If pharmaceutical drug patents are an hourglass turned over on the day of approval – with the approaching loss of exclusivity known in the industry as the “patent cliff” – then Big Pharma is currently watching the final grains of sand slipping through the neck of the glass.
At the bottom of the hourglass awaits an unforgiving world of generic and biosimilar competition. Between 2025 and 2030, the patent cliff is set to be one of the biggest since 2010 by revenue at risk, according to analysts.
Gone will be the exclusivity that underpinned years of research budgets, dividends and acquisitions, replaced by a market in which hungry rivals arrive at a discount and pricing power drains fast.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
And the patent cliff is not the only headwind. US drug makers are also operating in a tougher political environment as Washington takes a harder line on Chinese life sciences and supply chains.
The Biosecure Act, awaiting final passage in the US Senate and US President Donald Trump’s signature to become law, has added uncertainty to an industry that is simultaneously trying to refill pipelines at speed.
For US drug makers, all of these shifts are approaching like icebergs shearing off a glacier: slowly at first, then all at once.
Morgan Stanley estimates US$171 billion of 2025 revenue at large-cap biopharma companies will go off-patent by the end of 2030, forcing the industry into a race to replace ageing blockbusters.
Countdown anxiety was on display in San Francisco earlier this year at the JPMorgan Healthcare Conference, where pharmaceutical giant Pfizer chief executive Albert Bourla warned investors and analysts of an approaching “loss of exclusivity” wave.
“There is clearly a loss of exclusivity wave coming,” Bourla said. “This will cost us between US$17 billion and US$18 billion and it’s coming in gradually in 2026, 2027 and 2028.”
Pfizer is not alone. Biopharma multinational Bristol Myers Squibb (BMS) chief executive Chris Boerner also warned of a “stacking effect” as multiple drugs lose protection in quick succession.
The dynamics are well understood in an industry where a handful of blockbusters can underwrite years of costly research and where patents may run 20 years on paper, but far less in practice once years of development are taken into account.
“Upon patent expiration, generics or biosimilars enter the market at a significant discount to capture share,” said Bruce Liu, a senior partner at consulting firm Simon-Kucher.
For Chinese biotechs, however, the same deadlines are looking less like a cliff and more like an opportunity, as the looming crisis pushes big drug makers to hunt for Chinese biotech assets to refill their pipeline.
The opportunity has not been lost on Beijing either.
Even as Washington tightens its stance, Chinese policymakers have signalled that biotech and biomanufacturing should be pillars of the next growth cycle, identifying biomanufacturing as a new economic growth engine in its push for tech self-reliance.
Chinese biotech firms – many of them operating with lower costs and faster clinical execution – are increasingly well placed to supply the “new molecules” global companies need through licensing deals that can be cheaper and quicker than building replacements in-house.
According to Cui Cui, head of healthcare research for Asia at US investment bank Jefferies, Chinese biotech companies “are reshaping the US biopharma sector”.
“In-licensing assets from China could offer global pharmaceutical companies a remedy to alleviate pressure affordably and within a manageable time frame,” she said.
That shift is also changing what global drug makers are willing to buy.
In the past, many preferred late-stage assets – medicines already in Phase III trials or nearing regulatory submission – because there is more human data, less scientific risk and a clearer path to commercialisation.
But as timelines tighten, drug makers are increasingly willing to license earlier-stage candidates and use their capital and development infrastructure to push them through the pipeline.
Ultimately, the debate comes back to the same fear: what happens the moment exclusivity ends. Once generics or biosimilars arrive, price erosion can be swift and brutal, leaving even the most dominant franchise exposed.
For industry players, the fear is as real as the stakes are high.
Drug prices decreased by 30 to 82 per cent over eight years after patent expiration in eight developed markets, with the US experiencing the steepest decline, according to figures from the JAMA Health Forum.
US blockbuster drugs from Merck & Co, Regeneron, BMS and Pfizer were among the most exposed to this pricing squeeze over the next six years, according to a report from Jefferies.
Keytruda, Merck’s flagship lung cancer drug that generated US$29.48 billion last year – 46 per cent of the company’s total sales – faces expiration in 2028 in both US and Chinese markets.
BMS, meanwhile, relies on blood thinner Eliquis for US$13.33 billion of sales, with patent expirations approaching in Japan in 2026 and the US in 2028.
Other franchises face similar cliffs in the years ahead, adding to the industry’s urgency to rebuild pipelines before pricing power drains away.
In anticipation of post-patent price falls, Merck has over the past five years channelled US$40 billion into acquisitions, collaborations and licensing agreements including multiple deals with Chinese biotech firms such as LaNova Medicines, Hansoh Pharma and Kelun Biotech, all of which specialise in cancer therapies.
The shift is visible across the market.
Chinese companies accounted for 32 per cent of out-licensing deals to multinational corporations by value in the first half of 2025, up from 21 per cent in 2024 and 2023, and from single digits in the years following 2011.
Cui also pointed to a structural advantage. “Cost advantages extend to labour, the supply chain, and clinical trials – China biotech assets also trade at a notable discount to their global peers,” she said.
Jefferies estimated that upfront payments to Chinese companies were 60 to 70 per cent lower, while Chinese biotech could deliver a 30 to 50 per cent acceleration in timelines from molecule validation to proof of clinical concept, aided by faster patient enrolment and cost efficiency.
Drug prices decreased by 30 to 82 per cent over eight years after patent expiration in eight developed markets. Photo: Shutterstock alt=Drug prices decreased by 30 to 82 per cent over eight years after patent expiration in eight developed markets. Photo: Shutterstock>
Those advantages would be compelling even in calm political waters – but they are arriving amid heightened US-China tensions and growing scrutiny in Washington of Chinese life sciences.
Cui, however, argued the commercial logic was proving hard to resist. “Geopolitics should not be a concern,” she noted.
In the latest sign of this trend, Changchun High-Tech’s unit Shanghai Scizeng Medical licensed out its clinical-stage thyroid drug GenSci098 to Yarrow Bioscience in a deal worth up to about US$1.5 billion, granting the US biotech exclusive rights to develop and commercialise the injectable antibody outside mainland China, Hong Kong, Macau and Taiwan, according to its exchange filing on December 16.
Pfizer has also agreed to pay up to US$2.1 billion to Fosun Pharma’s subsidiary Yao Pharma for an experimental oral obesity drug, under a deal that grants Pfizer exclusive worldwide rights to develop, manufacture and commercialise the GLP-1 receptor agonist.
That momentum has continued despite growing political tensions. US Congress has targeted Chinese biotech firms it considers national security risks through the Biosecure Act, part of the National Defense Authorisation Act (NDAA) released earlier this month.
Employees pack medicines at a pharmaceutical company in northwest China’s Shaanxi Province. Photo: Xinhua alt=Employees pack medicines at a pharmaceutical company in northwest China’s Shaanxi Province. Photo: Xinhua>
Earlier versions that explicitly named WuXi AppTec and WuXi Biologics failed to make it into the 2025 NDAA after opposition from senior lawmakers and the biopharma industry, according to a Macquarie Capital report.
“Uncertainty remains, but we believe the NDAA and Biosecure impact [on Chinese drug developers and manufacturers] will be limited,” said Tony Ren, head of Asia healthcare research at Macquarie Capital.
The watered-down outcome “demonstrated that the underlying current is that global innovation and collaboration in healthcare will drive better patient care and also lower costs,” said George Lin, executive vice-president of Shanghai-headquartered Hua Medicine.
“If American pharmaceutical are not allowed to in-license these kinds of [Chinese] drugs, will that really help innovation in San Francisco and Boston?” Lin said. “American pharmaceutical can’t just suddenly develop these [drug] compounds themselves. It would just take so long to do that.”
Even where Washington has pushed to reconfigure supply chains back to the US through tariffs and other policies, the pharmaceutical industry remains conservative.
Clients typically place commercial manufacturing orders only after production capacity had secured regulatory approval, Ren said, a process that could take 18 months to almost three years. Abrupt decoupling, he added, could raise costs and extend approval timelines.
“The US biopharma industry has been unwilling to decouple from CDMOs (contract development and manufacturing organisations) despite the urging of China hawks,” Ren said.
Chinese biotech firms – many of them operating with lower costs and faster clinical execution – are increasingly well placed to supply the ‘new molecules’. Photo: Xinhua alt=Chinese biotech firms – many of them operating with lower costs and faster clinical execution – are increasingly well placed to supply the ‘new molecules’. Photo: Xinhua>
WuXi AppTec and WuXi Biologics also maintain a significant footprint in the US, including laboratories and manufacturing sites totalling nearly 344,000 sq ft across Massachusetts and New Jersey, according to the company.
For Cui, the direction of travel is clear.
“Demand from multinational corporations in China will continue,” she said, adding that potential bestsellers were likely to emerge in oncology, autoimmune diseases and cardiovascular medicine.
Jefferies pointed to candidates including PD-1/VEGF bispecific antibodies and antibody-drug conjugates in oncology, as well as oral GLP-1 drugs and orexin-based therapies in other disease areas.
For Big Pharma, the logic is increasingly hard to escape. Patents do not negotiate; they expire on schedule, and once they do, pricing power rarely returns.
In the scramble to replace ageing blockbusters, Chinese biotech has become an ever more practical source of new molecules – cheaper, faster and, in some cases, genuinely competitive.
Washington may try to redraw the boundaries of cooperation, but the hourglass is still running.
