China Healthcare — US Outbound Investment Proposal: License-out and CDMO Operations Likely to be Unaffected

We expect the proposed outbound-investment rules of the U.S. Department of the Treasury (expected to be finalized by Dec 7, 2026) to have no direct impact on conventional innovative-drug license-out transactions or routine CRO/CDMO service contracts, as neither is included among the specified covered transaction types. Under the proposed rules, US-funded NewCo deals, equity investments and acquisitions of China-based biotech assets could be affected, while Chinese companies could still sell their overseas assets to US buyers if they fully exit after closing. The final rules may also narrow the current broad scope to advanced or frontier biotechnology (based on the Department's request for feedback). We thus view the sell-off in China's innovative drug and CDMO names as overdone and expect sustained momentum in China's innovative drug license-out trend. China's CDMO and innovative drug stocks sold off sharply on Oct 22 following an Endpoints News report suggesting that the newly propose