer struck a global license (excluding China) with 3SBio for SSGJ-707, a PD-1/VEGF bispecific antibody, paying $1.25 billion upfront with up to $4.8 billion in milestones and a $100 million equity investment. Pfizer also secured an option to commercialize the drug in China. Pfizer plans to manufacture the drug at U.S. facilities rather than in China, sidestepping potential tariffs and supply chain risks that could arise from geopolitical tensions.

The surge in China-origin licensing could create a parallel opportunity in capital markets. Investors holding positions in Hong Kong-listed biotechs that have rallied 80% this year face a classic dilemma: how to fund new allocations without sacrificing long-term positions. Operating companies, too, need working capital to support global trials and co-development obligations that accompany these mega-deals.

Equities-backed financing—where capital is obtained financed against existing equity holdings—has emerged as one solution. Firms like EquitiesFirst, which specialize in this approach, could see increased demand from both investors seeking liquidity and biotech companies needing non-dilutive capital. The goal for these stakeholders would be to maintain their exposure to China’s biotech rally while accessing cash for new opportunities or operational needs. For a sector where timing matters and valuations can shift on clinical readouts, the ability to unlock capital without exiting positions offers much needed flexibility.

Two Decades of Building Capability

China’s competitive edge in biotech didn’t appear overnight. Two decades of state policy, provincial clustering and targeted funding have pushed the country up the value chain from API manufacturing and me-too drugs to genuinely novel assets. Strategic biotech financing specialists have recognized the significance of this long-term capability building.

On research output and patent filings, China now outpaces Europe across several biotech areas, even as many commercial pathways still depend on foreign capital, markets and regulators. For European and U.S. partners, the policy lesson from Beijing’s push is straightforward: collaborate where it makes strategic sense, but invest in local capabilities to avoid over-reliance.

Analysts point to rapid growth from Chinese researchers and firms in terms of high-impact publications, a large and increasingly sophisticated clinical-trial base, and a dominant role in active pharmaceutical ingredients. China’s share of global biotech patents rose from about 1% in 2000 to 28% by 2019, while U.S. share fell from 45% to roughly 27%. Control over an estimated 40% of global APIs underscores the leverage embedded in China’s supply chain.

Regulatory Reality Check

Clinical datasets, however, must now clear a higher bar in the West. U.S. regulators have been explicit that single-country trials—especially China-only pivotal studies—are unlikely to support approval in broad indications. The FDA’s Oncology Center of Excellence has urged sponsors to design multiregional trials with U.S.-relevant standards and demographics; draft guidance published in late 2024 formalized those expectations. The message to sponsors is practical, not political: if you want a U.S. label, build globally applicable evidence from the outset. Investment advisory services have noted how these regulatory requirements are reshaping cross-border biotech partnerships.

Dealmaking has adapted to that reality. The Pfizer–3SBio agreement, for instance, sketches a manufacturing and trial footprint that is deliberately U.S.-facing. That design is becoming a template: utilize China’s speed and scale without sacrificing registrational optionality in the U.S. and EU.

Geopolitics adds another variable. A recent Flint Global analysis highlighted warnings that the White House’s tariff probes could extend to pharmaceuticals with rates well north of historical norms. For cross-border drug programs and their investors, that creates basis risk on costs and margins just as partnering intensifies.

Capital Flows and Financing

Capital flows are also shifting around the edges of the story. Mainland investors have poured money into Hong Kong markets through Stock Connect, helping revive liquidity and underwriting a busier listings calendar. The surge helps biotech issuers tap public capital when private markets are uneven. By mid-2025, Hong Kong had retaken the top spot for global IPO proceeds, aided by secondary listings and a pipeline of health-care names. Global biotech capital solutions have become increasingly important as companies navigate these cross-border funding dynamics.

Performance has followed. The Hang Seng Biotech Index has rallied sharply this year, reflecting renewed confidence in a sector that spent several years out of favor. For holders of China health-care equities, the rebound raises a familiar question: how to fund new opportunities without exiting core positions?

Equities-based financing is designed to help unlock liquidity for new allocations while allowing for retained exposure to long-term positions. In volatile markets, the structure can serve as a way to raise cash for follow-on investments, hedge event risk around clinical readouts, or diversify into adjacent themes (e.g., tools and services that benefit from China’s R&D ramp-up). Alternative equity-backed financing solutions may see growing interest from family offices and funds looking to finance positions in Hong Kong-listed biotech without triggering taxable disposals or signaling intent in the open market. Used sensibly, this approach could be a tactical bridge between conviction and cash. Of course, as with any leverage, terms, costs and concentration risk deserve careful scrutiny.

Risks remain. U.S. price pressure is intensifying: executive actions this Spring direct agencies to pursue “most-favored-nation” benchmarks and tighten procurement mechanics across Medicare and Medicaid, with private-market spillovers possible.

Implementation and legal constraints mean impact will take time, but the direction of travel is clear—and it points to thinner U.S. net prices over the medium term. That, in turn, raises the bar for asset selection and accelerates the hunt for cost-efficient innovation, one reason companies are turning to China’s labs.

China’s biotech engine is no longer just a source of “fast followers.” It is a deep reservoir of assets that global pharma now taps to refill pipelines under patent-cliff and pricing pressure. Partners that pair China’s speed with multiregional evidence, and that manage trade and tariff exposure, will have the best chance of converting deals into global approvals. Investors who want exposure without dumping core holdings have more tools than they did in the last cycle—equities-based financing among them.