Western Biotech’s “DeepSeek Moment” – China’s Rise in Pharma Innovation The WSJ article opens with how Summit Therapeutics’ cancer drug, licensed from China’s Akeso, outperformed Merck’s $30B Keytruda. But apparently this isn't all that special — Chinese companies now account for 31% of major pharma licensing deals, up from just 5% in 2020. How Did China Get Here? The investment bank Stifel listed the below provocative answers they think you'd hear if you asked Chinese biotech CEOs. (Some of these answers seem like they apply to multiple industries, especially #1 & 2.) 1️⃣ You didn't appreciate us. "We worked in your American labs, but you wouldn’t promote us. So we went back to China and built our own companies. Now that you see how good we are, don’t complain." 2️⃣ We run lean and fast. "Your biotechs are bloated with unnecessary FTEs, fancy executive suites, and endless meetings. We focus on innovation, not bureaucracy. You’re paying for overhead, not breakthroughs." OUCH?! 3️⃣ We don’t need to steal your secrets. "Finding novel epitopes and mastering phage display isn’t rocket science. We innovate just like you—except we work harder." 4️⃣ You pushed Wuxi out—we welcomed them back. "You decided Wuxi Biologics was a threat. Fine. Now they focus on our molecules, working faster at a fraction of the cost. Again, don't complain." Why Chinese Biotech Is Winning ✅ Lower costs & streamlined clinical trials ✅ Lean operations with minimal bureaucracy ✅ Better drug candidates at lower prices ✅ Faster R&D with Wuxi and other CDMOs driving efficiency Global Pharma’s Growing Dependence on China - Nearly a third of licensed molecules in 2023-2024 came from China. - VEGF x PD-1, a major oncology breakthrough for solid tumors, originated in China, where research remains ahead of Western counterparts. - China is rapidly advancing first-in-class biologics and fundamental life sciences research. Finally, efforts to cut off China (e.g., BioSecure Act) are losing momentum, as they offer little national security benefit. What This Means for Western VC & Biotech Chinese biotech isn’t just competing—it’s delivering better drugs at lower prices. If this trend continues, industry experts are predicting it could disrupt the U.S. biotech funding model, as VCs struggle to justify sky-high valuations when superior alternatives are available for less. Meanwhile, India is also entering the game, adding to the competition. I’m no biotech expert, but after loosely following the industry for the past two years, this WSJ headline doesn’t surprise me. A decade ago, when LPs asked me to look into China’s then-nonexistent biotech sector, I never could have predicted its rapid rise. What’s more surprising—and disappointing—is seeing the U.S., once the gold standard for efficiency, now bogged down in the kind of bureaucracy I used to associate with China. But as a consumer, I’m excited to see China, India, and others join the race for better drugs. Links below in comments.