China has gotten very good at making cutting-edge pharmaceuticals — good enough to seriously threaten America's long-standing dominance in drug-making.

Why it matters: This is all happening in plain sight. But it's playing out against a profound remaking of the U.S. federal health bureaucracy that the industry has said threatens future cures.

• China is "really very close to us. If they continue like that with that strength, they will become better than us. I think it's a wake-up call for us," Pfizer CEO Albert Bourla told CNBC earlier this month at Davos.
• He added that, in order to compete, the U.S. needs to adequately fund Ph.D. programs, the NIH and other research.

Between the lines: More high-quality new drugs could be a very good thing for patients around the world.

• But warnings abound about the risks of letting China surge ahead.
• "If the United States loses its primacy in biopharmaceutical innovation, it risks weakening the financial and intellectual engine that drives broader biotechnology leadership," the National Security Commission on Emerging Biotechnology wrote in a December report.

The big picture: So far in 2026, it appears the four-year biotech slump is coming to an end, and investors seem optimistic about the near-term future of the sector.

• A key question is whether a year's worth of upheaval at the FDA will blunt biotech's momentum in the U.S.
• If it does, one of the major concerns is that America will be left playing catch-up.

What they're saying: "Marty Makary has done an incredible job at the FDA," Health Secretary Robert F. Kennedy Jr. said yesterday at a White House Cabinet meeting.

• "We're making this a safe and productive and encouraging ecosystem for biotech so that China does not steal that industry from us."

The bottom line: "We no longer have to imagine a world in which China outperforms the United States in biopharmaceutical innovation. That world is already emerging," the biotech commission report concludes.

• The private sector agrees: "Asia is now the epicenter of global biopharmaceutical progress — outpacing the United States and Europe in pipeline growth, patents, and next-gen therapies," McKinsey wrote in a recent analysis.

It wasn't that long ago that China's role in the global pharmaceutical ecosystem was mostly producing generics and other follow-on drugs.

• In just the last five years, it's become a major player in discovering and developing competitive new treatments that are increasingly being licensed by Big Pharma.

Between the lines: China "has gained the lead in early-stage asset generation," a recent Pitchbook research note declares. "This advantage will likely persist as early-stage assets remain underfunded in other biopharma markets such as the U.S."

• Notable Chinese biopharma companies are competitive in some of the drug industry's most ambitious — and lucrative — markets, including oncology, metabolic disease and gene therapies.

Zoom in: It's now faster and cheaper to do early-stage clinical trials in China than in the U.S.

• Plus, Big Pharma companies are hungry for new assets as they face the end of market exclusivity for some of their older blockbuster drugs.
• That's resulted in dozens of deals in 2025 alone, the majority of which were for experimental drugs in preclinical studies or early-stage trials.
• The number of deals "indicates growing global trust in Chinese science," Pitchbook notes.

By the numbers: Chinese deals made up 17% percent of global pharma deals in the first three quarters of 2025, up from only 6% in 2020, according to Bain.

• Goldman Sachs found that China accounted for half of all global licensing deals when measured by dollar value, and that nearly half of new drug molecules that entered into human trials in the first half of 2025 were from Chinese companies.

Between the lines: Drug companies aren't just buying up Chinese drug candidates; they're also expanding their footprints in the country.

• Just yesterday, AstraZeneca announced it was investing $15 billion in manufacturing and R&D in China.
• Global life sciences companies have clustered in hubs like Shanghai's "Pharma Valley," which is home to more than 1,700 companies.

Reality check: The U.S. is still the world's largest market for pharmaceuticals, namely because it pays the highest prices for them.

• That means absent a radical reordering of the global drug market, the manufacturer of any new drug will still be incentivized to seek FDA approval and sell their product in the U.S.

The bottom line: There's not much the U.S. can do at this point to slow down Chinese innovation, making the only real option for staying competitive to speed up our own.

• And the experts say the best time to do that is now — with little wiggle room.

One quick note about last week's newsletter: As several of you noted, babies can get measles vaccines before they turn 1.

• The CDC recommends infants 6–11 months old get one dose of the MMR vaccine before traveling internationally, but then get two more doses after their first birthday.
• The American Academy of Pediatrics says babies can also be vaccinated as early as 6 months old if they live in or are traveling to a community experiencing a measles outbreak. Again, they then have to get two more doses later.
• The bottom line here is that early vaccination is essentially an additional dose of the vaccine — and it's only an option for babies who are at least 6 months old.