Innovent Biologics climbed 6%, Akeso surged 8%, and CSPC Pharmaceutical Group rose by more than 6%. HUTCHMED added 3% while Sino Biopharmaceutical advanced 8%. The Hang Seng Biotech Index was up more than 5%.
The report, citing people briefed on the process, said the U.S. Treasury Department is working on rules that would likely permit American pharmaceutical companies to back promising new drugs from Chinese firms, but would exclude projects tied to pathogens or biotechnology that could be weaponized. The proposed measures are still at the drafting stage and have not been finalised, and they remain subject to change.
If adopted, the approach would treat biopharma differently from sectors such as artificial intelligence and semiconductors, where U.S. policy has tightened restrictions on China. The apparent carve-out for drug licensing reflects the commercial and clinical incentives that have sustained cross-border partnerships despite geopolitical friction.
Cross-border licensing already accounts for a large share of outbound deals. GlobalData showed almost half of U.S. deals to license drugs from overseas in 2025 were with Chinese companies. Pfizer provides a recent example, announcing in May a partnership worth up to $10.5 billion with Innovent to collaborate on the research and development of 12 oncology programs.
China’s out-licensing surge persisted through 2026. NMPA data cited by Nomura put a record 81 deals at a combined $110 billion in the first half of 2026. Nomura said investors now seem "largely immune" to intermittent geopolitical concerns and expects China-U.S. out-licensing to "ride on a high tide." The bank also noted China’s 15th five-year plan has pushed pharmaceutical and biotech companies to globalise.
Markets will watch whether the Treasury finalises any carve-outs and how the details define permitted investments and exemptions. Until rules are published, cross-border dealmaking and asset prices remain vulnerable to policy revisions and geopolitical developments.
