Global pharma giants turn to Chinese biotech to tap innovation, valuation growth

Global pharmaceutical giants are doubling down on investing in China’s fast-growing biotech companies given the sector’s huge room for valuation growth, according to speakers at the Global Health Summit, which concluded in Hong Kong on Saturday. “Multinational pharmaceutical companies are shifting their business strategies in China away from asset-heavy operations,” said Xu Chenming, head of the healthcare group at Hong Kong-based Citic Securities. “They are moving towards investing in companies with strong innovation capability, as well as deeper integration with Chinese partners,” Xu said during a panel discussion on Friday. The investment “could help Chinese companies grow, pushing them to compete on the global stage”, he added. On Wednesday, AstraZeneca announced it had established a joint venture with China’s innovative drug developer CSPC Pharmaceutical Group to build a drug manufacturing site in Shijiazhuang, capital of Hebei province. Under the deal, AstraZeneca will hold a 49 per cent stake while CSPC owns the remaining shares. In its initial phase, the joint venture is expected to focus on manufacturing and supply of products for the global market, with plans to expand its product line in the future. In May, Swedish wound care and surgical products provider Mölnlycke formed a joint venture with Zhejiang province-based Zhende Medical, a domestic supplier of medical care and protection items, to combine their business portfolios and co-develop future products. China has become an important global source of innovation in pharmaceutical deal making, said Jiang Yu, chairman of Huatai United Securities. Cross-border deals for innovative drugs reached a record US$110 billion in the first half of 2026, equal to about 80 per cent of last year’s total, according to state media. However, Chinese healthcare companies are still behind their US peers in valuations, according to Jiang. Among the mainland-listed healthcare companies, only four are worth more than US$20 billion, accounting for just 18 per cent of total sector market cap. By contrast, in the US, 73 healthcare companies exceed that threshold, accounting for 85 per cent of total market cap. Investor appetite for Hong Kong-listed biotech and healthcare stocks had improved over the past two years, according to Xu, with the Hong Kong capital market making “a full recovery”. Leung Chuen-yan, a partner for healthcare investment at Hong Kong-based Value Partners Group, said investors in biotech initial public offerings (IPOs) in Hong Kong, or those investing after listings, were “increasingly international”. “A growing number of multinational corporations act as cornerstone investors in these IPOs,” Leung said. Hong Kong’s healthcare and drug sector saw 11 companies raise a total of HK$14.1 billion (US$1.8 billion) in initial public offerings during the first half of the year, according to Deloitte, with pre-profit biotech listings rising to seven from six a year earlier.