BD hits a strong start! China's innovative drug licensing transaction volume is impressive, approaching half of last year's total from January to March.

According to information from the National Medical Products Administration, in the first three months of this year, the total value of China’s innovative drug out-licensing transactions exceeded $60 billion, nearing half of the total for all of 2025. As of March 27, China has approved 10 innovative drugs for 2026, including 2 imported and 8 domestic. China’s innovative drugs have achieved historic breakthroughs, maintaining strong development momentum and potential.

The data the agency previously disclosed shows that in 2025, China approved 76 innovative drugs for the full year, setting a record high. The total value of out-licensing transactions for innovative drugs also hit a record high. That year, there were 157 out-licensing transactions in total, with an upfront payment of $7 billion and an aggregate total of about $135.7 billion, representing a doubling of growth compared with 2024.

Innovative-drug BD (business development) is a core business model in which pharmaceutical companies integrate innovative drug resources on a global scale and maximize commercial value through methods such as buying, selling, and cooperation. Out-licensing transactions for innovative drugs (Licensing-out) are one of the core components of BD.

Right now, China’s domestic innovative drug BD going overseas remains continuously active.

On March 4, China BioPharmaceutical and Deqi Pharmaceuticals jointly announced major BD deals on the same day. They will, respectively, authorize Sanofi and UCB with total consideration of $1.53 billion and over $1.18 billion, licensing rovegacitinib (a JAK/ROCK inhibitor) and ATG-201 (a CD19/CD3 bispecific antibody).

On February 8, Innovent Biologics announced that it has reached a strategic cooperation with Eli Lilly. Together, they will advance global R&D of innovative drugs in the oncology and immunology fields. This agreement is the seventh cooperation between the two parties. Under the agreement, Eli Lilly will obtain global exclusive development and commercialization rights for the relevant projects outside Greater China, while Innovent Biologics retains all rights to the relevant projects within Greater China. Innovent Biologics will receive a $350 million upfront payment, milestone payments of up to approximately $8.5 billion, and sales-based profit sharing.

On January 30, CSPC Group and AstraZeneca signed a licensing agreement to develop innovative long-acting polypeptide drugs using the group’s proprietary sustained-release drug delivery technology platform and polypeptide drug AI discovery platform. Under the agreement, CSPC Group will receive a $1.2 billion upfront payment, $3.5 billion in milestone payments, up to $13.8 billion in sales milestone payments, and sales royalties.

In addition, several Chinese Biotechs have reached major collaborations with MNCs based on cutting-edge technology platforms: Shengyin Biology will license Roche’s preclinical RNAi therapy (a $200 million upfront payment + $1.5 billion in milestone payments); Saisense Pharma will license Novartis an antibody using blood-brain barrier shuttling technology ($165 million + $1.5 billion); Innovent Pharma will license Boehringer Ingelheim SIM0709, a TL1A/IL-23p19 bispecific antibody ($42 million in euros + €1.016 billion); and RuiBo Biopharmaceuticals will license Madrigal six MASHsiRNA assets ($60 million + $4.4 billion). These four transactions are all preclinical assets.

According to a review by Huatai Securities, from a global perspective, the global share of China’s domestic innovative drug BD projects and the amounts disclosed since the beginning of the year are 20% and 75%, respectively. Among the 21 major deals already reached, 15 involve China, accounting for more than 70%. The firm believes that given the number of Chinese assets currently being contacted by MNCs and overseas PE institutions, as well as the upward trend in industry interest in Chinese assets, there is a high degree of predictability that BD will continue to grow.

The firm believes that China’s innovative drug companies and U.S. biotechs have fundamentally different business models. China’s companies have a significant advantage in the size of their pipeline compared with U.S. biotechs. First, there will be ongoing BD activities every year. Second, large-scale BD deals (upfront payments exceeding $500 million / total deal value exceeding $2 billion) as well as continuous and ongoing mid- and small-sized BD deals have a high probability of bringing the company sustained and even increasing cash flow (based on continuously accumulating R&D milestones and sales royalties that are expected to arise). At present, the market typically considers only the contribution of upfront payments to company valuation. Therefore, the firm believes it has undervalued the value of milestone revenue.

Dongwu Securities said that BD revenue has become an important source of funds for China’s innovative drug companies. Evaluate whether the capital position of the innovative drug sector is sufficient by calculating “cash and cash equivalents / annual R&D expenses.” Overall, the current medicine sector has ample funding, and the vast majority of companies still maintain R&D funding coverage capacity of at least one year. This can effectively support the advancement of subsequent clinical trials, pipeline expansion, and technological innovation, laying a solid financial foundation for the industry’s long-term high-quality development, and providing sufficient time windows for technological breakthroughs and commercialization transformations of innovative drug companies.

The 2026 Government Work Report proposes “building new pillar industries such as integrated circuits, aerospace, biopharmaceuticals, and the low-altitude economy.” Compared with the wording in the 2025 report about “cultivating and strengthening emerging industries and future industries,” the industrial positioning of biopharmaceuticals has clearly moved up, for the first time being placed at the level of “emerging pillar industries.”

Guosheng Securities believes that for the pharmaceutical and healthcare sector, this means the policy’s positioning for biopharmaceuticals is being upgraded from “cultivating emerging tracks” to “an important direction for economic growth and industrial upgrading.” Within that, innovative drugs are the most core, high-value-added segment of the biopharmaceutical industry, and the beneficial direction is especially clear.

BOC International said that as the biopharmaceutical industry’s positioning rises to an emerging pillar industry, it signals that policy dividends across the whole value chain will continue to be released. Double resonance is forming between breakthroughs in AI drug discovery and the boom in China’s innovative drug out-licensing BD going overseas, and the industry’s fundamentals are expected to improve faster. Currently, China’s innovative drug out-licensing collaborations have evolved from authorization for a single pipeline to platform-level cooperation. The recognition by multinational pharmaceutical companies of China’s pharmaceutical R&D capabilities is increasing in a systematic way.

(Source: China Science and Technology Innovation Board Daily)