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Pharma innovation efforts bear fruit

By Li Jing | China Daily | Updated: 2025-12-17 10:04
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A pharma researcher works at a lab in Haikou, Hainan province, on Feb 5. SU BIKUN/FOR CHINA DAILY

China's pharmaceutical sector is playing an increasingly important role on the global stage, with cross-border licensing and partnership deals expected to exceed $100 billion by the end of 2025.

China-linked pharmaceutical business development transactions accounted for nearly half of global pharmaceutical deal value in the first half of 2025, according to data from SAI MedPartners, a global consultancy.

"By the end of this year, the transaction value of China's innovative drug business development is expected to surpass $100 billion," said Deng Xianpeng, president of SAI MedPartners in Asia.

Deng said Chinese drugmakers are increasingly partnering with foreign companies on a more equal footing, moving beyond simple licensing toward complex co-development and co-commercialization models.

The dealmaking boom is fueled by a critical supply-and-demand dynamic. A report by Founder Securities highlights that multinational pharmaceutical giants are facing a looming "patent cliff", with blockbuster drugs generating around $200 billion in annual revenue set to lose market exclusivity by 2030. To replenish their pipelines, these multinationals are turning to China's efficient and robust research and development ecosystem.

According to the securities firm, antibody technologies dominated this year's major deals, accounting for 40 percent of the total, followed by small molecules at 20 percent. While oncology remains the top target with 15 major transactions, interest is diversifying with rare diseases, immunology, and metabolic disorders each recording seven deals.

Analysts expect this scope to widen further into autoimmune and cardiovascular diseases starting in 2026.

Backing this global interest is China's status as the world's second-largest pharmaceutical industry, now accounting for about 30 percent of innovative drugs in the global research pipeline.

The pace of domestic approval is accelerating. As of Dec 1, regulators had approved 66 first-class innovative drugs in 2025, a nearly fivefold increase compared to 2018.

Since the start of the 14th Five-Year Plan (2021–25), China has approved 204 innovative drugs, Yang Sheng, deputy head of the National Medical Products Administration, said at a news conference in August.

Despite China's growing prowess in global dealmaking, industry insiders caution that sustainable growth depends on improving returns within the domestic market.

Innovative drugs account for just 8.6 percent of pharmaceutical spending in China, compared with 81.8 percent in the United States, said Song Ruilin, senior chairman of the China Pharmaceutical Innovation and Research Development Association.

"Reasonable returns are the foundation of market development," Song said, adding that lower domestic pricing could constrain the profits needed to reinvest into research and development.

To address the imbalance, policymakers are accelerating the construction of a multilayered payment system by reducing reliance on basic medical insurance while expanding the role of commercial health insurance.

Progress is already visible in the 2025 National Reimbursement Drug List, which added 114 medicines, including 50 innovative drugs, significantly improving patient access. Authorities have also released the country's first commercial health insurance catalogue for innovative drugs, strengthening coordination between public and private payers.

Global players are seeing the benefits. Novartis AG saw two new products and four new indications included in the latest list.

Leo Lee, president and managing director of Novartis China, said the Swiss pharmaceutical giant's development timeline in China is now "100 percent synchronous" with its global schedule. "I am very pleased to see more Novartis innovative drugs included," Lee said, emphasizing the company's commitment to accessibility for Chinese patients.

Song said these policy shifts are critical. "Closing the loop from R&D investment to reimbursement support and market returns is key to the high-quality development of China's pharmaceutical innovation," he said.

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