Biotech is enjoying a massive run, powered by strong clinical data and a merger wave. Over the past 12 months, the State Street SPDR S&P Biotech ET F is up around 85% versus roughly 20% for the S&P 500. Last week added an exclamation point: Moderna more than doubled in a single session after its mRNA cancer vaccine, developed with Merck, cleared a late-stage melanoma trial.

But there is a slow-moving threat, and it comes from China. For decades, U.S. and other Western companies enjoyed something close to a monopoly on cutting-edge science. And, because everyone played by the same rules, the game was predictable. Lock up a technology with a patent and clinical trials, and you had a moat lasting several years.

China's growing capabilities and different regulatory environment pose challenges to this traditional biotech model, potentially disrupting the current bull run that has seen biotech funds significantly outperform broader market indices.