-- Li Zhixin, Chief Pharmaceutical Analyst at Chengtong Securities, recently released a research report providing an in-depth analysis of the rapid growth of China’s innovative drug sector in 2025. He stated that 2025 marks a pivotal year in the development of China’s innovative drugs, characterized by qualitative breakthroughs in out-licensing deals and pipeline commercialization.
Out-licensing (License-Out) transactions have reached record-high total values. According to statistics from third-party firm PHARMCUBE, in the first three quarters of the year, the number of China’s innovative drug out-licensing deals exceeded 100, with a total transaction value of US$92 billion—surpassing full-year 2024 figures in both deal count and value. Chengtong Securities forecasts that the annual total is likely to exceed US$100 billion. Representative high-value business development (BD) deals, notable for both total transaction value and upfront payments, include collaborations such as Hengrui Pharma/GSK and 3SBio/Pfizer. This surge in out-licensing reflects not only global pharmaceutical giants’ recognition of the quality of China’s innovative drug R&D, but also domestic biotech companies’ ability to recover R&D investment earlier, easing cash flow pressures.
Commercial pipelines continue to expand, strengthening corporate financial performance. According to the annual drug review report released by the Center for Drug Evaluation (CDE) of the National Medical Products Administration (NMPA), 19, 40, and 48 Class I innovative drugs were approved for market from 2022 to 2024, respectively. Of these, 13, 34, and 39 were developed by Chinese companies, accounting for over 80% of approvals and firmly establishing domestic enterprises as the main players on the innovative drug stage. In the first half of 2025 alone, Hengrui Pharma obtained approval for six new Class I innovative drugs, while Innovent brought five innovative drugs to market. A-share listed biotech companies maintained revenue growth exceeding 70% in both 2023 and 2024, with growth reaching 42% in the first half of 2025. Innovent became the first company to report full-year positive Non-IFRS net profit and EBITDA in 2024, while BeOne achieved a net profit of RMB 1.14 billion in the first three quarters of 2025—signaling leading biotechs’ transition toward Big Pharma status.
Chengtong Securities views the 2025 boom as a natural outcome resulting from the convergence of multiple favorable factors:
1, Strong policy support. In July 2024, the Implementation Plan for Whole-Chain Support for Innovative Drug Development was issued, providing comprehensive support across the entire lifecycle—from R&D and market access to clinical use and payment mechanisms. Multiple measures have been introduced to improve review efficiency and shorten approval timelines. On the payment side, innovative drugs benefit from preferential policies for inclusion in the national medical insurance drug list.
2, Years of intensive R&D investment. Total R&D expenditure by listed Chinese pharmaceutical companies increased rapidly from approximately RMB 85.8 billion in 2020 to about RMB 140 billion in 2024, representing a compound annual growth rate (CAGR) of roughly 13%, significantly higher than the approximately 6% CAGR in revenue over the same period. In 2024, BeOne’s R&D spending reached RMB 14.1 billion, while Hengrui Pharma, Fosun Pharma, CSPC, and Sino Biopharm each invested more than RMB 5 billion in R&D.
3, A broad disease spectrum and cost advantages driven by a large population base. China’s vast patient pool facilitates rapid clinical trial enrollment, while clinical trial costs remain significantly lower than global averages. According to Frost & Sullivan, per-patient costs for Phase I clinical trials in the Chinese mainland typically range from US$40,000 to US$60,000, while Phase II and III trials range from US$50,000 to US$70,000. In contrast, international multi-center trials generally cost US$120,000 to US$180,000 per patient, with Phase II and III trials slightly more expensive than Phase I—approximately two to three times higher than costs in the Chinese mainland.
4, Returnee talent bringing innovative ideas and technologies. Most Chinese biotech companies were established after 2010, with founders and academic leaders predominantly possessing overseas education or R&D experience at multinational pharmaceutical companies. Despite relatively smaller capital bases and teams, these companies tend to focus on niche therapeutic areas, excel at achieving “0 to 1” breakthroughs, and demonstrate high R&D efficiency—exemplified by BeOne’s intensive innovation efforts in hematological oncology.
Capital markets have responded enthusiastically, significantly boosting investor confidence. Driven by the surge in out-licensing activity and strong operating fundamentals, the CSI Innovative Drug Industry Index rose by as much as 57% this year, while the CNI HK Connect Innovative Drug Index—which tracks Hong Kong-listed innovative drug companies—surged by up to 140%, both substantially outperforming the CSI 300 Index and the CSI 300 Healthcare Index. Assets under management (AUM) in products tracking these indices have expanded rapidly: funds linked to the CSI Innovative Drug Industry Index grew from RMB 14.3 billion last year to RMB 22.4 billion, while those tracking the HK Connect Innovative Drug Index increased from RMB 1 billion to nearly RMB 40 billion, further reinforcing market confidence.
Chengtong Securities believes that China’s innovative drugs are now stepping onto the global stage. A 2024 Tsinghua University study published in Nature Reviews Drug Discovery indicates that as of 2024, first-in-class and fast-follower drugs accounted for more than 43% of China’s total industry pipeline, up from 39% in 2021. Among these, first-in-class drugs—representing novel targets, therapies, or molecular entities—comprised 19% of active pipelines. Additionally, data from Citeline and IQVIA show that China has become the world’s second-largest drug R&D hub, hosting approximately one-third of global clinical trials in 2024, compared with only about 5% a decade ago. This underscores the country’s substantial growth potential driven by cost-efficient R&D and accelerating clinical advancement.
As an integral part of the financial services sector under the state-owned China Chengtong Holdings Group Ltd., Chengtong Securities adheres to a development philosophy centered on serving the real economy, supporting the high-quality development of central SOEs, and facilitating state capital operation strategies. Its research institute integrates macroeconomic and industry research, delivering buy-side-oriented analysis with deep specialization in sectors including pharmaceuticals, high-end manufacturing, TMT, renewable energy, and consumer goods.
Contact Info:
Name: Liu Honggang
Email: Send Email
Organization: Chengtong Securities
Website: https://www.cctgsc.com.cn/
Release ID: 89179470
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