Pfizer to Pay Over $1 Billion for a Chinese Cancer Therapy 💉

Pfizer shares (PFE.US) gain nearly 2% following the announcement that the company will buy a license for a new immuno-oncology therapy from Chinese biotech giant 3SBio Inc. The $1.25 billion upfront payment marks the largest licensing deal of its kind with a Chinese pharmaceutical company.

Pfizer shares are rebounding from the second low that hit the biotech sector after Donald Trump signed an executive order on prescription drug pricing. The stock has broken above its 30-day exponential moving average (EMA30, light purple), though gains have stalled at the 23.6% Fibonacci retracement level. A potential breakout above the 100-day EMA (dark purple) would be key to returning to the recent consolidation zone. Source: xStation5

The Start of a Close Partnership

The therapy at the center of the deal, SSGJ-707, is an innovative cancer treatment that both stimulates the immune system to fight tumors and inhibits the formation of new blood vessels critical to tumor growth. The therapy is currently undergoing clinical trials for multiple tumor types, with late-stage studies expected to begin in China by the end of 2025.

The licensing deal marks the beginning of a broader collaboration and reflects Pfizer’s growing interest in Chinese biotech innovation. Clinical milestone payments could total up to $4.8 billion, and the American pharma giant also plans to invest approximately $100 million in 3SBio. Pfizer will be responsible for manufacturing the therapy in the U.S. and handling its global distribution.

Overpayment or Strategic Investment?

Compared to a similar transaction by Merck ($588 million upfront + $2.7 billion in milestone payments), Pfizer appears to be paying a premium for its relatively late entry into the next-gen oncology therapy space. Following recent changes in its capital structure and a general decline in stock price since the COVID-19 pandemic, the deal holds fundamental strategic importance to secure Pfizer’s position in a fast-growing market.

A Deal That Defies Protectionism

The growing interest in pharmaceutical innovation from China contrasts with the rising U.S. isolationism, particularly in healthcare and drug sourcing. Donald Trump has repeatedly emphasized the need to reduce dependency on drugs made in Asia — especially in China and India — while also questioning their quality and safety. In consequence, the deal has sparked optimism in China’s pharmaceutical sector—the Hang Seng healthcare subindex outperformed the broader Chinese market today, gaining 3.8%.

Despite relatively stable revenue in recent quarters, Pfizer shares remain under pressure due to intense competition and the lack of a breakthrough drug pipeline. With a forward P/E ratio of 8.4, the company remains relatively cheap compared to the broader pharma sector and the S&P 500 index overall.Source: XTB Research