Innovative drugs make splash abroad

Chinese drugmakers are seeing a deeper and wider presence overseas, with homegrown innovative pharmaceuticals underpinned by a maturing innovation ecosystem and a favorable policy environment, industry executives and experts said.

The sector — which, alongside artificial intelligence and robotics, forms what some international observers are calling China's "next new three", a term referring to a new wave of Chinese growth industries emerging after the original "new three" (electric vehicles, batteries and solar products) — is shorthand for the nation's shift toward higher-value, tech-intensive manufacturing.

The innovative drug sector is emerging as a new driver of export growth, fueled largely by cross-border out-licensing, with the NewCo model and direct overseas commercialization also gaining traction, they added.

NewCo models involve hybrid structures in which a Chinese drugmaker spins off select clinical assets and then teams up with investors to refinance the nurturing of these assets through the creation of a new company in a jurisdiction overseas.

China's pharmaceutical sector momentum was reflected in the 81 out-licensing deals signed in the first half of this year, with a potential combined value of about $110 billion — a record for any six-month period and equivalent to roughly 80 percent of the full-year total for 2025, according to the National Medical Products Administration.

Behind the headline growth was a marked increase in deal size, with agreements worth more than $1 billion becoming increasingly common, according to analysis based on the global deal database of Pharnexcloud, a China-based digital marketplace and information platform serving the pharmaceutical industry.

CSPC Pharmaceutical Group's January agreement with United Kingdom-based AstraZeneca was among the largest, covering eight long-acting peptide drug programs and carrying potential payments of up to $18.5 billion — including $1.2 billion upfront — plus royalties.

Dealmaking was also moving earlier in the development cycle, the analysis found, with many high-value transactions involving preclinical or Phase I assets.

Investment 'paying off'

Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation, said the figures showed that sustained investment in pharmaceutical innovation was "paying off" and that global confidence in Chinese drugmakers was increasing.

The rise in dealmaking has also been accompanied by shifts in how deals are structured. Shanghai-based Hansoh Pharmaceutical, for example, paired a conventional licensing agreement with an equity investment in Avere Therapeutics, a United States-based NewCo built around HS-20118, an experimental drug developed by Hansoh for plaque psoriasis, a long-term skin condition linked to an overactive immune system.

Under the arrangement, Hansoh granted Avere exclusive overseas rights to develop, manufacture and commercialize the drug, while also investing in the company through convertible notes. The drug, a potential once-weekly oral treatment for moderate-to-severe plaque psoriasis, has received breakthrough therapy designation from the National Medical Products Administration.

"NewCos are typically built around early-stage drug assets, allowing drugmakers to tap outside capital and expertise for overseas development and commercialization," said Chu Lei, a researcher at the Healthcare Executive Institute.

Hansoh will receive $120 million in upfront payments and is eligible for up to an additional $2.18 billion in development and sales milestone payments, plus royalties on future sales, the company said.

"If the drug ultimately makes it to overseas markets, the originating drugmaker can continue to share in its long-term upside," Chu said.

While out-licensing remains the dominant route overseas, direct commercialization is taking on a larger role in Chinese drugmakers' global expansion.

BeOne Medicines, a global oncology company, offers a case in point. US sales of Brukinsa — its flagship blood cancer drug developed in China — rose 31 percent year-on-year to $893 million in the second quarter of this year, while global sales increased at the same pace to $1.2 billion, the company said.

John Oyler, BeOne's co-founder, chairman and CEO, said the company's capabilities spanning drug discovery, clinical development, manufacturing and commercialization would underpin its next phase of global growth.

Zhou from the Chinese Academy of International Trade and Economic Cooperation attributed Chinese drugmakers' expanding overseas presence to "stronger R&D capabilities, an integrated pharmaceutical supply chain and a more predictable market environment".

The McKinsey Global Institute said in a report in June that China's share of the global biopharma pipeline rose to about 30 percent in 2025 from just 2 percent a decade earlier.

"That growth reflects stronger science as well as the build-out of much more complete innovation ecosystems," the report said, pointing to a network spanning talent, clinical sites, specialist service providers and development infrastructure.

'Emerging pillar industry'

The industry's progress has come as policy support has strengthened. The 2026 Government Work Report identified biomedicine as an "emerging pillar industry" for the first time. The State Council, China's Cabinet, followed last month with a national health plan for the 15th Five-Year Plan (2026-30) period, calling for "whole-chain support for the development and adoption of innovative drugs".

"China's innovative drug sector is likely to maintain rapid growth over the next few years," Zhou added.

Chu from the Healthcare Executive Institute said that the next test is whether Chinese drugmakers can turn research strength into commercial success overseas.

"To become global players, they must build overseas commercialization capabilities and strengthen basic research," he added.

Contact the writers at zhangchenxu@chinadaily.com.cn