On Monday, US pharmaceutical company Merck agreed to pay a $400 million upfront payment to Spurray Pharmaceuticals for its preclinical KRAS G12D oncology drug, with a total potential transaction value of up to $2.13 billion. The background to the deal is clear: Keytruda faces patent expiration in the coming years, and Merck needs to continuously bolster its oncology pipeline.
The reasons why Western pharmaceutical companies are buying Chinese assets are becoming increasingly pragmatic: in-house R&D is becoming increasingly expensive and slow, while the patent cliff is looming ever closer.
A recent Reuters analysis indicates that large pharmaceutical companies may face approximately $400 billion in revenue impacted by patent expiration by 2033, while the return on traditional in-house R&D has already declined. Therefore, early-stage innovative assets in China have become a "lower-cost, faster, and more versatile" way to bolster their pipelines.
