Three weeks, three giants, three deals
On 2 October, Novartis licensed ABO2203 from Wuxi-based Abogen Biosciences. ABO2203 is a LNP-encapsulated mRNA therapy that encodes a CD19xCD3 T-cell engager, intended to deplete the patient’s B cells that drive autoimmune disease. Abogen will receive $575M upfront and can earn up to $7.2B in milestones, for a total of about $7.8B. The clinical evidence is thin: published data cover three patients with immune thrombocytopenia.
On 19 October, Roche signed its second ADC agreement with Hansoh Pharma. The first deal, in October 2025, gave Roche ex-China rights to the CDH17-targeted ADC HS-20110 for $80M upfront. The new deal covers two preclinical Hansoh programmes plus several built on Roche-proposed targets, using Hansoh’s ADC platform. Hansoh receives $400M upfront and $110M on the first anniversary, and can earn more than $15B in milestones plus tiered royalties. It runs development through Phase Ia; Roche then takes over outside Greater China.
Eli Lilly’s agreement with METiS TechBio, announced the same day, is the smallest yet the most revealing. This partnership gives Lilly access to METiS TechBio’s AiLNP platform, a world-first machine learning tool for designing ionizable lipids for use in tissue-specific nanoparticles. Lilly will pay an upfront ‘in the low double-digit millions of dollars’, with up to $1.1B in milestones and single-digit tiered royalties.
Despite the large companies and valuations involved, these deals remain risky for the Chinese deal side given the small upfront payments – with average upfront payments at 5.8% of total deal value. Regardless, the average upfront paid to Chinese licensors rose from $52M in 2022 to $172M in early 2026 (source: Evaluate).
Interestingly, the perception of these deals by Chinese licensors may be partially responsible. Locust Walk’s Geoff Meyerson says Chinese licensors accept these upfront-light, milestone-heavy deals because they “view licensing as a fundraising event.” Milestones are often never paid, so the upfront is the better measure of commitment and the capital that can be fed into projects.
San Diego’s biotechnology ecosystem is booming. At its heart, it consists of a mosaic of startup and mature companies working on the honorable task of discovering new therapies for patients, but it’s also peppered with organizations helping turn promising new drug candidates into clinical-stage products, and beyond.
In our inaugural San Diego spotlight feature, we’re taking a closer look at Catalent’s San Diego operations. From early development through clinical supply, Catalent’s San Diego facilities provide a connected pathway designed to help biotech companies move candidates into the clinic faster and with less complexity.
A 68,000-square-foot development facility supports early-phase small-molecule and peptide drug candidates through preformulation testing, formulation and analytical development, GMP manufacturing, stability testing, clinical packaging, with strategies for compounds with poor solubility.
What makes Catalent San Diego unique is the seamless transition from development to clinical supply. As programs progress, sponsors can leverage two closely connected facilities to support development, packaging, distribution, and clinical trial execution through a single integrated network.
Catalent’s purpose-built clinical supply facility extends that support through clinical supply management, packaging, complex labeling, cold-chain services, storage and global distribution. Together, the two facilities can help biotechnology companies move candidates from early development through clinical supply, helping sponsors reduce complexity and maintain momentum as programs advance towards clinical trials, all within San Diego’s growing life sciences community.
European healthcare takes the hit
Germany is arguably the hardest hit. A German government commission put the statutory health insurance shortfall at about €15B for 2026, rising towards €40B by 2030 without action. German Health Minister Nina Warken’s stabilisation law aims for savings of nearly €20B in 2027 and more than €42B by 2030, drawn from hospitals, doctors and patients as well as drugmakers. For industry, it fixes the manufacturer rebate on branded medicines at 15.5% from 1 January 2027, up from 7%; Germany’s vfa association estimates the sector’s 2027 contribution will rise from an expected €1.1B to about €3.2B. The Federal Council has questioned the premise, noting that medicines have stayed a stable share of insurance spending.
The three companies responded differently. In June, Lilly’s chief executive David Ricks said the company would halve its planned €2.3B German investment. Alzey will employ about 500 people rather than 1,000, and Ricks said the money would likely go to US sites.
On 19 October, Roche Germany head Daniel Steiners said all future investment decisions were on hold, and that political decisions had “destroyed a great deal of trust.” Regardless, Roche’s €600M Penzberg site stays on schedule.
Novartis announced no freeze, but its president international, Patrick Horber, said that under the draft it would most likely not expand further in Halle, and that its 171 German clinical trials could fall to ten or five. Novartis is also closing the Wehr tablet plant by the end of 2028 (about 220 jobs), ending small-volume biologics production in Kleinbasel (up to 130 jobs), and cutting 15% of roles after merging its Nordic units.
Germany is not alone. France’s 2027 social security bill makes medicines its largest source of savings: €3B, of which €1.3B comes from price cuts and €1.7B from a contribution that replaced the old safeguard clause. Juliette Moisset of the industry body Leem said medicines carry a large share of the savings “for less than 10 percent of spending.”
Belgium’s Federal Health Minister Frank Vandenbroucke requested €907M in health savings in 2026. GSK is reported to be examining 1,217 job cuts there. Meanwhile, Italy is raising clawbacks on hospital drug overspend, and Spain has made price agreements confidential since 1 August.
The United Kingdom is the exception. In exchange for zero US tariffs, it raised NICE’s cost-effectiveness threshold to £25,000-£35,000 per quality-adjusted life year and cut the main voluntary-scheme rebate from 22.9% in 2025 to 14.5% in 2026. Governments facing US tariff pressure can buy relief with higher drug spending, while those facing only a budget gap cannot.
The EFPIA reports that 49% of new medicines were unavailable to European patients in 2025, up from 46% in 2019.
How have the markets reacted?
Nine European chairs, including those of Roche and Novartis, signed an open letter on 22 September claiming that Europe’s share of global pharmaceutical R&D has fallen from 43% to 31% between 1990 and 2026, and its share of commercial clinical trials has halved to 9% in a decade. IQVIA data show that the European Economic Area’s trial share fell from 22% to 12% between 2013 and 2023.
Kearney’s Marc Philipp says Europe “cannot replicate” China’s patient pool and cost base. Alexander Brown of Merics issues a different warning regarding a “vicious circle” in which capital flowing to Chinese partners is unavailable to European start-ups. The counterweight is that Chinese licensors need Western buyers, since public insurance in China covers few advanced therapies. Turning that into pricing leverage requires governments willing to pay more, the opposite of what Berlin just legislated.
Chinese biotechs are being increasingly restricted by the US. A US bill introduced in June could extend outbound-investment screening to pharmaceuticals. In response, the US Treasury is reportedly drafting rules that would let most licensing continue, and the Hang Seng Biotech Index rose more than 5% on the report – underlining how much that bill matters to Chinese biotech.
The Chinese biotech industry faces constraints from Beijing itself. Beijing’s 16 October draft export-control update would bar foreign acquisition of cell and gene therapy and siRNA platforms but leave out-licensing largely untouched. The index rose 64% in 2025 and was down 2% for 2026 in early July. With upfront payments near 6% of deal value, most of the headline depends on trials not yet read out.
Employees on both sides
European job losses so far are modest and concentrated in manufacturing and administration, with hundreds at Germany’s Wehr, Kleinbasel and Alzey alone. However, if headquarters and revenue can stay in Europe while new laboratories, production lines and early research move elsewhere, future roles within Europe may be slowly eroded.
In China, one constraint is the workforce. Recruiters report senior clinical and regulatory hiring taking 19-22 weeks with counteroffers between 30%-40% above initial bids. Furthermore, gene-therapy and ADC specialists command premiums of 40%-60%.
If Chinese licensors become the early-stage engine of Western pipelines, can a continent that remains a large market – but is no longer the preferred place to test and build – keep the research and skills that make that market worth serving?
