BD hits a strong start! China's innovative drug licensing transaction volume is impressive, approaching half of last year's total from January to March.

Ask AI · How do policy upgrades drive an explosive surge in innovative drug BD deal values?

KeChuangBan Daily (Science and Technology Innovation Board Daily), March 28 (Editor Song Ziqiao) According to the National Medical Products Administration, in the first three months of this year, the total value of China’s innovative drug licensing-out transactions exceeded $60 billion, nearing half of the full-year 2025 figure. As of March 27, China has approved 10 innovative drugs for 2026, including 2 imported and 8 domestically developed. China’s innovative drugs have achieved historic breakthroughs, maintaining strong development momentum and substantial potential.

The data previously disclosed by the agency shows that in 2025, China approved 76 innovative drugs for the year, setting a record high. The total value of innovative drug licensing-out transactions also hit a record high. In that year, there were 157 licensing-out deal events, with upfront payments of $7 billion and a total value of approximately $1357 billion, representing a doubling growth versus 2024.

Innovative drug BD (business development) is the core business model in which pharmaceutical companies integrate global innovative drug resources and maximize commercial value through activities such as buying and selling, as well as cooperation. Innovative drug licensing-out (Licensing-out) is one of the core components of BD.

At present, domestic innovative drug BD going overseas remains highly active.

On March 4, China Biopharmaceutical and Deqi MedMedicine announced major BD deals on the same day. With total consideration of $1.53 billion and over $1.18 billion respectively, they licensed Rovactinib (JAK/ROCK inhibitors) and ATG-201 (CD19/CD3 bispecific antibody) to Sanofi and Hengrui, respectively.

On February 8, Innovent Biologics announced a strategic collaboration with Eli Lilly. Together, they will advance global R&D of innovative drugs in the oncology and immunology fields. This agreement is the seventh collaboration between the two parties. Under the agreement, Eli Lilly will obtain global exclusive development and commercialization rights for the relevant programs outside Greater China, while Innovent Biologics retains all rights to the relevant programs within Greater China. Innovent Biologics will receive a $350 million upfront payment, milestone payments of up to approximately $8.5 billion, and sales revenue sharing.

On January 30, CSPC Group and AstraZeneca signed a licensing agreement to develop innovative long-acting polypeptide drugs using the group’s proprietary controlled-release drug delivery technology platform and its polypeptide drug AI discovery platform. Under the agreement, CSPC Group will receive a $1.2 billion upfront payment, $3.5 billion in milestone payments, up to $13.8 billion in sales milestone payments, and sales royalties.

In addition, multiple Chinese Biotechs have reached major collaborations with MNCs by leveraging cutting-edge technology platforms: Sinocells licensed a preclinical RNAi therapy to Roche ($200 million upfront payment + $1.5 billion milestone payments); Saisome Biotechnology licensed a blood-brain barrier shuttling technology antibody to Novartis ($165 million + $1.5 billion); Boehringer Ingelheim licensed the TL1A/IL-23p19 bispecific SIM0709 from Simcells (4200万 euros + 10.16亿 euros); RuiBo Biotech licensed six MASHsiRNA assets to Madrigal ($60 million + $4.4 billion). These four transactions all involve preclinical assets.

According to analysis by Haitong Securities, from a global perspective, the global share of domestically developed innovative drug BD projects and disclosed deal values, from the beginning of the year to date, is 20% and 75% respectively. Among the 21 major deals that have been reached, 15 are China deals, accounting for more than 70%. The institution believes that given the number of Chinese assets currently being engaged by MNCs and overseas PE institutions, and the upward trend in industry interest in Chinese assets, BD continued growth has relatively high predictability.

The institution believes that China’s innovative drug companies and U.S. biotechs have fundamentally different business models. First, there will be ongoing BD every year. Second, there is a high likelihood that large-scale BD (upfront payments exceeding $500 million / total value exceeding $2 billion) and continuous mid- and small-sized BD will bring the company sustained, even growing, cash flow (based on continuously accumulating R&D milestones and sales revenue sharing that is set to arise). At present, the market typically considers only the contribution of upfront payments to a company’s valuation. Therefore, the institution believes the value of milestone revenue is being underestimated.

Dongwu Securities said that BD revenue has become an important source of funding for China’s innovative drug companies. By calculating “cash and cash equivalents / annual R&D expenses,” one can assess whether the funding position of the innovative drug sector is sufficient. Overall, the current funding position in the pharmaceutical sector is sufficient, and the vast majority of companies still maintain the ability to cover R&D expenses for more than 1 year. This can effectively support the advancement of subsequent clinical trials, pipeline expansion, and technological innovation, laying a solid financial foundation for the industry’s long-term high-quality development, and also providing sufficient time window for innovative drug companies’ technological breakthroughs and commercialization transformation.

The 2026 Government Work Report proposes “building new pillar industries such as integrated circuits, aerospace, biopharmaceuticals, and the low-altitude economy.” Compared with the wording in the 2025 report (“cultivating and expanding emerging industries and future industries”), the industrial positioning of biopharmaceuticals has clearly been raised, and for the first time it is placed at the level of “emerging pillar industries.”

Guosheng Securities believes that for the pharmaceutical sector, this means that policy positioning for biopharmaceuticals has upgraded from “cultivating emerging tracks” to “an important direction for economic growth and industrial upgrading.” Among them, innovative drugs, as the most core and high-value-added segment in the biopharmaceutical industry, have particularly clear upside directions.

BOCOM International points out that the positioning of the biopharmaceutical industry has risen to emerging pillar industries, signaling that policy dividends across the entire value chain will continue to be released. Breakthroughs in AI pharmaceutical technology and the explosive surge of China’s innovative drug overseas BD will create a two-way reinforcement, and industry fundamentals are expected to accelerate toward improvement. At present, domestic innovative drug overseas collaborations have evolved from single-pipeline licensing to platform-level cooperation. Multinational pharmaceutical companies’ recognition of China’s pharmaceutical R&D strength is being systematically enhanced.

(KeChuangBan Daily, Song Ziqiao)