Economic Observer reporter Liu Xiaonuo

The introduction of a new policy has made many innovative pharmaceutical companies feel confident.

On October 16th, the Ministry of Commerce and the Ministry of Science and Technology issued Announcement No. 48 of 2026, soliciting public opinions on the revision of the "Catalogue of Technologies Prohibited and Restricted from Export in China" (hereinafter referred to as the "Catalogue"), and implementing temporary registration management for related technology exports.

At the end of May 2026, there were rumors in the industry that the overseas business development (BD) of various innovative drugs would be banned or restricted, sparking a lot of discussion. BD plays a crucial role in the current innovative pharmaceutical industry in China, bringing both cash flow to enterprises and opportunities to enter overseas markets.

The release of the 'Prohibited and Restricted Catalogue' means that innovative pharmaceutical companies can still sell their rights to product development and commercialization, but it does not mean that companies can also sell. According to the document, the transfer of ownership of technology platforms for cell and gene therapy, small nuclear acid drugs, and pathogenic microorganisms is prohibited. This may affect the likelihood of cross-border mergers and acquisitions for companies in these fields.

Although cross-border mergers and acquisitions are not common in China's innovative pharmaceutical industry, they are still an exit option for companies and investors. In popular fields such as CAR-T (a cell therapy) in the body, some Chinese companies once hoped to be acquired by multinational corporations, but now they may have to rethink their way out.

Involving three major fields

At the end of May, in the list of biopharmaceutical related technologies that were rumored to be banned and restricted in the industry, bispecific antibodies, polyclonal antibodies, ADC (antibody conjugated drugs), small molecule targeted drugs, small nucleic acid drugs, as well as cell and gene therapy technologies were prominently listed. This almost covers all mainstream drug development routes.

If it's true, it's really unbelievable! "The founder of a dual antibody innovative pharmaceutical company once told the Economic Observer," Chinese companies have almost no ability to develop these products abroad. They can only promote these products internationally through transfer or cooperation

Zhang Zhimin is a senior expert in cross-border business development. He has been responsible for business expansion and investment in multinational companies such as Johnson&Johnson and Merck, and has also founded two gene therapy companies in the United States. Currently, he serves as a mentor for the QB3/Bakar Biotechnology Incubator at the University of California, Berkeley, and helps Chinese and American biotechnology companies establish cooperation with multinational pharmaceutical companies. At the end of May, when he read the previous list, he felt that "this range probably covers 70-80% of the offshore pipelines in recent years".

After the public solicitation of opinions on the "Catalogue of Prohibitions and Restrictions" in October, even foreign companies breathed a sigh of relief. Previously, there were also rumors in the United States that clinical data from China would be restricted. Foreign companies were once considering acquiring assets in China and developing in the United States. In May, there were rumors that the Chinese government would also restrict BD, and foreign companies were thinking about how to do business models. Now it seems that the situation is very different from what was previously circulated. ”Zhang Zhimin said.

The scope of this' Prohibited and Restricted Catalogue 'has been significantly reduced, involving five technologies:

There are three technologies prohibited from export, namely the cell and gene therapy technology process platform with independent intellectual property rights, the small interfering RNA (siRNA) drug technology process platform with independent intellectual property rights, and the artificial genetic modification and targeted propagation technology of pathogenic microorganisms;

There are two technologies that are restricted from export, namely the discovery and validation of novel targets for cell and gene therapy with independent intellectual property rights, and the discovery and validation of novel targets for small interfering RNA with independent intellectual property rights.

In the "Catalogue of Prohibitions and Restrictions", pathogenic microorganism technology belongs to the field of research and experimental development. The three major fields that are truly related to the pharmaceutical manufacturing industry are cell therapy, gene therapy, and small nuclear acid drugs.

Starting from 2024, the development and application of human stem cells, gene diagnosis and treatment technologies have been included in the scope of foreign investment prohibition. However, the inclusion of small nucleic acid drugs in the directory has surprised some industry insiders.

Limited Impact

The 'Catalogue of Prohibitions and Restrictions' only prohibits the transfer of ownership of certain technology and process platforms to external parties. If ownership is not transferred externally, it does not fall within the scope of management.

This means that the behaviors managed by this directory are mainly "selling platforms" or "selling companies", and are not commonly seen in BD models such as external authorization.

On October 16th, a spokesperson for the Ministry of Commerce stated that they support the orderly and lawful development of international cooperation in biopharmaceutical technology, and have taken measures to exclude or apply facilitation measures to important situations of international cooperation. For external authorization models that do not involve ownership transfer, convenient measures such as automatic licensing shall apply.

According to the interpretation of the Hankun Law Firm team, common technology exports targeting a single pipeline, product, or variety, whether through licensing transactions or IP (intellectual property) transfer transactions, are not affected by the prohibition of export clauses.

In foreign countries, multinational corporations often acquire certain assets through acquisitions, but there are very few cases of Chinese biopharmaceutical companies being acquired by multinational corporations. The National Medical Products Administration disclosed that there were 81 authorized transactions for innovative drugs in the first half of 2026. The two most well-known cross-border mergers and acquisitions cases now are BioNtech's acquisition of Pumis in November 2024 and AstraZeneca's acquisition of Genki Biotech in December 2023.

Genxi Biotechnology mainly develops cell therapy drugs. If it were now, this acquisition might not be completed, "said Zhang Zhimin.

Multinational pharmaceutical companies acquire biotech companies primarily to acquire their core assets or technology platforms. Zhang Zhimin explained from these two aspects why cross-border mergers and acquisitions by Chinese companies have always been rare:

On the one hand, compared to American companies that focus more on pipelines, Chinese companies often have more than a dozen pipelines, which is more complex for multinational companies and their asking prices are correspondingly higher. Obtaining core assets through BD can avoid many legal troubles.

On the other hand, there are not many good technology platforms in China. Leading pharmaceutical companies such as Hengrui Pharmaceutical and Xinda Biotechnology can use the advantages of technology platforms to cooperate with multinational enterprises, and multinational enterprises do not have to acquire them, "Zhang Zhimin said." There is a saying in the United States, 'If I can drink milk, why should I buy a cow?'

From an industry perspective, the necessity for overseas companies to purchase these Chinese process technology platforms is not significant.

As for cell and gene therapy, according to Zhang Zhimin's observation, from 2017 to 2020, multinational corporations invested a large amount of funds and products have been developed, but due to high prices and certain side effects, they cannot be sold in the commercial stage. Now, they are gradually withdrawing from the cell and gene therapy track, and it is difficult for domestic pipelines to find buyers.

The cell therapy that can arouse the interest of multinational corporations is almost exclusively in vivo CAR-T. Zhang Zhimin noticed that some domestic companies that specialize in in-vivo CAR-T also hope to be acquired. But under the new policy, the possibility of them being acquired has decreased.

As for the small nucleic acid industry, Zhang Zhimin pointed out that almost all large multinational pharmaceutical companies already have small nucleic acid platforms or have established platform cooperation, and the possibility of acquiring Chinese companies is not high.

Some Chinese companies also lack the desire to sell ownership of the aforementioned platforms.

Zhao Chunlin is the founding and managing partner of Anlong Life Science Fund. In 2019, he founded Anlong Biotechnology to develop gene therapy and small nucleic acid drugs. Originally, everyone was not planning to primarily exit through selling platforms or companies, but mainly through selling products. External authorization will not be affected, and the impact of the new policy on enterprises will not be significant, "he said.

Zhang Zhimin's hidden concern is that after the new policy enters the specific implementation process, it may affect the technology transfer or cross-border mergers and acquisitions of companies in other fields. Some Chinese companies have diverse businesses and engage in research and development in multiple directions. If some of the technologies involve management scope, it may affect the opportunity for the entire company to be acquired through cross-border mergers and acquisitions. Although cross-border mergers and acquisitions are not a common exit method, they are still a potential way out for some innovative pharmaceutical companies.

The respondents believe that the possibility of innovative pharmaceutical companies in the primary market introducing foreign investors will also change.

Chinese companies like ours hope to sell products, but foreign large companies at least hope to have a way to acquire the company as a whole, so that they can exit quickly and conveniently. If mergers and acquisitions are restricted, the willingness of US dollar funds to invest in Chinese companies may decrease, "said Zhao Chunlin.