Novartis signs $7.8 billion licensing deal with China's Abogen Biosciences

Novartis has signed a deal worth up to $7.8 billion, in the latest of a flurry of tie-ups between Big Pharma and Chinese biotechs.

The Swiss pharma major is entering a licensing agreement with China-based Abogen Biosciences for its lead asset, an early-stage experimental treatment for autoimmune disease, Abogen said in a statement on Friday.

China offers Western biopharma companies hopes of finding their next blockbuster drug, as patents on top-selling drugs, which generate hundreds of billions in sales, face a "patent cliff" in the early 2030s.

Novartis' normally stable shares fell last month by the most since 1987 following several clinical trial setbacks, raising questions about its ability to develop new drugs to offset the looming patent expirations.

Novartis' announcement comes after Danish weight loss drug maker Novo announced earlier this week an exclusive licensing agreement with Hengrui Pharma for an early-stage, once-weekly GLP-1/GIP pill for as much as $2.6 billion.

Novo, whose shares have plummeted over the past two years amid intensifying competition in the anti-obesity space, is under pressure to find a successor to its semaglutide franchise, which includes mega-blockbusters Wegovy and Ozempic.

The U.K.'s GSK said in mid-September that it was acquiring a blood cancer medicine from Chinese Chimagen Biosciences for up to $750 million.

GSK's head of business development, Chris Sheldon, told a London healthcare investor event last month that, while the company isn't targeting specific geographies for innovation, China's share of new biotech innovation is rapidly increasing.

ING has estimated that China will account for about a third of all new molecules in pharma companies' pipelines globally in 2026, up from 4% in 2014.

The bank expects the value of Chinese biotech outlicensing deals to surpass $250 billion in 2026, as overseas demand for its drug assets rises.

Drugs developed in China are increasingly being pulled into global Big Pharma development programs.

AstraZeneca early Friday announced it had entered a partnership with Summit Therapeutics to test its oncology drugs.

With Daiichi Sankyo, they will test AstraZeneca's cancer treatment Datroway in combination with Summit's ivonescimab, developed by Chinese biotech Akeso and licensed to Summit, across multiple types of tumour.