The biotech race is heating up, and small U.S. players might get steamrolled if things don’t change.

U.S. biotech is in a tough spot right now. While American companies are still giants in the space, China’s biotech sector is coming in hot, and they’re not slowing down anytime soon.

Pfizer CEO Albert Bourla didn’t sugarcoat it during his earnings call by saying, China’s biotech game is strong, fast, and getting a whole lot of government love.

Bourla pointed out that the Chinese are now leading or matching the U.S. in everything from CRISPR research to clinical trials.

They’re outpacing us in scientific publications, filing more patents, and securing a bigger chunk of global licensing deals.

In the first half of 2025 alone, one in three licensing deals in the pharmaceutical industry involved drugs originating from China. That’s a huge jump from where we were just two years ago.

Big Deals Shake Up Small-Cap Biotechs

Take Pfizer’s multibillion-dollar deal with China’s 3SBio; it’s a clear sign that Big Pharma is eyeing China for innovation. Such a deal might hurt smaller U.S. biotechs more than help them. These small caps rely heavily on partnerships with big companies to stay alive and fund their pipelines.

If Big Pharma is looking east, who’s going to back the scrappy innovators at home?

Bourla said Congress isn’t too worried about China-to-U.S. deals. Their focus is on stopping U.S. tech from flowing to China. But that doesn’t fix the real issue, China’s speed and cost efficiency. They can develop drugs faster and cheaper, and that’s drawing more private investment their way.

So, What Can The U.S. Government Do?

Bourla didn’t just throw shade; he also threw out solutions. He called on the U.S. government to step up, with more R&D funding, faster drug approval pathways, and smarter use of AI in regulatory reviews.

He even proposed the idea of dropping animal testing for certain drugs to speed up timelines. The message was that we can’t slow China down, but we can move faster ourselves.

And there has been some movement. The One Big Beautiful Bill Act now lets U.S. drugmakers deduct R&D expenses upfront, giving a bit of financial breathing room.

But small caps need more than that. They need policies that cut red tape, open up funding, and reward risk-taking.

Final thoughts

This isn’t fear-mongering. It’s a wake-up call. U.S. biotech, especially the small caps, can’t afford to play catch-up. The competition is already here, and it’s fierce.

If we want to stay ahead, we need bold moves, better support, and a serious investment in the next wave of biotech innovation.