--- title: "Mindset Observation Institute: In the first quarter, China's innovative drugs delivered an exciting report card" type: "News" locale: "en" url: "https://longbridge.com/en/news/282791090.md" description: "In the first quarter of 2026, China's innovative drug industry performed exceptionally well, with the total amount of out-licensing transactions exceeding USD 60 billion, nearly half of the total for the entire year of 2025. The National Medical Products Administration approved 13 innovative drugs for market launch, of which 6 are first-in-class drugs, covering key disease areas. The total number of innovative drugs under research in China reached 4,751, accounting for 33.7% of the global total, with over 45% in several cutting-edge fields. China has become the world's largest country for innovative drugs under research, with transaction volume accounting for 49% of the global total" datetime: "2026-04-15T05:51:30.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/282791090.md) - [en](https://longbridge.com/en/news/282791090.md) - [zh-HK](https://longbridge.com/zh-HK/news/282791090.md) --- # Mindset Observation Institute: In the first quarter, China's innovative drugs delivered an exciting report card In the first quarter of 2026, China's innovative drug industry delivered an impressive report card. The latest data released by the National Medical Products Administration shows that in the first quarter of 2026, the total value of China's innovative drug licensing transactions exceeded $60 billion, approaching half of the total of $135.655 billion for the entire year of 2025. Meanwhile, as of April 10, the National Medical Products Administration has approved 13 innovative drugs for market launch this year, including 6 first-in-class drugs, covering key disease areas such as anti-tumor, blood sugar reduction, and blood lipid reduction. These figures not only set a new historical record for the same period but also confirm a clear trend: China's innovative drugs have transitioned from the past role of "follower" to becoming a core force in the global innovative drug R&D value chain. Why has China's innovative drug licensing achieved such rapid growth? This is the result of a series of deep-seated changes working together. **From Quantity Change to Quality Change: Systematic Improvement of Innovation Capability** The explosive growth of China's innovative drug licensing transactions primarily stems from the systematic enhancement of local innovation capabilities. After nearly a decade of continuous accumulation, the R&D strength of Chinese pharmaceutical companies has transitioned from "quantity change" to "quality change." In terms of quantity, the total number of innovative drugs under research in China has reached 4,751, accounting for 33.7% of the global total, with over 45% of R&D in cutting-edge fields such as cell therapy and antibody-drug conjugates (ADC). By the end of 2025, China had surpassed the United States to become the world's largest country for innovative drugs under research. More critically, there has been a leap in quality. In 2025, China approved 76 innovative drugs, with domestic innovative drugs accounting for 80.85% of chemical drugs and 91.30% of biological products. In the field of first-in-class drugs, which have the highest R&D difficulty, China approved 11 first-in-class drugs in 2025, 4 of which were independently developed. In the first four months of this year, this trend has further accelerated—with 6 first-in-class drugs approved for market launch. The recognition of multinational pharmaceutical companies is the best evidence of the improvement in innovation quality. In 2025, 7 of the top ten global pharmaceutical licensing transactions came from Chinese companies, with partners being multinational pharmaceutical companies. The transaction value of China's innovative drugs has accounted for 49% of the global total, surpassing the United States. As Lan Gongtao, Deputy Director of the Drug Registration Management Department of the National Medical Products Administration, stated: "The significant growth in licensing reflects the international community's recognition of the value of our innovative drugs." **Global Supply and Demand Resonance: The "China Procurement" Logic of Multinational Pharmaceutical Companies** The surge of Chinese innovative drugs going overseas is the result of a resonance in the global supply and demand structure. On the demand side, global pharmaceutical giants are facing a severe "patent cliff" challenge. It is predicted that by 2030, over $300 billion in sales of drugs will lose patent protection globally. Faced with a significant gap in their innovation pipelines, multinational pharmaceutical companies urgently need to supplement high-quality innovative assets to maintain competitiveness On the supply side, the "cost-performance ratio" advantage of China's innovative drugs has become a key attraction. Liu Bowei, Vice Chairman of Healthcare Investment Banking for Asia Pacific at JP Morgan, shared a compelling case: the CFO of a large multinational pharmaceutical company once admitted that if the cost of procuring the same pipeline in China is only 30% to 40% of that in the United States, and potentially achieves better results, they would definitely choose China. "The ultimate balance between cost and effectiveness is becoming the key logic for multinational pharmaceutical companies to view China as a core source of R&D pipelines." In addition, China's dense clinical resources, efficient R&D system, and rich early pipelines are becoming strategic supply stations for multinational pharmaceutical companies to fill future revenue gaps. In specific fields, dual antibodies, ADCs, and GLP-1RAs have become the most active directions for BD transactions. From 2025, domestic dual antibody drug BD overseas has achieved an upfront payment of USD 3.5 billion, a year-on-year increase of 414.7%, accounting for 49.8% of all drug BD upfront payments for the year. A researcher from a pharmaceutical company in Shenyang processes samples. Data source: Xinhua News Agency **Dual Driving Forces of Policy Dividends and Capital Support** The rise of China's innovative drug industry cannot be separated from the dual support of policy and capital. On the policy side, the continuous reform of the drug review and approval system in China since 2015 has laid the institutional foundation for the development of innovative drugs. A relevant person from the National Medical Products Administration pointed out when reviewing the achievements of 2025 that this is a "major achievement of China's continuous deepening of drug review and approval system reform and the implementation of a series of encouraging innovation policies." An efficient patient recruitment system, continuously optimized review and approval processes, and strong policy support have given China a significant advantage in clinical development speed and costs. On the capital side, the opening of the Sci-Tech Innovation Board and Hong Kong stocks has opened financing doors for unprofitable pharmaceutical companies. From early 2024 to March 2026, the A-share and Hong Kong stock biopharmaceutical sectors are expected to raise approximately 70 billion yuan after listing. Cities like Beijing and Shanghai have established special mother funds for biopharmaceuticals worth billions, leveraging social capital for continuous investment. Analysis from Soochow Securities indicates that the overall funding situation in the domestic pharmaceutical sector is currently abundant, with the vast majority of companies still maintaining over one year of R&D funding coverage capability, effectively supporting subsequent clinical trial progress, pipeline expansion, and technological innovation. It is worth noting that BD overseas is no longer just a capital operation that adds icing on the cake, but a strategic choice concerning corporate cash flow, R&D sustainability, and even survival and development. For a long time, innovative drug R&D has faced the "double ten rule" test of "ten years of time and ten billion dollars of investment." In the stage of not yet achieving scaled profitability, how to maintain high-intensity R&D investment is a survival proposition that every innovative pharmaceutical company must face. BD income has become an important source of funding for Chinese innovative pharmaceutical companies, forming a dual driving model of "domestic market supporting cash flow + global licensing enhancing valuation." * * * **Upgrading the Overseas Expansion Model: From "Selling Seedlings" to "Co-creation and Sharing"** More noteworthy than the growth in transaction amounts is the deep evolution of the overseas expansion model. China's innovative drugs have undergone a clear generational change in their overseas expansion. In the "1.0 era," the core was "one-time monetization," with companies primarily aiming to obtain upfront payments; the "2.0 era" advanced to "value sharing," where the transaction structure became "down payment + high milestone payments + sales sharing"; and the current "3.0 era" is entering the stage of "platform and ecosystem co-construction." Dr. Xu Jia, partner in charge of the pharmaceutical and healthcare industry at PwC China, analyzed that "the transaction model for Chinese innovative drugs is evolving from the early 'selling seedlings' to new models of deep bundling such as joint development and regional licensing." A typical case is the collaboration between Innovent Biologics and Eli Lilly—Innovent leads the research and development work from drug discovery to clinical concept verification in China, while Eli Lilly obtains global rights outside of Greater China, with potential milestone payments reaching up to $8.5 billion. Another example is the authorization of the entire long-acting peptide drug platform from CSPC Pharmaceutical Group to AstraZeneca, with a potential total value of $18.5 billion—this is no longer about selling a single product, but about exporting a sustainable technology system and research and development capabilities that can continuously generate new drugs. This "shared responsibility and benefits" model reflects multinational pharmaceutical companies' deep recognition of China's research and development capabilities. A report from CITIC Securities pointed out that the proportion of upfront payments in transactions will significantly increase in the first quarter of 2026, "on one hand reflecting the acquirer's recognition of pipeline value, and on the other providing cash flow support for the research and development of Chinese innovative drug companies, forming a positive cycle." **The "Golden Triangle" of Engineer Dividend + Patient Pool + AI Empowerment** Supporting the rise of Chinese innovative drugs is the "golden triangle" formed by three structural advantages: "engineer dividend, large patient pool, and policy support." The engineer dividend means that China has a large number of high-quality, relatively low-cost research and development talents. Over the past decade, returning scientists and overseas experts have continuously flowed in, driving rapid improvements in China's innovation levels. The large patient pool provides abundant sample resources for new drug clinical trials, giving China an irreplaceable competitive advantage in terms of clinical trial speed and cost. At the same time, the rapid application of emerging technologies such as AI has given Chinese pharmaceutical companies the confidence to tackle the "unmanned areas" of research and development. Beijing Jitai Technology's self-developed AI platform screened the innovative pipeline product MTS-105, which received orphan drug designation from the U.S. FDA; the domestically developed innovative drug Shuwotini became the world's first EGFR ex20ins targeted lung cancer innovative drug to be launched in the U.S., breaking through the treatment bottleneck for refractory lung cancer. The efficient molecular design capabilities of AI drug development platforms are becoming an important part of pharmaceutical companies' "external innovation brain." Shuwotini tablets have been included in the National Comprehensive Cancer Network (NCCN) guidelines for non-small cell lung cancer in the United States **Three Major Challenges in the Industry Remain** While the industry is developing rapidly, challenges and concerns cannot be ignored. **First, homogenized competition is becoming increasingly prominent.** Currently, the issue of homogenized competition in the domestic innovative drug sector's popular targets remains significant. Taking PD-1/PD-L1 inhibitors as an example, more than ten products have been approved for market launch in China, and fierce market competition has triggered price wars, with some products' annual treatment costs dropping to tens of thousands of yuan, significantly compressing profit margins for companies. In the currently hottest ADC track, targets such as HER2 and CLDN18.2 have also attracted a large number of research projects, leading to increased congestion in the field. **Second, the anxiety caused by "selling seedlings."** Liang Yingyu, a member of the National Committee of the Chinese People's Political Consultative Conference and managing partner of Huihang Capital, pointed out at the two sessions that "if we overly rely on external licensing transactions, it will lead to the premature outflow of core assets, long-term commercialization benefits being ceded, and insufficient construction of global capabilities, making it difficult to form an independent commercialization system." The reality behind companies going overseas to maintain survival is the shrinking profit margins in the domestic market—normalization of medical insurance cost control has caused prices of innovative drugs to quickly decline after market launch, making it difficult to cover high R&D investments. **Third, global competition and geopolitical pressure.** International geopolitical and technological competition is intensifying, and the globalization of pharmaceuticals faces structural pressures. High-end R&D talents are attracted by overseas high salaries and mature commercialization systems, which may lead to the relocation of key links in the industrial chain. **Outlook: From "Partial Breakthrough" to "Global Value Creation"** Standing at a new historical starting point, China's innovative drugs are at a critical juncture from "partial breakthrough" to "global value creation." Experts at the 2026 Zhongguancun Forum unanimously believe that China's pharmaceutical and health industry is shifting from rapid following to systematic innovation. Only through platform integration, international talent allocation, and patient capital support can China's pharmaceutical and health industry truly move towards global value creation. CITIC Securities' research report maintains an "outperform market" rating for the innovative drug industry, believing that "Chinese innovative drugs are showing a trend of leading globally in several sub-tracks such as ADC, dual antibodies, and small molecule targeted drugs." However, at the same time, CITIC Jianzhong Securities also reminds that "while BD transactions are certainly important for realizing the global value of innovative drugs, the gradual verification and realization of the product's global value after the BD transaction is even more crucial." In the future, China's innovative drug industry needs to continue to make efforts in three areas: first, daring to explore "unmanned areas" in source innovation to break through the bottleneck of target homogenization; second, addressing shortcomings in global capability construction to enhance independent clinical development and commercialization capabilities; and third, improving the domestic innovation ecosystem in the payment system to form a virtuous development pattern of dual circulation. The Economist once predicted: "The birth of global Chinese pharmaceutical giants is not far off." From the data of the first quarter of 2026, this day is accelerating towards us. **This article is an exclusive piece from Observer Network, and the content solely represents the author's personal views, not the platform's views. Unauthorized reproduction is prohibited and will be subject to legal liability. 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