The pharmaceutical sector is collectively rising.

Ask AI · Surge in Chinese Pharma Companies’ BD Deals, Where Does Global Competitiveness Come From?

Text | Tai Luo

On April 1st, the pharmaceutical sector collectively rose.

Guangsheng Tang, Aidi Pharmaceutical, Chengda Pharmaceutical, Baili Tianheng, Kailai Ying, Xinlitai, and others all saw increases.

Tightening policies were the core reason for the last major pharmaceutical adjustment, but now, the domestic policy environment for innovative drugs has significantly loosened.

In 2024, innovative drugs appeared for the first time in the government work report. By 2025, the government work report further advanced, providing specific guidance and tone across industry, funding, and development directions. More importantly, it proposed releasing the Class C drug list for medical insurance in 2025, signaling that the era of incremental payments for innovative drugs is imminent.

Domestic policies have supported the lower limit for innovative drugs, while overseas BD has directly opened up the upper limit.

Huafu Securities’ research report shows that from 2020 to 2024, the total value of innovative drug BD transactions increased from $9.2 billion to $52.3 billion, with upfront payments rising from $600 million to $4.1 billion.

Entering 2025, innovative drug BD is fully unleashed, with increasing numbers and larger volumes — San Sheng Pharmaceutical secured a deal exceeding $6 billion with Pfizer, BioNTech of Germany flipped Pumice BNT327 for $11.1 billion, and three potential BD deals from Shiyao Group with a total of $5 billion are about to be finalized… Since the start of the year, the total overseas transaction amount for innovative drugs has reached $45.5 billion, nearly matching last year’s total in less than half a year.

ASCO has always been regarded as the largest and most academically prestigious oncology conference worldwide. At the recently concluded 2025 ASCO, a record 73 oral presentations from China were made, a historic high.

When all negative factors are fully priced in, even the slightest change can bring huge elasticity, especially with such a significant marginal improvement. This is a fundamental underlying logic for the current revaluation of innovative drugs.

However, if it’s only about surpassing the past self, innovative drugs wouldn’t have the current market influence and attention.

From 2015 to 2024, China’s pharmaceutical industry completed a historic leap from following to leading within ten years.

Among the 184 ADC pipeline-related studies selected for the 2025 ASCO, 89 are from China, accounting for about 48.4% of the total; Chinese companies released about 34 bispecific antibody studies, nearly 49% of all bispecific antibody research; globally, researchers published 54 “Late-Breaking Abstracts” (LBA), with 11 led by Chinese researchers. A decade ago, China had only one oral report at ASCO, and zero LBA projects that attracted international attention.

In 2015, China’s original innovative drug R&D pipeline had only 124 entries, which grew to 704 by 2024, ranking first globally. In 2015, only 9 FIC innovative drugs from Chinese companies entered clinical development, less than 10% of the global total; by 2024, this number soared to 120, over 30%.

Looking far ahead, China’s great journey of innovative drugs has only just begun.

On one hand, domestic biotech firms, with extremely low R&D costs (about 1/3 to 1/5 of the US) and faster development speeds, have already crushed overseas competitors. As of now, Chinese companies lead globally in pipelines for cell therapies, ADCs, bispecific antibodies, and maintain the top position in 716 research tracks.

On the other hand, multinational pharmaceutical companies are approaching patent cliffs. It is reported that by 2037, 27 blockbuster drugs with sales exceeding $4 billion in 2024 will face patent expiration, including products from Merck, Novartis, AstraZeneca, Pfizer, Roche, and GSK, urgently needing to replenish R&D pipelines to maintain market competitiveness.

In 2024, China’s licensing-out transaction value accounted for 30% of the global total; by 2025, this share has risen to over 40%. Leveraging license-out models to realize globalized technological value and fill market gaps after MNC patent cliffs is the starry sea belonging to Chinese innovative pharma companies.

From an investment perspective, whether innovative drugs have peaked in the short term or not, high-quality targets will continue to elevate their valuation centers in the long run. According to Huafu Securities, from 2020 to 2025, the overall profit from Chinese licensing projects is expected to reach about $8.2 billion, with a potential market value increase of up to $81.7 billion based on a 10x PE.

The same words again: a star-studded era has arrived. Pharma was one of the worst sectors in the capital market over the past five years, but it may also be one of the best in the next five.

Disclaimer

This article involves content related to listed companies, based on the author’s personal analysis and judgment of publicly disclosed information (including but not limited to interim announcements, periodic reports, and official interactive platforms). The information or opinions herein do not constitute any investment or other commercial advice. MarketWatch is not responsible for any actions taken based on this article.

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