From loss to profit, will domestic innovative drugs bid farewell to "burning money without making money"?

Ask AI · What is the key driver behind the breakthrough profitability of domestically innovative drugs?

Meiri Reporter: Xu Libo, Zhen Zujing Meiri Editor: Bi Luming

As the 2025 annual reports are disclosed, domestic innovative drug companies have delivered a series of impressive results.

According to Yaozhi.com statistics, the top ten domestic innovative drug companies by sales revenue in 2025 collectively surpassed 100 billion yuan, with five companies crossing the 10 billion yuan threshold. More symbolically, leading biotech companies represented by BeiGene and Innovent achieved full-year profitability in 2025, breaking the industry curse of “burning money without making a profit” for domestically innovative drugs.

This series of changes has also subtly transformed the valuation system in the capital markets. Many industry insiders believe that the valuation logic for innovative drug companies is shifting from the past reliance on external financing—“burning money for R&D”—to a stage that pays more attention to commercialization capabilities and profitability levels, emphasizing value realization.

Zhou Liyun, Chairman of Pharma Magic Cube, told the Daily Economic News (hereafter referred to as Meiri Reporter) that after ten years of cultivation, Chinese innovative drug companies have truly emerged from the initial development stage, but industry differentiation is becoming increasingly apparent.

In addition to building a rich product matrix, the volume of one or two core products remains the fundamental driver for rapid company performance growth. Zhou Liyun analyzed that first-tier companies have taken the lead in breaking through, achieving good commercialization development in the innovative drug field and establishing self-sustaining revenue.

More than half of innovative drug companies are profitable

Meiri Reporter screened 86 pharmaceutical companies with the most innovative attributes. The results show that in 2025, the innovative drug sector exhibited positive signals such as revenue expansion, narrowing losses, and increased profitability of leading companies; meanwhile, the gap in profitability and secondary market performance among companies continues to widen.

From the revenue perspective, the commercialization ability of domestically innovative drugs is accelerating its solidification. Among the 86 sample companies (excluding those with no valid data), 61 achieved year-on-year revenue growth, accounting for about 70%; 34 companies had growth rates over 30%, and 15 over 100%. Five companies had revenues exceeding 30 billion yuan: BeiGene, Hengrui Medicine, China Biopharmaceutical, Huadong Medicine, and Fosun Pharma, demonstrating the scale advantage of top-tier firms.

A pivotal point is profitability. Among the 86 sample companies, 46 reported positive net profits attributable to parent after deducting non-recurring gains and losses in 2025; 40 companies reported losses, meaning the number of profitable companies has surpassed those with losses. Profitable companies contributed approximately 55.8 billion yuan in non-recurring net profits, while loss-making companies had a total loss of about 14.7 billion yuan. Overall, the industry has basically crossed the breakeven point.

Among profitable companies, top-tier firms remain the ballast, with the top ten companies contributing about 39 billion yuan in non-recurring net profits.

Behind the improving performance are the continued volume growth of core innovative drug products, the increasingly mature commercialization system, and the rising contribution of some companies’ global revenues.

Financial reports show that Hengrui Medicine achieved revenue of 37.77B yuan, up 13.02%; net profit attributable to parent after deducting non-recurring gains and losses was 26.99B yuan, up 20%. The company stated that in 2025, the efficient transformation of innovative achievements empowered performance growth, with innovative drug sales leading the way. Meanwhile, the success of going global with innovative drugs and external licensing transactions became new engines for performance growth.

BeiGene reported that in 2025, product revenue reached 13.04B yuan, up from 135.66B yuan in the same period last year. The revenue growth was mainly driven by the sales of BeiYueZe (Zanubrutinib), as well as licensed products from Amgen and the sales of BeiZeAn (Tislelizumab).

Another leading biotech company, Innovent Biologics, achieved revenue of 4.2B yuan through phased product volume increases, up 38.42%, and net profit of 814 million yuan, marking its first full-year profit. By the end of 2025, Innovent’s commercial product portfolio had expanded to 18 items, with a robust pipeline: five products in Phase III or critical clinical stages, 14 in early clinical stages, forming a virtuous cycle of “launching a batch, filing a batch, clinical batch.”

However, industry profitability differentiation is also evident. Companies like Kangfang Biotech, Junshi Biosciences, Maiwei Biotech, Dizhe Pharma, Konoa, WuXi Juno, Kelun Botai, and others still operate at a loss. Some of these companies have rapid revenue growth, but high sales expenses and R&D investments still pressure profits. This reflects that from successful R&D to commercial success, innovative drug companies still face multiple challenges such as insurance coverage, hospital expansion, and global markets.

In the secondary market, among the 86 sample companies, 45 saw stock price increases since the beginning of the year, while 41 declined, roughly evenly split. Leading stocks like Jingsheng Pharma, Rongchang Biotech, BioOasis, Kintor Pharma, Genor Biotech, and Kexing Pharma mostly rely on pipeline progress and business expansion expectations rather than traditional high profitability logic.

Conversely, profitable companies like Hengrui Medicine, BeiGene, and Ailis saw their stock prices decline this year, reflecting that top-tier companies may face higher performance realization demands, and the market is more scrutinizing of their growth sustainability and pipeline potential.

Regarding industry differentiation, Zhou Liyun pointed out that the first-tier companies that have broken through and are expected to continue growing have entered a harvest period for commercialization and internationalization capabilities. Other companies struggle to establish their own commercialization ability, relying mainly on business expansion paths.

Profit growth depends on overseas markets

CITIC Securities research reports believe that the strong profit growth of Chinese pharmaceutical companies is closely linked to overseas markets. In 2025, the total value of Chinese innovative drug companies’ overseas expansion and licensing transactions reached 2.77B USD, far exceeding 2024’s 51.9 billion USD. The recognition of Chinese innovative drugs in overseas markets benefits from improved innovation capabilities. After sustained R&D investments in earlier years, the Chinese innovative drug industry may now be entering a harvest period. The industry’s innovation capacity has been enhanced by supportive policies, including optimized approval systems and increased payment options.

Data from San Sheng Guojian and Rongchang Biotech are particularly striking. In 2025, San Sheng Guojian achieved revenue of 3.11B yuan, up 251.81%; net profit attributable to parent after deducting non-recurring gains and losses was 3.25B yuan, up 1024.98%. A detailed look at the profit statement shows that the significant performance leap was not solely due to sales volume increases of existing products but was largely driven by revenue from business development.

The annual report indicates that San Sheng Guojian received upfront licensing payments related to Pfizer projects in 2025, which contributed 2.8 billion yuan to revenue—mainly responsible for the year-over-year surge. From the revenue structure, San Sheng Guojian’s “licensing of intellectual property rights” income reached 3.113 billion yuan, accounting for about 74% of the company’s total revenue that year.

Rongchang Biotech’s turnaround also has a strong business development component. In 2025, Rongchang Biotech achieved revenue of 3.251 billion yuan, up 89.36%; net profit attributable to shareholders was 710 million yuan, turning profitable. The company stated that the revenue increase mainly came from two sources: rapid growth in domestic sales of Taltz (Taltz) and Vedolizumab, and a significant increase in licensing income. From the revenue structure, licensing income in 2025 reached 895 million yuan, accounting for about 27.53% of total revenue.

Ping An Healthcare & Technology’s hybrid fund manager believes that in 2025, Chinese innovative drug companies’ valuation shift is underway, moving from “focusing on revenue” to “focusing on profit.” Large and medium-sized pharmaceutical companies are expected to enter a phase of both performance and valuation growth, with a key catalyst being the successful readout of overseas Phase III clinical results in the second half of 2026. From 2027 onward, companies will step into an era of “earning dollars,” reshaping sector valuations.

“The vision of earning dollars is not a pipe dream.” A research report from Southwest Securities shows that in 2025, the total overseas expansion and licensing project value of Chinese innovative drug companies reached 136.68 billion USD, up 192.2%. In the first quarter of 2026, the total value of licensing transactions exceeded 60 billion USD, nearly half of 2025’s total, indicating that Chinese innovative assets have become a core target for global pharma giants to supplement pipelines.

“The window for Chinese pharmaceutical companies to enter overseas markets has opened, but the barriers are also rising. In the past, rapid follow-up was key, but now the focus must be on pioneering drugs or ‘best-in-class’ products,” said a chairman of a listed pharmaceutical company in South China in an interview with Meiri. To mitigate risks from market volatility, companies are adopting deep market strategies, pursuing dual-track development in high-end and emerging markets, and building an ecosystem that does not rely on a single product or market, while also partnering with multinational pharma to expand globally.

Zhou Liyun’s view is more cautious. He emphasized to the reporter that most innovative drug companies will find it difficult to grow into large pharmaceutical giants in the future. He believes that these companies can only achieve product commercialization returns through a business expansion model, and many overseas biotech firms are positioned similarly. However, domestic companies differ significantly, especially in pipeline focus, where domestic firms are relatively lacking. The industry still needs more endurance and courage to develop blockbuster drugs.