Event Recap | Attorney Tang Huadong Speaks at Symposium on Innovative Drug R&D Layout and Globalization Strategies amid International Competition
The Symposium on Innovative Drug R&D Layout and Globalization Strategies amid International Competition concluded successfully on May 28. Centered on four core themes including innovative drug project initiation, patent protection, cross-border transactions and overseas expansion pathways, the event gathered specialists from pharmaceutical industry, intellectual property and legal sectors to deliver actionable advice for the global expansion of China’s biopharmaceutical sector.
Tang Huadong, Partner at Merits & Tree Law Offices, was invited to deliver a keynote speech entitled Typical Cases and Dispute Trends in Cross-border Pharmaceutical Transactions. Drawing on frontline practice and cutting-edge industrial precedents, he thoroughly unpacked compliance pitfalls and risk mitigation routes for Chinese pharma companies’ cross-border BD deals.
I. Opening Remarks: Empowered Policies for Co-built Industrial Ecosystem
Ms. Ma Li, General Manager of NewNest Innovation Center, delivered the opening address on behalf of the organizer. She noted the forum was designed to break information barriers and connect industrial resources, empowering enterprises to make sound decisions spanning early-stage R&D to global commercialization.
Subsequently, Ms. Wang Zongyue, Deputy Director of the Life Science City Service Division of Future Science Park Administrative Committee and Deputy Division Chief at the Biological Examination Section under the Pharmaceutical & Biological Invention Examination Department of CNIPA, took the floor. She remarked that competent authorities would keep refining regulatory frameworks to boost IP protection and international collaboration for biotech firms and drive high-quality industrial growth. She underscored that intellectual property constitutes core assets for innovative drug developers, and comprehensive patent portfolios serve as the cornerstone for Chinese enterprises to go global.
II. Keynote Sharing Sessions
2.1 Dr. Li Jing: Decoding Full-Spectrum BD Landscape to Anchor R&D Value
Dr. Li Jing, Founder & Chairman of Yaodu Group, kicked off the keynote session with two presentations: Overview of China’s Innovative Drug BD Transactions in 2026 and Review of Domestic Launched Small-molecule Drugs in 2025 plus Outlook on China’s Small-molecule R&D over the Next Decade. From an industrial practitioner’s perspective, he systematically sorted out scale, structural features and regional distribution of recent out-licensing deals while pinpointing prevalent industry woes such as redundant target development, insufficient clinical value and substandard patent quality.
He stressed three cardinal principles for new drug initiation: clinical-value orientation, differentiated pipeline design and prior patent planning. Abandoning blind follow-up development and focusing on unmet clinical demands is essential to sharpen global pipeline competitiveness. Meanwhile, he forecasted future small-molecule R&D will center on First-in-class candidates, PROTACs and molecular glues, offering forward-looking guidance for corporate pipeline planning.
2.2 Mr. Liu Guiming: End-to-End Patent Portfolio to Fortify Innovation Moat
Following that, Mr. Liu Guiming, Former Level-2 Inspector and Division Head of the Chemistry Department at CNIPA, presented an in-depth report on Patent Protection Strategies for New Drug Development. A veteran patent examination expert, he elaborated on end-to-end patent filing logic covering chemical compounds, crystal forms, formulations, medical uses and manufacturing processes based on real examination practices.
He emphasized that core compound patents form the foundation while peripheral patents build a protective portfolio, and drafting quality directly determines patent stability. In addition, he warned against frequent risks including ambiguous claims, neglected FTO clearance and unstable patent validity, and proposed targeted solutions via patent invalidation and infringement precedents to help enterprises solidify IP defense.
2.3 Attorney Tang Huadong: Typical Cases and Dispute Trends in Cross-border Pharmaceutical Transactions
Partner Tang Huadong shared insights under the title Typical Cases and Dispute Trends in Cross-border Pharmaceutical Transactions. Supported by real-world litigation cases, he dissected prevalent contractual traps, IP controversies and compliance hazards in cross-border pharma deals and put forward targeted countermeasures.
1. China’s Innovative Drug Out-licensing Enters Golden Era
Attorney Tang pointed out Chinese innovative drug globalization has evolved from niche exploration into an industry-wide boom. Greater China’s out-licensing transaction volume surpassed USD 137.7 billion in 2025, with a year-on-year growth of 76% in early 2026, driven by restructured global industrial landscape and rising domestic innovation capacity.
Globally, multinational pharma giants are plagued by patent cliffs, facing mass expiry of blockbuster medicines and declining in-house R&D returns, hence eager to source external innovative assets to replenish pipelines. Domestically, China’s pharmaceutical industry has shifted toward innovation-driven growth, with globally competitive assets emerging across ADC, small molecule, CGT and mRNA sectors. Legend Biotech’s CAR-T product alone registers nearly USD 1.9 billion in annual sales, and domestic CGT breakthroughs have secured multiple high-value overseas partnerships.
Nevertheless, Attorney Tang flagged three prominent drawbacks restricting outbound licensing: overemphasis on headline transaction value rather than deal structure, prioritizing deal signing over performance supervision, and focusing on short-term gains at the cost of long-term layout. Excessive fixation on total consideration often ignores IP robustness, performance obligations and asset reversion clauses, sowing seeds for future disputes.
2. Four Core Uncertainties Underpinning Cross-border Deal Risks
Complications in cross-border pharmaceutical transactions originate from four pervasive uncertainties spanning R&D, regulatory approval and commercialization, the primary triggers of commercial disputes. Attorney Tang analyzed risks from scientific, regulatory, IP and commercial dimensions respectively.
- Scientific Uncertainty: High attrition rate complicates efficacy verification
New drug development is a high-risk undertaking with over 90% preclinical failure rate; divergent responses between animal models and human subjects introduce massive unpredictability for safety and efficacy tests. Poor pharmacodynamic performance, excessive toxicity or abnormal pharmacokinetics at any stage from target validation to Phase III trials can halt projects and invalidate milestone payment commitments.
- Regulatory Uncertainty: Evolving approval rules create unpredictable review paths
Regulatory standards vary drastically across FDA, NMPA and EMA with frequent policy updates. Amid geopolitical fluctuations, some jurisdictions refuse to recognize Chinese clinical data and block approval routes. Rapid regulatory revisions for China-US parallel filing, orphan drugs and CGT therapies raise risks of delayed or failed registration without timely policy alignment.
- IP Uncertainty: Defective patent layout fuels ownership conflicts
As the core valuation benchmark for out-licensing, domestic pharma commonly suffers incomplete patent portfolios, ambiguous claims, missing FTO reports and unclear ownership: insufficient protection for core payloads, linkers and conjugates; overbroad platform patents lacking supporting examples; undefined IP ownership for joint R&D; incomplete global FTO covering EU and US markets, all exposing license deals to infringement litigation and asset depreciation.
- Commercial Uncertainty: Inflated “up-to” deal value and uncertain milestone payouts
Cross-border deals frequently advertise eye-catching multi-billion-dollar aggregate consideration, yet upfront payments account for a tiny fraction, with subsequent development, regulatory and commercial milestones fully subject to buyers’ investment willingness. In practice, multinational buyers often withhold milestone payments under excuses of failed acceptance or corporate strategy shifts; some acquire innovative assets solely to eliminate competitive threats and suspend further development, leaving sellers with zero commercial gains.
The four overlapping uncertainties lead to eight frequent dispute triggers: controversies over asset authenticity and completeness, IP stability & infringement risks, milestone eligibility disputes, breaches of development obligations, project suspension & termination, asset reversion upon deal exit, antitrust violations and M&A regulatory scrutiny. Attorney Tang warned China’s out-licensing sector is entering a high-incidence litigation cycle with concentrated disputes expected over the next three to five years.
3. In-depth Analysis of Benchmark Precedents
To visualize real risks for attendees, Attorney Tang reviewed five landmark cross-border litigations to identify pitfalls and actionable takeaways.
Case 1: Seagen v. Daiichi Sankyo
Armed with ADC linker platform patents, Seagen sued Daiichi Sankyo for DS-8201 infringement relying on overbroad patent claims. The court eventually invalidated Seagen’s patents for insufficient written description and absence of explicit DS-8201 structural disclosure in original specifications, resulting in Seagen’s defeat.
Key takeaway: Platform patents should avoid overly expansive claims lacking supporting experimental data to survive invalidation challenges. Companies shall file layered patents for antibodies, linkers, payloads and conjugation technologies, define future improvement IP ownership in collaboration contracts and complete full-scope global FTO before outbound licensing.
Case 2: Alexion vs Syntimmune
In 2018, Alexion acquired Syntimmune with a deal value capped at USD 1.2 billion and contracted to use commercially reasonable efforts (CRE) for product development within seven years. Post-acquisition, Alexion shelved the asset to avoid USD 800 million milestone payments and faced litigation. A 2025 court ruling ordered Alexion to pay USD 130 million in milestone fees plus USD 180 million in compensatory damages.
Attorney Tang emphasized CRE constitutes legally enforceable rather than cosmetic contractual terms. Out-licensing contracts must quantify CRE via fixed minimum R&D spending, predefined clinical timelines and annual development KPIs, establish joint development committees for ongoing oversight and embed asset clawback clauses if buyers discontinue project advancement.
Case 3: BMS-Celgene Acquisition Dispute over CVR
BMS closed its USD 74 billion takeover of Celgene in 2019 with a Contingent Value Right (CVR): shareholders would receive an extra USD 9 per share if core CAR-T liso-cel obtained FDA approval by December 31, 2020. The candidate secured approval five weeks late in February 2021, terminating all CVR benefits and triggering class-action lawsuits against BMS. In 2025, the federal court denied BMS’s motion to dismiss and proceeded with substantive trial.
Practical guidance: Contracts must reserve contingency buffers for regulatory delays and CMC setbacks, with explicit clauses governing purchasers’ diligence obligation, information disclosure and audit rights to curb massive financial losses from minor schedule slippage.
Case 4: Takeda Antitrust Litigation over Pay-for-Delay Settlement
Takeda reached pay-for-delay deals with generic drug developers to delay generic launch of its digestive drug Amitiza and preserve market monopoly. In 2026, a Boston federal jury ruled against Takeda on antitrust violations with USD 885 million in initial damages, potentially tripled under US antitrust statutes. This marks the first plaintiff victory post-Supreme Court’s relevant rulings and signals stricter global antitrust oversight.
Cross-border license parties must conduct rigorous antitrust compliance reviews to steer clear of reverse payment, market exclusion and improper benefit transfer violations.
Case 5: FTC v. Edwards Lifesciences (JenaValve Acquisition)
Global heart valve leader Edwards sought to acquire clinical-stage peer JenaValve in 2024 to eliminate competitive threats. The US FTC filed suit against the transaction as a killer acquisition that suppresses industrial innovation and inflates drug prices. A preliminary injunction issued in 2026 forced Edwards to scrap the entire buyout.
Chinese out-licensors shall conduct reverse due diligence on prospective buyers, reviewing their pipeline layout, acquisition track record and history of shelving acquired assets. Anti-abandonment provisions, minimum development commitments, liquidated damages and asset reversion terms are indispensable to prevent acquired assets from indefinite suspension.
4. Integrated IP & BD Strategy: Shift from Deal Brokerage to Pre-transaction Asset Structuring
Attorney Tang proposed the integrated IP & BD framework, under which cross-border pharmaceutical licensing evolves from simple matchmaking into full-lifecycle value management covering asset preparation, buyer screening, deal structuring, contract drafting, post-signing performance supervision and dispute resolution. The model delivers four core transformations:
- Translate technical data into formal IP layout and FTO conclusions;
- Convert patent robustness and claim coverage into quantifiable asset valuation;
- Codify commercial demands into enforceable contractual obligations on development milestones and asset reversion;
- Secure long-term deal safety via structured technology transfer, progress tracking and default early-warning mechanisms.
Based on the framework, five actionable suggestions are proposed for Chinese pharma’s global expansion:
- Front-load IP planning: Patent mining kicks off at target validation and lead optimization instead of post-R&D remedy, constructing multi-layered patent portfolios while completing global FTO in advance. Premature academic publication or China-only filing often destroys novelty and blocks overseas listing.
- Prioritize realizable returns over inflated headline value: Evaluate upfront payment proportion and split development/regulatory/commercial milestones with objective measurable standards to avoid unenforceable vague bonus clauses, plus rigorous counterparty credit review.
- Solidify enforceable contractual mechanisms: Quantify minimum R&D investment and annual milestones, convert ambiguous reasonable-effort clauses into binding commitments, and introduce joint governance, information access and audit rights to avoid arbitrary project suspension.
- Perform thorough reverse DD on licensee: Avoid selecting buyers solely based on brand and financial strength; scrutinize their M&A history and strategic intent to guard against killer acquisition and asset shelving risks.
- Embed full-spectrum cross-border compliance: Secure export clearance, genetic resource approval, data compliance, antitrust filing and foreign exchange registration with coordinated efforts across R&D, BD and regulatory teams to avoid deal termination due to incomplete paperwork.
He reiterated optimal cross-border licensing targets steady value realization and controllable risks rather than maximum signing value. Enabled by integrated IP & BD capability, domestic innovative drugs can shift from speculative early-stage asset dumping toward sustainable global value monetization.
2.5 Dr. Liu Xiao: CGT Globalization Opportunities under New Regulatory Decree No.818
Closing the keynote session, Dr. Liu Xiao, VP of Business & Marketing at Sincere Bio, delivered Why, What and How for Chinese Innovative Drug Globalization, unpacking the regulatory impacts of Decree No.818 on domestic CGT sector and future overseas expansion roadmap.
Promulgated on May 1, 2026, the Regulations on Clinical Research and Industrial Transformation of Advanced Biomedical Technologies (Decree No.818) is China’s first comprehensive administrative regulation governing cell therapy R&D and commercialization, clearing standardized pathways for CGT translation. Dr. Liu advised CGT enterprises to seize the policy window for global layout alongside robust internal compliance building to facilitate steady overseas development.
III. Event Wrap-up
The forum effectively addresses core pain points plaguing domestic pharma globalization by pooling industrial insights, sharing field-tested experience and connecting cross-industry resources, furnishing authoritative references for high-quality outbound expansion. Attendees include R&D and investment representatives from dozens of leading pharmaceutical firms such as BeiGene, Simcere, Realbio and Zhendong Pharma, plus multiple investment institutions and research institutes including Queshan Capital and Chuangshi Capital, fostering productive on-site communication and resource matching.
China’s biopharmaceutical industry stands at a pivotal juncture transforming from a large pharmaceutical nation into an innovation powerhouse amid intertwined opportunities and challenges. Merits & Tree Law Offices and its affiliate Meritsip IP will keep focusing on biotech IP and cross-border transaction legal services, escorting Chinese innovative drugs to global markets and benefiting patients worldwide.
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