Bristol Myers Squibb turns to China’s Hengrui to replenish pipeline

One of America’s largest pharmaceutical companies this week said it will partner with a Chinese drugmaker to test some of its experimental drugs and discover new ones, a deal that could mark the next phase of coordination across continents.

Bristol Myers Squibb on Tuesday announced the potential multibillion-dollar partnership with one of China’s top drugmakers, Hengrui Pharma. The companies will work together to develop about a dozen drugs, including four that Bristol discovered and will send to China for Hengrui to run the early-stage clinical trials. The pair of companies will also collaborate to discover new drugs.

“It’s a huge signal,” said Michael Baran, head of private investments at healthcare-focused hedge fund Affinity Asset Advisors and a former partner at Pfizer Ventures. He said U.S. drugmakers have partnered with Chinese companies to develop drugs before, including Amgen’s 2019 collaboration with BeOne.

But Bristol’s deal is significant because it is more reciprocal, he said. It raises the prospect that more U.S. drugmakers could increasingly carry out early drug development in China as they try to bring treatments to market more quickly, and that Chinese companies could start to become global powerhouses.

Bristol and Hengrui will each contribute assets and will work together on developing new drugs, making China look less like a source of one-off molecules and more like a part of pharma’s global research and development operating system, Baran said.

American and European biopharmaceutical companies like Pfizer, Merck and AstraZeneca have been increasingly turning to China to find their next potential blockbusters. A little more than half of large pharmaceutical companies’ licensing deals have come from China so far this year, up from 39% all of last year and 5% in 2022, according to data from DealForma, which tracks agreements in the sector.  

Up until now, the playbook has mostly been for large drugmakers to license drugs that were discovered and underwent early testing in China, or essentially take experimental drugs out of China. Some U.S. companies like Eli Lilly have partnered with Chinese companies to discover and develop new drugs.

Bristol’s deal differs because it sends several experimental medicines to China.

Lieven Van der Veken, a senior partner at McKinsey, said Bristol’s partnership differs from others in some key ways. It’s similar to a deal Hengrui recently inked with GSK that gives the British drugmaker access to some of Hengrui’s experimental drugs. But with this agreement, Bristol is acknowledging it has drugs it can develop…