Out-licensing 'should be means to an end', not final goal

Mabwell, the first Chinese biotech company to complete an A-to-H share listing under Hong Kong's Chapter 18A biotech regime, believes out-licensing deals should be viewed primarily as a financing tool rather than the ultimate objective for China's innovative drugmakers, Chairman and CEO Liu Datao told China Daily. 

His comments come as Chinese biotech firms increasingly sign out-licensing agreements with multinational drugmakers to secure funding and expand overseas, fueling a wave of multi-billion-dollar transactions in recent years.

According to the National Medical Products Administration, the value of the cross-border out-licensing deals for China's innovative drugs hit a record $60 billion in the first quarter, a 73 percent increase year-on-year, and already amounting to nearly half of the total $135.7 billion worth of agreements signed in full-year 2025.

Liu said such transactions are an important source of financing, particularly for young biotech companies that often spend years investing in research before generating product revenue.

"Many innovative drug developers have no commercialized products in their early years and rely on equity financing, business development partnerships and licensing income to continue research," Liu said.

"If they cannot obtain funding through these channels, some companies may struggle to sustain long-term research and development."

However, he said out-licensing intellectual property rights should not become the industry's long-term strategy.

"In the long run, I believe product commercialization overseas offers greater value," he said, arguing that companies capable of selling medicines directly in international markets would be better positioned to generate sustainable profits and reinvest in research.

Shanghai-based Mabwell listed on Shanghai's STAR Market in 2022, before completing its Hong Kong listing in April, becoming China's first Chapter 18A company to achieve an A-to-H listing.

Liu said the Hong Kong market's international investor base and relatively flexible refinancing mechanism make it an attractive funding venue for innovative drug developers, contrasting it with the more retail-driven A-share market. He said Mabwell pursued its Hong Kong listing as part of its international expansion strategy rather than solely to raise capital.

China has made significant progress in innovative drug research over the past decade, supported by closer collaboration among hospitals, research institutes and biotechnology companies, as well as regulatory reforms that accelerated drug approvals.

Technologies including artificial intelligence are also shortening the time required to identify potential drug targets.

Despite improvements in China's innovation ecosystem, Liu said the industry still faces challenges, including limited access to long-term capital and a shortage of professionals with international experience in areas such as global clinical development, regulatory affairs and overseas commercialization.

He said the Yangtze River Delta has emerged as one of China's most comprehensive biopharmaceutical clusters, bringing together research institutions, hospitals, manufacturers and contract development and manufacturing organizations. But sustaining innovation will require improving long-term investment returns so companies can continue funding research, he added.