China-to-West Licensing: The Comp Set Has Reset

The China-to-West licensing corridor has undergone a structural repricing. The shift did not happen gradually — it was triggered by a handful of landmark transactions that forced every BD team in Western pharma to recalibrate what a China-originated asset is worth. Companies and advisors still anchoring to 2020–2022 benchmarks are working from an outdated comp set, and they are leaving tens of millions on the table as a result.

The proof is in the portfolio outcomes. Legend Biotech's CARVYKTI collaboration with Johnson & Johnson — a CAR-T program originated in Nanjing — generated over $700M in global sales in 2024 alone, demonstrating that Chinese-originated assets can anchor entire global franchises. BeiGene's evolution from a company that licensed out assets at steep geography discounts to one that commercializes globally under its own flag tells the same story from the other side: the corridor has matured, and the old rules no longer apply.

67 Transactions, Three Years, One Trajectory

Between January 2023 and June 2026, we tracked 67 licensing transactions where a China-originated asset was out-licensed to a Western pharma or biotech partner. This dataset — sourced from SEC filings, FTC premerger notifications, and direct primary research — reveals a clear and accelerating trajectory. These benchmarks are available in real-time on Solidus, our deal terms platform.

Median upfronts have increased 2.4x. The median upfront payment for a China-to-West licensing deal was $28M in 2023. By H1 2026, that figure reached $67M. Part of the increase reflects asset maturity — more Phase 2+ programs entering licensing processes with clinical proof-of-concept in hand. But the competitive dynamic matters more: Western pharma BD teams now actively source from Chinese pipelines as a core component of their external innovation strategy, and multiple bidders are the norm rather than the exception. Takeda and Novartis have been particularly aggressive in sourcing from Chinese pipelines through 2025 and into 2026, running competitive processes that have pulled median upfronts higher across the board.

The geography discount has narrowed from 50% to 22%. Comparing China-originated assets to US-originated assets at equivalent development stages and therapeutic areas, the median upfront discount was 50% in 2022. By H1 2026, that discount narrowed to 22%. In oncology — where 58% of China-to-West deal volume sits — the discount is now just 15%.

The narrowing is not uniform across therapeutic areas. Immunology shows a 19% discount (down from 48% in 2022), driven in part by competitive tension around novel mechanisms like the AbbVie / Harbour BioMed deal for batoclimab, which validated that Chinese immunology assets could command near-parity economics. Neurology shows 28% (down from 55%). The pattern is consistent: the more deal flow a therapeutic area generates from China, the faster the geography discount compresses.

Deal structures have converged toward Western norms. Early China-to-West deals frequently used non-standard structures: heavier milestone weighting, region-specific carve-outs, abbreviated royalty terms, and unusual termination provisions. The 2025–2026 cohort shows convergence. Risk-adjusted milestones, global royalty rates benchmarked against US-originated comps, and standard termination clauses are now the expectation. This structural convergence is as meaningful as the headline number repricing — it signals that Western BD teams now evaluate Chinese assets using the same frameworks they apply to Boston- or San Diego-originated programs.

Oncology Dominates, But the Corridor Is Diversifying

Oncology accounts for 58% of China-to-West licensing volume in our dataset. The concentration is earned — Chinese biotech has built world-class capabilities in ADCs, bispecifics, and next-generation small molecules across a range of oncology targets.

But the corridor is diversifying in ways that matter. Immunology represents 14% of recent deal volume, driven by novel bispecific platforms and differentiated mechanisms. The batoclimab deal showed Western pharma that FcRn inhibitors with Chinese clinical datasets could support global registrational programs. Neurology has emerged at 8% as Chinese companies advance CNS programs with differentiated pharmacology and novel delivery approaches. Metabolic and obesity sits at 7%, reflecting the global GLP-1 tailwind and Chinese expertise in peptide engineering.

The emerging therapeutic areas are notable because they often show even smaller geography discounts than oncology. When Western BD teams have fewer sourcing alternatives in a given therapeutic area — when the target landscape outside China is thin — they compete more aggressively for Chinese assets. The pricing reflects that scarcity.

The ADC Premium

Within oncology, antibody-drug conjugates command a distinct and persistent premium in China-to-West transactions. Across 19 ADC-specific licensing deals since 2023, the median upfront was $88M — 31% higher than the broader oncology China-to-West median of $67M.

The repricing traces back to a single inflection point. Daiichi Sankyo's enhertu partnership with AstraZeneca — a Japan-originated ADC program — established that Asia-originated conjugate assets could anchor multi-billion-dollar global franchises and reset the benchmark for what ADC platforms are worth in licensing discussions worldwide. Every ADC negotiation since has referenced that deal, whether explicitly or implicitly.

Chinese biotechs moved aggressively into the resulting white space. The Merck / Kelun-Biotech ADC collaboration, with its $1.4B headline value, provided the definitive China-specific proof point: a single ADC partnership could generate economics that rivaled or exceeded what US-originated assets commanded. That deal shifted the comp set permanently.

The ADC premium reflects three structural factors: clinical differentiation (novel payloads, linker chemistries, and targets that simply do not exist in Western pipelines), manufacturing scale (Chinese CDMOs have built ADC production capabilities faster and at lower cost than Western alternatives), and competitive urgency (every major pharma house is now building an ADC portfolio, and Chinese biotech collectively has the deepest bench of clinical-stage programs).

For companies with ADC assets preparing for a China-to-West process, the relevant comp set is not "oncology deals from China" — it is "ADC deals from China," and the economics are materially different.

Implications

The repricing creates specific opportunities and obligations for every participant in the corridor.

For Chinese biotechs preparing to license out: Anchor your valuation expectations to 2024–2026 deal benchmarks. The median upfront for a differentiated oncology asset is now $67M; for ADCs, it is $88M. If an inbound offer comes in below $40M for a Phase 2 oncology program with clean data, it is below market — full stop. Run a competitive process with at least three qualified bidders. Structure your data room to Western standards from the outset: IND-enabling studies formatted for FDA review, CMC packages that address tech transfer timelines, and IP freedom-to-operate analyses covering the US and EU. The days when a strong dataset alone could overcome a thin data room are over.

For Western pharma BD teams sourcing from China: The era of extracting 50% geography discounts ended around 2024. Your competitors — Takeda, Novartis, Merck, AbbVie — are already in the room, and they are paying near-parity economics for the best assets. The differentiation in sourcing is no longer about finding Chinese assets before others do. It is about speed of diligence, certainty of close, and the strategic value of your commercial platform. If your internal valuation model still applies a blanket China discount above 25%, your model is wrong and you will lose competitive processes to partners who have updated theirs.

For advisors running cross-border processes: The comp set matters more than it ever has. The right reference deals — matched precisely by therapeutic area, modality, development stage, and vintage — can shift an upfront by $20–40M in either direction. Using a 2022 ADC comp for a 2026 ADC process is malpractice. Using a broad oncology comp for an ADC deal leaves $20M+ on the table. Build your comp set from the 2024–2026 vintage, segment by modality, and be prepared to defend every reference transaction in the room. The advisory fee on a well-benchmarked deal pays for itself many times over.

The corridor has repriced. The question is no longer whether China-originated assets deserve Western-equivalent economics. It is which specific assets, in which therapeutic areas, at which stages, command a premium — and which still trade at a discount, and why. That level of granularity is where the real negotiating leverage lives.