The latest mega deals aimed at bringing Chinese innovation to the US have rekindled go-global hopes for a sector badly needing some cheer. But some investors say out-licensing may be the best route and that Chinese biotech must scale back its do-all mentality and focus on what it does best amid a new reality.

The hard going could get even tougher as a funding crunch continues for China’s biotech sector, which is being hit by a paradox that could see more pain ahead, leading investors to take the pulse of the sector as the Year of the Rabbit starts.

From orphan to cancer drugs, more products have had their prices cut in the latest round of reimbursement negotiations in China. Although the 60% average across 100 medicines was considered mild given it didn’t go beyond the previous year, it was still chilling and is prompting more firms, both multinational and domestic, to walk away from the process.

For the first time in 61 years, China has reported its population is shrinking and the new demographic shift is likely to have a far-reaching impact on the pharma sector. Meanwhile, regulators have accelerated the approval of new COVID-19 drugs to relieve acute shortages.

Recent antibody mega-deals are providing a rare bright spot for the embattled China biotech sector, amid sharply rising COVID-19 deaths in the country that indicate rebound and recovery could take longer than previously expected.

The short-notice reopening of the country made 2022 a tough year for the health sector in China, where divestments, cash crunches and commercial challenges abounded. Throughout the year, despite clinical trial activity continuing to blossom, multiple Chinese innovative drug developers faced setbacks in the US from regulatory rejections of oncology products. Meanwhile, others quietly scaled back their operations in China, hit by the negative impact of deep price cuts.