The Biotech Flywheel: How China is Overtaking the West in the New Great Power Competition

On December 19, 2025, the National Security Commission on Emerging Biotechnology (NSCEB) published a definitive staff paper entitled "The Future of U.S.-China Biotechnology Competition," signaling a critical inflection point in the global struggle for technological primacy. This document, building upon a sobering April 2025 assessment, warns that the window for the United States to retain its leadership in biotechnology is closing far faster than previously anticipated. While the United States has historically dominated this sector, China has spent the last two decades systematically constructing a vertically integrated biotechnology ecosystem specifically designed to usurp American leadership. This competitive posture is not merely a product of market forces but is propelled by a state-driven strategy implemented on a foundation of non-market practices and brute force economics. Evidence presented by the NSCEB indicates that China is now moving beyond its legacy of copycat generic medicine manufacturing and is driving a significant share of global biopharmaceutical innovation.

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This systemic shift is further analyzed in the corporate intelligence briefing by Extrema Ratio, "Geopolitical Alert: China Arms the Biopharmaceutical Sector" (November 24, 2025), which highlights that China controlled approximately 80% of the global generic active pharmaceutical ingredient (API) supply chain by 2023. The analysis argues that Beijing has completed a strategic industrial transformation to establish itself as a global innovation power—a transition described as a systemic operation that amplifies risks to Western supply chains and national security. This transformation is fueled by what the NSCEB calls an "innovation chain" strategy, which connects inventions directly to commercialization through the co-location of research institutes, regulatory authorities, and industrial-scale manufacturing within specialized regional clusters. Notable clusters include the Beijing-Tianjin-Hebei R&D hub and the Yangtze River Delta, the latter of which has seen its bio-manufacturing sector revenue grow significantly as it integrated AI and synthetic biology.

The commercial results of this strategy have been sensational throughout 2025. In the report "China Revolutionizes the Global Pharmaceutical Market" (June 11, 2025), Extrema Ratio documents a massive surge in high-value licensing deals. In May 2025, American giant Pfizer signed a record-breaking deal worth potentially over $6 billion with China’s 3SBio, paying an unprecedented $1.25 billion upfront for the global rights to an experimental anti-cancer drug. This was followed in June 2025 by Bristol-Myers Squibb paying $1.5 billion upfront to BioNTech for a drug originally developed by the Chinese firm Biotheus. Further demonstrating this shift, the NSCEB notes that while Chinese companies accounted for only 5% of licensing deals over $50 million in 2022, they captured 42% of such deals in the first quarter of 2025 alone.

The rapid internalization of innovation is also reflected in clinical trial data. In 2024, China surpassed the United States in the number of drug clinical trials, listing more than 7,100 trials compared to approximately 6,000 in the United States. This rise is supported by a more flexible regulatory regime and a vast talent pool often led by "returning brains"—Chinese scientists trained at leading Western institutions who bring an internationalized mindset back to domestic firms. These domestic firms are now producing therapies that, in some clinical studies, have demonstrated superiority over established Western blockbuster drugs, marking a watershed moment for Chinese innovative capabilities. Even Italian international firms, such as Chiesi Group led by CEO Giuseppe Accogli, have recognized this shift, significantly increasing their workforce in China and signing cooperation agreements with local partners like Haisco to develop new innovative drugs.

However, this growth is perceived as a "golden trap" in the Extrema Ratio analysis "The Great Illusion: Why the West is Falling into the Chinese Biotech Trap" (September 3, 2025). The analysis argues that the record surge in foreign direct investment (FDI)—exceeding $4 billion in the first seven months of 2025—is not a sign of simple market opening but a strategic maneuver to co-opt Western innovation. Major companies like AstraZeneca, which invested $2.5 billion in an R&D center in Beijing, are finding the Chinese market indispensable but increasingly dangerous. The NSCEB and Extrema Ratio both highlight that Chinese laws, such as the National Intelligence Law and Data Security Law, compel foreign companies to cooperate with state intelligence and share complex health and genomic data. This data is used to fuel Chinese AI programs and monitor populations, while also creating biological capabilities that could be leveraged for national security purposes.

The NSCEB concludes that if the United States cedes biopharmaceutical innovation to China, it risks losing the financial and intellectual engine that sustains basic science and the next generation of biotechnology startups. Revenues from breakthrough drugs currently fuel a "flywheel effect" in the U.S. that underwrites research in agriculture, energy, and defense. Surrendering this cycle to Beijing would provide unrivaled advantages to a foreign adversary and create a strategic dependency on Chinese-originated innovation. With China’s 14th Five-Year Plan and "Made in China 2025" strategy significantly expanding the nation's manufacturing and innovation capacity, the NSCEB warns that unless the U.S. government adopts decisive policies to catalyze its domestic industry, China’s competitive edge may soon expand into an insurmountable lead.