<p><strong>Core Viewpoint</strong></p>
<h2>What stage has China's innovative drugs developed to? How far is it from international leading levels?</h2>
<p>In response to the above questions, we believe that: (1) In terms of the time to market for the first innovative drug targeting the same target, the gap between China and the world has narrowed from over 10 years to within 1-5 years, with projects such as bispecific antibodies and ADCs having achieved breakthroughs in FIC; (2) In terms of the number of clinical trials, China's innovative drugs now account for over 30% of the global total, with popular targets exceeding 60%; in BD transactions with upfront payments exceeding $50 million, the share of Chinese molecules has surpassed 25%.</p>
<p>Currently, Chinese innovative drugs have become a backbone force globally, thanks to a solid industrial foundation; the rapid growth of License Out transactions has brought considerable cash flow to innovative pharmaceutical companies, providing strong support for the advancement of their core pipelines overseas; at the same time, the recognition of Chinese innovative drugs by multinational pharmaceutical companies has provided domestic companies with more cooperation opportunities and development space, which is expected to further accelerate the development of Chinese innovative drugs. Looking ahead, Chinese innovative drugs have already taken the lead in some areas in the new mechanisms and new targets; in the Chinese market, foreign companies still occupy a large part of the domestic market, and under the dual factors of policy support and product strength enhancement, Chinese innovative drugs are expected to continue to achieve domestic substitution in the local market.</p>
<p><strong>Report Body</strong></p>
<p><strong>The Catch-up of Chinese Innovative Drugs Has Significantly Increased: The Gap Between China's Pharmaceutical Industry and Overseas Continues to Narrow</strong></p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/6531d1e2-f2d1-435d-b005-dd05862bfb0e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/6531d1e2-f2d1-435d-b005-dd05862bfb0e.png"/></p>
<p>Source: Bio Valley, YaoDu WeChat Official Account, Insight Database WeChat Official Account, etc., Tianfeng Securities Research Institute</p>
<h2>The overall clinical pipeline of Chinese companies accounts for nearly 30%, with oncology pipelines exceeding 35%</h2>
<p>A paper titled &#34;Challenges and opportunities in oncology drug development and clinical research in China,&#34; published in CELL in 2024, reported the number of clinical trials globally and the share of Chinese companies from 2016 to 2023. For all indications, the clinical share of Chinese companies increased from 9.7% in 2016 to 28.2% in 2023; for oncology drugs, the clinical share of Chinese companies increased from 15.0% in 2016 to 35.5% in 2023.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/4937d40a-280e-4fd4-9a9b-45cfe1b9184d.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/4937d40a-280e-4fd4-9a9b-45cfe1b9184d.png"/></p>
<p>Source: CellPress Cell Science WeChat Official Account, Tianfeng Securities Research Institute</p>
<h2>Global TOP10 New Drug Target Active Pipeline, China's Clinical Proportion Exceeds 60%</h2>
<p>By 2025, the proportion of popular target pipelines in China has exceeded half, surpassing 60% as of June 2025. According to the Insight database, looking at the clinical numbers of the TOP10 popular targets such as EGFR, HER2, VEGF, IL-17, CD19, CLDN18.2, and GLP-1, the clinical numbers in China (based on the location of the company's headquarters) have continued to increase, with the global share rising from 15.7% in 2016 to 65% in 2024, already exceeding half of the global total. As of June 2025, the proportion of pipeline numbers in popular targets by Chinese companies has approached 70%, at 68.4%.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/effd17fc-5f3e-467e-8f43-b3666fa71e8d.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/effd17fc-5f3e-467e-8f43-b3666fa71e8d.png"/></p>
<p>Source: Insight database, Tianfeng Securities Research Institute</p>
<h2>Global Licensing Deals with Upfront Payments Over $50 Million, China's Related Project Count Exceeds 25%</h2>
<p><strong>China (based on the location of the rights transfer company's headquarters and only considering cases where the transferee is overseas) has seen a continuous increase in the global share of license-outs, surpassing 25% since June 2025.</strong> In 2024, Chinese companies completed a total of 19 BD transactions with upfront payments over $50 million, accounting for 22% of the global total. As of June 2025, Chinese companies have completed 13 BD projects with upfront payments over $50 million, accounting for 25.5% of the global total.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b3fb8211-f8f8-423a-9829-95dcacf04914.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b3fb8211-f8f8-423a-9829-95dcacf04914.png"/></p>
<p>Source: Insight database, Tianfeng Securities Research Institute Note: Only statistics for upfront payments over $50 million</p>
<h2>CDE Breakthrough Therapies: The Number of Included Products Continues to Increase, Developing in Sync with Overseas Transactions</h2>
<p>It is noteworthy that CDE breakthrough therapies started in 2020, and with the improvement of R&amp;D capabilities, domestic molecules have gradually gained global competitiveness.</p>
<p>To obtain breakthrough therapy designation, two conditions must be met: (1) it is used for the prevention and treatment of serious diseases or conditions (life-threatening or severely affecting quality of life); (2) the drug must provide preliminary evidence of significant clinical advantages. This means that molecules included in CDE breakthrough therapies have commercial value and data advantages. Overseas and MNC BD departments have high data requirements when seeking domestic molecules, so organizing breakthrough therapies at this moment has practical significance for guiding domestic innovative drug molecules to go overseas
The success rate of breakthrough therapy molecules going overseas also confirms this point: Insight database shows that 25% of domestic molecules included in CDE breakthrough therapies have already gone overseas, while only 1% of all domestic molecules have achieved this.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/103152d4-fd0f-4450-a14e-1f1e82452f17.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/103152d4-fd0f-4450-a14e-1f1e82452f17.png"/></p>
<p>Source: Insight database, Tianfeng Securities Research Institute</p>
<h2>Analysis of CDE Breakthrough Therapies Going Overseas: Learning from History to Understand Changes</h2>
<p>Companies such as Kelun-Biotech, 3SBIO, BaiLi Tianheng, Legend Biotech, and Rongchang Biologics have completed breakthroughs from 0 to 1 in terms of going overseas, with both the initial payment and total amount reaching new highs. It can be seen that the molecules going overseas are generally in later clinical stages, leading globally or have obtained US BTD certification.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/667a4a07-225c-4351-b038-2a20afb6050a.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/667a4a07-225c-4351-b038-2a20afb6050a.png"/></p>
<p>Source: Insight database, BaiLi Tianheng announcements, Hansoh Pharmaceutical announcements, Medical Cube, etc., Tianfeng Securities Research Institute</p>
<h2>License-out Provides Cash Flow and Global Recognition for Companies, the Positive Cycle of Innovative Drugs Going Overseas Has Started</h2>
<p>According to the Insight database, looking at license-out transactions with initial payments over USD 10 million, Hengrui Pharma has the highest number of overseas transactions, reaching 8 times; Kelun-Biotech has gone overseas 5 times, with the highest total amount of USD 12.68 billion; 3SBIO has an initial payment of USD 1.25 billion, making it the company with the highest total initial payment for overseas transactions.</p>
<p>The rapid growth of License Out transactions brings considerable cash flow to innovative pharmaceutical companies, providing strong support for the advancement of their core pipelines overseas; at the same time, the recognition of Chinese innovative drugs by multinational pharmaceutical companies also provides more cooperation opportunities and development space for domestic pharmaceutical companies.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/09bf464c-9d45-4c0b-9f5e-577faa0c12b5.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/09bf464c-9d45-4c0b-9f5e-577faa0c12b5.png"/></p>
<p>Source: Insight database, Tianfeng Securities Research Institute</p>
<h2>Exploration of New Targets and Mechanisms Still Has Room for Improvement</h2>
<p>The report &#34;Current Status and Development Suggestions for China's Innovative Drug Research and Development&#34; analyzes the global FIC pipeline situation. The United States is one of the most active countries in the global FIC drug R&amp;D pipeline, with a total of 4,511 FIC pipelines, accounting for 48% of the global share, significantly higher than other countries, leading in the field of pharmaceutical innovation. China's FIC drug pipeline has 1,775, accounting for 19% of the global share. Although there is still a certain gap compared to the United States, it also shows China's rapid development in the pharmaceutical field and its increasingly enhanced international influence. From its own situation, the TOP1 FIC pipeline in the United States (calculated by target + molecule type) accounts for 46% of all pipelines, while China's proportion is 25%</p>
<blockquote>
<p>(1) New Targets: In the field of autoimmune diseases, China's IL-25 molecule has demonstrated the potential to be the latest and best globally in terms of progress and data. The SM17 antibody from China has made preliminary breakthroughs in atopic dermatitis, improving skin lesions, alleviating itching, and ensuring safety, overcoming the &#34;impossible triangle&#34;;</p>
<p>(2) New Mechanisms: Due to the activation effect on T cells, cytokines have potential anti-tumor effects, but their low safety window caused by toxicity has led to repeated failures for overseas multinational corporations (MNCs); Innovent Biologics' PD-1/IL-2-α maximizes the immune long-tail effect of cytokines (activating T cells) through engineering modifications, achieving breakthroughs for Chinese innovative drugs in the cytokine field; additionally, Aosaikang's cytokine prodrug technology platform aims to solve the druggability issues of cytokine drugs through &#34;masking&#34; technology, with the FIC molecule of PD-1/IL-15 currently in clinical phase I.</p>
</blockquote>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/0c9a3367-6794-430e-a260-b59a1bd88398.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/0c9a3367-6794-430e-a260-b59a1bd88398.png"/></p>
<p>Source: Baiaoxin Kang WeChat Official Account, Yiyao Mofang WeChat Official Account, Tianfeng Securities Research Institute</p>
<h2>In the domestic market, foreign patent-expired varieties account for a high proportion, still leaving significant room for breakthroughs</h2>
<p>The Chinese pharmaceutical market is still dominated by foreign varieties, and many products have already undergone or are about to undergo centralized procurement. According to data from Minai Network, AstraZeneca's Andatang (Dapagliflozin tablets) has seen sales soar since being successfully included in the national medical insurance in 2019, achieving sales of 6.8 billion yuan in China in 2024 (yoy +30.8%), making it the highest-selling drug in China in 2024. Furthermore, among the top 10 products by sales, 7 are from foreign enterprises. Products like Andatang, Lipitor, Amgen, and Noxinto have been deeply cultivated in China for many years and are facing centralized procurement, yet still occupy a mainstream market share. Considering the continuous improvement in the level of domestic innovative drugs, the replacement of existing foreign products is expected to accelerate.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f7bb882e-c0b5-4046-89b5-4182d8fa6477.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f7bb882e-c0b5-4046-89b5-4182d8fa6477.png"/></p>
<p>Source: YaoPinTong, Saibeilan WeChat Official Account, Tianfeng Securities Research Institute</p>
<p>Note: This article has been abridged.</p>
<p>Authors: Yang Song, Cao Wenqing, Source: Tianfeng Securities, Original Title: &#34;Buying the Best Chinese Innovative Drugs Globally&#34;</p>
<p>Risk Warning and Disclaimer</p>
<p>The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk</p>

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<p>The development of innovative drugs in China has significantly improved, narrowing the gap to international leading levels to 1-5 years. The proportion of Chinese innovative drugs in global clinical trials exceeds 30%, with popular targets accounting for over 60%. The growth of License Out transactions brings cash flow to enterprises, and recognition from multinational pharmaceutical companies provides collaboration opportunities for domestic firms. In the future, Chinese innovative drugs are expected to achieve domestic substitution in new mechanisms and new target areas, continuously narrowing the gap with international standards</p>

- China's innovative drug development has significantly advanced, narrowing the gap with global standards to 1-5 years.  
- Chinese companies now account for over 30% of global clinical trials, with a notable presence in key therapeutic areas, particularly oncology.  
- The rapid growth of license-out transactions is enhancing cash flow for domestic firms, while international recognition of Chinese innovations is creating more collaboration opportunities, potentially accelerating future development.

How far is China's innovative drugs from reaching international leading levels?