China's booster shot for drug innovation

Reasons for rise

Robust regulatory reforms since 2015, combined with rising investment and a growing talent pool, are regarded as the key forces propelling China's biotech ascent. After more than a decade, "a virtuous cycle fostering domestic pharmaceutical innovation has fully taken shape", said Jin Chunlin, director of the Shanghai Institute of Medical Science and Technology Information.

Jin said that a thriving innovation ecosystem features a strong investor appetite for early-stage, high-risk R&D, supported by a track record of solid returns, alongside upgraded drug review and approval standards that are now fully in line with international regulatory frameworks.

"Clinical data generated in China have increasingly gained recognition from overseas regulators, including the US Food and Drug Administration, which has laid critical groundwork for the industry's global expansion," he said in a recent interview with People's Daily.

Jin also pointed out that domestic drugmakers have gradually shifted away from homogenized research efforts, moving instead toward more differentiated and higher-value target portfolios.

Among the key engines powering the growth is the national healthcare security system, which has steadily expanded coverage for innovative drugs and bolstered corporate profits.

During the 14th Five-Year Plan (2021-25) period, China added 516 medicines to the national medical insurance drug list, including 167 innovative drugs, Zhang Ke, director of the National Healthcare Security Administration, said in a recent article.

The average time for a novel drug to progress from market approval to the list has been shortened from five years to about one year, Zhang said.

As of May 2025, national medical insurance funds had spent 410 billion yuan ($61 billion) on drugs — typically innovative medicines — that were added to the list following price negotiations with drugmakers, according to official data. Their inclusion on the list is estimated to have generated more than 600 billion yuan in pharmaceutical sales.

InnoCare Pharma, founded in 2015 and headquartered in Beijing, reported its first full-year profit in 2025 and continued to post gains in the first quarter of this year. The financial turnaround was fueled by rising product sales and proceeds from global business development agreements, the company said.

Chang Jinghua, head of market access at InnoCare, said the company's core product, orelabrutinib — a novel therapy for cancers and autoimmune diseases — has had all four of its indications, the legally defined use for a drug, covered by the national reimbursement list. Since its inclusion in 2021, sales of the drug have climbed at an annual rate of nearly 50 percent.

"A number of domestic drugmakers, including us, have started turning a profit," Chang said.

"Healthcare reimbursement policy has helped create a closed-loop ecosystem that nurtures innovation. The cycle starts with heavy R&D spending, leads to better patient access and lower out-of-pocket costs, and then channels back to companies to fuel the next wave of R&D," he said.

InnoCare secured another crucial funding source from a licensing deal with global pharmaceutical company Zenas BioPharma late last year. The deal, worth more than $2 billion, grants Zenas global rights to develop and commercialize orelabrutinib.

A defining moment for China's biotech innovation came in 2024, when ivonescimab — a lung cancer drug developed by China-based Akeso — outperformed Merck & Co's immunotherapy heavyweight Keytruda in head-to-head trials. The drug gained its first market approval in China in May 2024 and was added to the reimbursement list the same year.

Xia Yu, chairwoman and CEO of Akeso, said the reimbursement listing means Chinese patients can promptly access world-class, homegrown therapies that are affordable. For domestic drugmakers, commercial returns are now increasingly tied to expanded patient access.

Last year, the company generated 3.056 billion yuan in revenue, with product sales reaching 3.033 billion yuan, up 51.5 percent year-on-year.