CITIC Securities: The innovative drug industry is entering a period of intensive data-driven catalysis; recommended key focus areas

CITIC Securities research reports state that since 2026, the transaction value of China’s innovative drug BD has grown beyond expectations, and the industry’s global competitiveness has been further enhanced; the domestic market has expanded rapidly. Based on the 2025 annual reports, under the drive of new products, leading innovative drug companies have seen rapid growth in innovative drug revenue, and biopharmas have gradually begun to enter a profitability inflection point; with multiple international academic conferences coming up soon, many innovative drug pipelines are entering a period of dense data catalysts. Overall, we believe that the global value of the innovative drug industry has become prominent. Next, it will enter a period of dense data catalysts. It is recommended to focus on: ① leading innovative drug companies are expected to see performance release; ② core pipelines are about to receive catalysts from major data readouts; ③ the internationalization of pipeline assets with global potential is expected to accelerate their value realization. In summary, we maintain a “Outperform the market” rating for the innovative drug industry.

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Innovative Drugs | Innovative Drugs Enter a Period of Dense Data Catalysts, Focus on Key Areas

Since 2026, the transaction value of China’s innovative drug BD has grown beyond expectations, and the industry’s global competitiveness has been further enhanced; the domestic market has expanded rapidly. Based on the 2025 annual reports, under the drive of new products, leading innovative drug companies have seen rapid growth in innovative drug revenue, and biopharmas have gradually begun to enter a profitability inflection point; with multiple international academic conferences coming up soon, many innovative drug pipelines are entering a period of dense data catalysts. Overall, we believe that the global value of the innovative drug industry has become prominent. Next, it will enter a period of dense data catalysts. It is recommended to focus on: ① leading innovative drug companies are expected to see performance release; ② core pipelines are about to receive catalysts from major data readouts; ③ the internationalization of pipeline assets with global potential is expected to accelerate their value realization. In summary, we maintain a “Outperform the market” rating for the innovative drug industry.

▍ Over the past three years, the quality of China’s innovative drug pipelines has quickly gained international recognition, driving an out-license (License-out) deal amount that has grown beyond expectations, verifying an increase in the value of China’s innovative drug pipelines:

In 2026Q1, the upfront payment for China’s innovative drug License-out deals has already reached $3.85 billion (up 1066.7% vs. 2024Q1, and up 229.1% vs. 2025Q1), with total deal value reaching $52.53 billion (up 449.1% vs. 2024Q1, and up 43.8% vs. 2025Q1) (only deals with disclosed amounts are counted). Meanwhile, from 2026 to date, both the quality and quantity of deals have improved significantly. The optimization of deal structure reflects further improvements in pipeline quality and certainty. In 2025, License-out already exceeded $138.0 billion, setting a new high. Using full-year 2025 data as the baseline, the share of 2026Q1 in the number of deals, upfront payments, and total value has already reached 26.7%, 49.7%, and 37.9%, respectively. With only Q1 of 2026, upfront payments are already approaching half of the full-year 2025 figure. We believe that: the share of upfront payments has increased significantly. On one hand, this reflects acquirers’ recognition of the pipeline value; on the other hand, it provides cash-flow support for R&D by China’s innovative drug companies, forming a positive feedback loop that further helps the development/advancement of more innovative drug pipelines.

▍ Innovative drug product scale-up drives revenue growth, and leading biopharmas have gradually begun to enter a profitability inflection point.

From 2023 to 2025, BeiGene’s innovative drug revenue increased from RMB 17.4 billion to RMB 37.6 billion; Hengrui Pharmaceutical rose from RMB 10.0 billion to RMB 16.3 billion; Hansoh Pharmaceutical increased from RMB 6.9 billion to RMB 12.4 billion; Innovent Biologics rose from RMB 5.7 billion to RMB 11.9 billion; and China Biopharmaceutical increased from RMB 9.9 billion to RMB 15.2 billion. The revenue scale of innovative drug products for leading companies has continued to expand. The share of innovative drug revenue has continued to rise. Hengrui’s share of innovative drug revenue increased from 44.4% in 2023 to 57.9% in 2025; innovative drugs have already surpassed half of revenue. Hansoh’s innovative drug share rose from 67.9% to 82.2%, with innovative drugs becoming the absolute mainstay. China Biopharmaceutical’s share increased from 37.7% to 47.8%, and it is also rapidly transitioning toward innovation-driven development. Overall, we believe that the business structure of China’s leading pharmaceutical companies is transforming quickly from traditional pharmaceuticals to innovative drugs. The gradual scale-up of innovative drugs has become the core driving force behind revenue growth, and leading biopharmas have gradually begun to enter a profitability inflection point.

▍ With international academic conferences such as AACR/ASCO coming up, China’s innovative drug pipelines are about to enter a dense period of data readouts.

AACR2026 will be held in Santiago from April 17 to 22. According to the AACR conference official website, China pharmaceutical companies will appear with a scale of more than 100 companies and nearly 400 research achievements. Participation and innovation quality both achieved a significant leap. ADC drugs remain a focus. More than 90 innovative drug pipelines are expected to read out data. The trend of technological iteration is clear. It is recommended to pay attention to: next-generation CDK4/2 dual-target inhibitors; BCL-2 small-molecule inhibitors; trispecific co-stimulation TCE, bispecific/bis-toxin ADCs; the world’s first Pan RAS ADC; dual-antibody ADCs such as EGFR/HER3, SSTR2/DLL3, etc. Overall, China’s innovative drugs in multiple sub-sectors such as ADCs, bispecific antibodies, and small-molecule targeted drugs have already shown a trend of leading the world.

ASCO2026 will be an important stage for major data readouts for China’s innovative drug companies. The value of relevant assets is expected to be further released, driving the realization of the global value of the innovative drug industry. Key timeline to review: Abstract titles released: April 21; Abstracts disclosed: May 21; Conference dates: May 29 to June 2. Recommended focus on key iteration directions: ① combination treatment plans based on ADCs, bispecific/multispecific antibodies, and immunotherapy; ② ADCs moving from single-target, traditional payloads to a new stage that places greater emphasis on optimizing the therapeutic window, including improved payload/linker design, dual-specific targeting, and stronger platform-based development capabilities; ③ early clinical breakthroughs of new therapies such as cell therapy and gene therapy in solid tumors; ④ major clinical data readouts for pipelines with global value, including SKB264 combined with K drug 1L for PD-L1-positive NSCLC, and HARMONi-6, etc.

▍ Risk factors:

Risks that new drug R&D progress may fall short of expectations or fail; risks that new drug approval progress may fall short of expectations or not be approved; risks that efficacy and safety after new drug launch may fall short of expectations; risks that product commercialization may fall short of expectations and sales may be unfavorable; risks of changes in the market competitive landscape; risks of pharmaceutical and medical policy changes beyond expectations; risks of statistical data deviations.

▍ Investment strategy:

Since 2026, the transaction value of China’s innovative drug BD has grown beyond expectations, and the industry’s global competitiveness has been further enhanced; the domestic market has expanded rapidly. Based on the 2025 annual reports, under the drive of new products, leading innovative drug companies have seen rapid growth in innovative drug revenue, and biopharmas have gradually begun to enter a profitability inflection point; with multiple international academic conferences coming up soon, many innovative drug pipelines are entering a period of dense data catalysts. Overall, we recommend focusing on: ① leading innovative drug companies are expected to see performance release; ② core pipelines are about to receive catalysts from major data readouts; ③ the internationalization of pipeline assets with global potential is expected to accelerate their value realization. Maintain a “Outperform the market” rating for the innovative drug industry.

（Source: First Finance）