CBN News 2026-11-05 09:51:15

Author: Lin Zhiyin Editor-in-Chief: Zhang Xinchen

In the first three quarters of this year, the total value of foreign licensing transactions for innovative drugs in China reached $130 billion, just one step away from the historical peak of $135.7 billion set last year for the entire year.

With its efficient development speed, relatively controllable costs, and strong execution capabilities, Chinese innovative drugs have become a force that cannot be ignored in the global biopharmaceutical market landscape. However, behind the seemingly prosperous transaction data, issues such as homogeneous competition in the industry, insufficient pricing power, and uncertainties in achieving milestones continue to hinder Chinese innovative drugs from entering international markets.

Recently, Zhang Lianshan, Executive Vice President of Hengrui Medicine, stated at the 2026 China Pharmaceutical Innovation 100 Summit that the next stage of pharmaceutical innovation in China does not test the speed at which molecules are discovered, but rather the ability to realize their value.

The speed dividend is facing a decline.

According to McKinsey's analysis, among the top ten multinational pharmaceutical companies globally ( MNC ), the proportion of authorized transactions originating from China has soared from 15% in 2023 to approximately 50% in the first half of 2026.

From the discovery of the target to the IND (new drug clinical trial application) submission stage, Chinese pharmaceutical companies can develop drugs 2 to 3 times faster than the global average, and at a cost that is only 1/3 to 1/2 of that of their international counterparts; when it comes to clinical development, the efficiency of patient enrollment is 2 to 5 times higher, and the cost per subject is at least 50% lower than in European and American markets.

But this advantage cannot be maintained in the long term.

At the meeting, Zhang Lianshan believed that homogenization and clustering are the most prominent pain points in the current industry. Homogenization is not merely a regulatory issue, but rather a structural problem in the early stages of the pharmaceutical innovation system. A large number of projects are focused on popular targets, leading to a waste of research and development resources and an overabundance of noise in the competitive landscape. Many companies follow the trend by pursuing popular projects, lacking rational and differentiated choices in project initiation.

"For a long time, the domestic biopharmaceutical industry has managed to seize opportunities in the global market by leveraging cost advantages and the diligent efforts of researchers. However, relying solely on sheer time and speed is not sufficient to continuously produce differentiated products that are globally competitive. This is a core issue that all innovative pharmaceutical companies must confront today," he said.

A reality that is easily overlooked is that the impressive transaction amounts of China's innovative drugs licensed to foreign parties do not necessarily mean that the companies will ultimately be able to secure a solid profit.

According to MedCube Data, in the first half of 2026, the total amount of foreign licensing transactions for innovative drugs in China was 99.7 billion US dollars, but the upfront payment amounted to nearly 5 billion US dollars, accounting for only 5%.

Recently, Liu Chen, the Managing Director of Locust Walk, stated at the 11th Pharmaceutical Innovation and Investment Conference that among the projects introduced by pharmaceutical companies over the past 30 years, 85% to 90% ultimately failed to fulfill all milestone payments. The budget for licensing transactions of global multinational pharmaceutical companies remains relatively stable, while China's share of assets has increased. Essentially, this represents a reallocation of existing market shares, rather than an unlimited expansion of incremental dividends.

How to Enhance Asset Bargaining Power

When Chinese assets account for more than half of global transactions, the industry has reached a critical juncture in the struggle for global asset pricing power. In the past trading models, pricing was largely dominated by overseas buyers, with most deals involving the sale of individual assets at low prices. However, now, how to enhance asset pricing power has become a challenge for Chinese pharmaceutical companies.

Zhang Lianshan stated that during the 1.0 phase of innovative drugs in China, success was achieved through speed and cost-effectiveness. However, in the 2.0 phase of innovation, differentiation and global realization are essential. Relying solely on the domestic market is difficult to achieve long-term sustainable value; it is necessary to simultaneously advance the development of overseas markets and globalize the value of products. The realization of value is at the core of corporate operations.

Yang Shuwen, Vice President of Business at Thermo Fisher China, stated in an interview with Yicai News that the models for Chinese innovative drugs to go global are becoming increasingly diverse. In addition to the traditional method of licensing a single asset, other approaches such as retaining some overseas rights and interests, establishing NewCo ( New Company ), and independently advancing global development are emerging. Companies' priorities are shifting from simply selling assets to generate cash flow to building their own global R&D capabilities while maximizing the value of those assets.

In her view, three major trends in the industry have become clearly evident: First, the approach to going global has shifted from a "transactional" focus to a "competence-based" one; second, multi-center clinical trials and cross-regional simultaneous registration have become standard practices in the industry; third, the importance of CMC (chemistry, production, and control) and supply chain capabilities continues to rise.

However, Yang Shuwen also pointed out that many companies tend to underestimate the challenges brought about by globalization. To obtain approval from overseas regulatory authorities, factors such as the stability of manufacturing processes, the consistency of scaled-up production, and the ability to supply products continuously and stably are all essential. Differences in the evaluation criteria of various regulatory agencies also pose significant barriers. Regulatory bodies in different countries have different requirements for clinical endpoints, patient stratification, and statistical design, which directly affect the success rate of clinical trials and development costs. Only by having a global clinical network and a mature supply chain system can innovative drugs successfully complete the entire global development process.

"We recommend starting to plan the global clinical strategy from the pre-clinical phase, even from the stage of candidate target screening. At the time of project initiation, pre-clinical research, and the design of Phase I trial protocols, the team should clearly define the target market, clinical endpoints, patient population, potential ethnic differences, dose exploration, data standards, sample strategies, and regulatory communication pathways. Ideally, these foundational tasks for global development should be initiated before Phase I," said Yang Shuwen.

For Chinese pharmaceutical companies, external authorization is never just about “signing the contract and receiving the upfront payment; that’s the beginning of the project.”

Industry insiders suggest that during the negotiation phase, it is essential to establish key terms such as clinical division of labor, cost allocation, data handover, and project termination in advance; after the transaction is finalized, ongoing project monitoring and intellectual property protection are also of paramount importance. New types of transaction structures, such as NewCo and platform-based licensing, are emerging continuously. Pharmaceutical companies need to balance domestic regulatory compliance with overseas business demands, and proactively plan for technology exports and data transfer abroad to mitigate the hidden risks associated with cross-border transactions.