Treasury Drafted Rules for China Biotech Licensing Deals
The framework clarifies outbound investment restrictions for pharmaceutical collaborations under the COINS Act.
Updated on Sept. 18, 2026 in Biotech
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Should American pharmaceutical companies be allowed to maintain licensing partnerships with Chinese biotech firms?
The US Treasury Department has drafted sector-specific regulations to permit most pharmaceutical licensing deals between US and Chinese firms. The rules aim to fill implementation gaps from the 2025 Comprehensive Outbound Investment National Security (COINS) Act while maintaining safeguards against weaponizable biotechnology.
Why it matters
Pharmaceutical companies are increasingly reliant on Chinese biotech for novel molecules to offset revenue losses from blockbuster drug patent cliffs. These rules provide necessary regulatory certainty for multi-billion dollar partnerships essential to maintaining development pipelines.
Chinese biotech firms participated in $115 billion in external licensing deals in 2025, including a $15.2 billion collaboration between Bristol Myers Squibb and Jiangsu Hengrui Pharma. Additionally, Pfizer committed to a $10.5 billion deal involving 12 oncology treatments, signaling the scale of cross-border investment currently subject to new scrutiny.
The players
US Treasury Department
The federal agency responsible for implementing investment security rules and managing national financial policy.
Bristol Myers Squibb
A global biopharmaceutical company focused on oncology and immunology drug development.
Pfizer
A major pharmaceutical developer with an extensive portfolio of vaccines and oncology therapeutics.
Jiangsu Hengrui Pharma
A Chinese biopharmaceutical company specializing in the research and development of oncology and pain management drugs.
Innovent Biologics
A Chinese biopharmaceutical firm developing high-quality, cost-effective medicines for oncology and autoimmune diseases.
The details
The proposed framework establishes a specific carve-out for pathogen-related and weaponizable biotechnology, ensuring that sensitive dual-use research remains restricted. By defining these boundaries, the Treasury Department aims to clarify which pharmaceutical partnerships are permissible under the broader COINS Act of 2025. This allows US firms to continue sourcing therapeutic platforms and novel molecules from Chinese partners without violating national security mandates.
Timeline
2025: Chinese biotech firms were involved in $115 billion worth of external licensing deals.
December 2025: The Comprehensive Outbound Investment National Security (COINS) Act was passed into law.
2026: Bristol Myers Squibb and Pfizer finalized high-value partnerships with Chinese biotech entities.
September 18, 2026: This report on the draft regulatory framework was published.
The Tech Race
These regulations follow the mandate of the Comprehensive Outbound Investment National Security Act, which sought to curb foreign investment in sensitive sectors. The new rules specifically define the intersection of commercial pharmaceutical expansion and national security priorities.
The draft rules provide a stable regulatory environment for pharmaceutical companies to continue their cross-border oncology and immunology research. As these regulations formalize, investors and biotech firms in hubs like Boston and San Diego should monitor the final list of restricted pathogen-related technologies.
The takeaway
The move signals a shift toward sector-specific clarity in US-China pharmaceutical investment, balancing national security with the industry's need for new drug pipelines. Observers should monitor the upcoming meeting between President Trump and President Xi Jinping, which is expected to precede the finalization of these rules.
Further reading
For broader context on current industry shifts, visit our Biotech section.
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Should American pharmaceutical companies be allowed to maintain licensing partnerships with Chinese biotech firms?
