Chinese biopharma stocks surge on U.S. drug deal rules

Chinese biopharma stocks rallied sharply in Hong Kong on Monday after reports that the U.S. Treasury Department is drafting rules that would preserve American pharmaceutical companies' ability to license most drugs from Chinese firms. The Hang Seng Biotech Index rose more than 5%, with Akeso surging 8%, Sino Biopharmaceutical gaining more than 8%, and Innovent Biologics jumping 6%. CSPC Pharmaceutical Group ↗ 3.69% added more than 7%, while HUTCHMED ↗ 2.13% climbed 3%.cnbc+1

Treasury Rules Would Exempt Most Drug Deals

The rally followed a Reuters report published Friday, citing three people briefed on the process, that the proposed Treasury rules would allow U.S. companies to invest in promising Chinese-developed drugs as long as they are not related to pathogens or biotechnology that could be weaponized. The rules have not been finalized and remain subject to change, particularly should President Donald Trump weigh in.pharma.economictimes.indiatimes

The approach would mark a departure from restrictions Washington has imposed on sectors such as artificial intelligence and semiconductors, where the administration has tightened rules on business with China. Major drugmakers including Pfizer ↗ 0.90% have lobbied Trump administration officials against broad restrictions. Pfizer CEO Albert Bourla told Reuters he does not believe licensing medicines from Chinese companies creates a national security concern. "I don't think that that's the way to compete with China, to try to slow them down," Bourla said.cnbc+1

A Booming Deal Pipeline

The stakes are large. Almost half of U.S. deals to license drugs from overseas in 2025 were with Chinese companies, according to GlobalData as cited by Reuters, and that trend has continued into 2026. Bristol Myers Squibb Bristol-Myers Squibb Company ↘ 1.77% this year signed a partnership with Jiangsu Hengrui Pharma worth up to $15.2 billion, while Pfizer announced a collaboration worth up to $10.5 billion with Innovent Biologics covering 12 oncology programs. A record 81 deals worth a combined $110 billion were completed in the first half of 2026, according to NMPA data cited by Nomura.pharma.economictimes.indiatimes+1

Opposing Voices in Washington

Not everyone supports the permissive approach. Some midsize biotech companies and lawmakers argue that the flow of U.S. capital into Chinese drug development poses a long-term competitive threat. Representative John Moolenaar, who chairs the House Select Committee on the Chinese Communist Party, wrote in a May letter to Treasury that U.S. investment is "fueling China's strategy, aiding it in its rapid ascent up the pharmaceutical value chain". He and Representative Debbie Dingell are co-sponsoring a bill that would tighten regulation of biotechnology-related investments involving Chinese companies.pharma.economictimes.indiatimes

Chinese President Xi Jinping is due to meet with Trump in the U.S. next week, though sources told Reuters it is unlikely Treasury will unveil the new rules ahead of that meeting.pharma.economictimes.indiatimes