The news: Novo struck a deal worth up to $2.6 billion with China-based Hengrui Pharma for an experimental weight loss pill. Novo will pay $300 million upfront for HRS-1596, a GLP-1 drug candidate designed for once-weekly oral dosing, with the rest tied to development, regulatory, and commercial milestones.

Why it matters: China is becoming a key source of drug candidates for drugmakers. In obesity alone, nearly 250 GLP-1 drug candidates are under development in China, according to a recent PharmCube analysis, with more than 20 already licensed overseas. Large pharma companies including AstraZeneca, Merck, and Pfizer have struck deals with Chinese drugmakers for obesity candidates.

Beyond weight loss drugs, more than $130 billion worth of China-developed drugs across oncology, weight loss, and immunology were licensed by US and European biopharmas in 2025, up from “essentially negligible” levels in 2020, per the Wall Street Journal. Hengrui alone struck six licensing deals with US or European drugmakers since the beginning of 2025, per BioPharmaDive.

Implications for pharma companies: Tie ups with Chinese drugmakers are becoming a bigger part of global pharma drug development even as China faces increased political and regulatory scrutiny over national security, data, and pharma supply chains. The US Treasury is drafting rules that would allow most pharma licensing deals with Chinese companies to continue, per Reuters, but lawmakers have introduced legislation that would subject licensing agreements, joint ventures, and equity investments to greater review.

How US pharma companies structure Chinese partnerships could become more important as regulatory scrutiny becomes more specific. Licensing an asset while keeping later-stage clinical development and manufacturing outside China could limit some exposure as lawmakers and the FDA scrutinize US drugmakers’ use of Chinese clinical trials.

Competition presents another challenge. As more global drugmakers look to China for promising assets, Chinese biotechs could gain more leverage in negotiating licensing rights, milestone payments, and royalties, particularly if China-developed drugs produce more commercial successes.

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