CITIC Construction Investment: Optimistic about pharmaceutical companies maintaining profit growth through genuine innovation

CITIC Construction Investment Research reports that since 2020, China’s innovative drug internationalization has shifted from product export to strategic and organizational collaboration. License-out transaction volume and prices have risen simultaneously, with global clinical data enabling value revaluation; collaborations like Cinda with Takeda mark an upgrade from “product export” to “organizational export.” On the technological front, cutting-edge tracks such as small nucleic acids, IO multi-antibodies, ADCs, and GLP-1 are flourishing, continuously producing pipelines with BIC/FIC potential. Policy-wise, the efficiency of medical insurance negotiations has improved and stabilized in terms of price reductions, coupled with the first-ever establishment of the commercial insurance catalog in 2025, expanding the volume of innovative drugs. Based on international competitiveness, technological breakthroughs, and policy dividends, we are optimistic about leading companies with autonomous overseas expansion capabilities, platform-based firms deeply engaged in frontier tracks, and companies that can sustain profit growth through genuine innovation.

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CITIC Construction Investment | Pharmaceutical Industry: Continuing Optimism for Internationalization, Policy Support, and Technological Breakthroughs

Since 2020, China’s innovative drug internationalization has shifted from product export to strategic and organizational collaboration. License-out transaction volume and prices have risen simultaneously, with global clinical data enabling value revaluation; collaborations like Cinda with Takeda mark an upgrade from “product export” to “organizational export.” On the technological front, cutting-edge tracks such as small nucleic acids, IO multi-antibodies, ADCs, and GLP-1 are flourishing, continuously producing pipelines with BIC/FIC potential. Policy-wise, the efficiency of medical insurance negotiations has improved and stabilized in terms of price reductions, coupled with the first-ever establishment of the commercial insurance catalog in 2025, expanding the volume of innovative drugs. Based on international competitiveness, technological breakthroughs, and policy dividends, we are optimistic about leading companies with autonomous overseas expansion capabilities, platform-based firms deeply engaged in frontier tracks, and companies that can sustain profit growth through genuine innovation.

Global Perspective: Innovation value highlights China’s accelerating influence. Chinese pharmaceuticals possess advantages of “innovation upgrade + supply chain resilience.” In 2025, upfront payments for overseas licensing of innovative drugs have significantly exceeded last year’s total, and medical devices are actively exploring international markets. The US leads early-stage R&D and high-end pricing, but under patent cliffs, demand remains strong for multinational pharma, highlighting the global cost-effectiveness of Chinese assets and broad scope for domestic-international synergy.

Domestic Value Rebuilding: Focus on high-quality development, strengthening innovation and compliance foundations. ①Policy: Emphasize high-quality growth, optimize centralized procurement, diversify payment methods, and advance medical service reforms; ②Pharmaceutical Chain: Innovative drugs entering commercialization and volume growth phase, with attention to supply chain security; ③Devices: Domestic substitution extending to mid-high-end, with optimism for overseas expansion, new technologies (AI, brain-computer interfaces), and M&A integration; ④Track opportunities in traditional Chinese medicine, pharmacies, and healthcare services for bottoming out and upgrading.

Value Rebuilding in Going Global: Multi-dimensional breakthroughs to construct a new global pattern. ①Innovative drugs: Regular BD activities, entering the Internationalization 2.0 era; ②Industry Chain: Domestic and overseas demand recovery; ③Raw Materials: Mitigate short-term disruptions, transition toward specialty APIs/CDMO; ④Devices: Expand overseas markets, parallel development of autonomous sales and BD; ⑤Blood products/Vaccines: Overseas registration of plasma products, diversified vaccine export models.

Continuing optimism for investment opportunities driven by internationalization, policy support, and technological breakthroughs.

Internationalization: From BD to organizational expansion and strategic alliances. Since 2020, license-out transaction volume and prices for Chinese innovative drugs have risen, with upfront payments and total package amounts continuing to increase in 2024–2025. Cases like Kangfang Biotech’s AK112 and Kelun Botech’s SKB264 demonstrate that driven by global Phase III clinical progress, major data releases, and competitive landscape optimization, the global value of products and corporate valuations can be re-estimated multiple times. Hengrui Medicine’s strategic collaborations with GSK, CSPC with AstraZeneca, and Cinda with Lilly further deepen China’s innovative drug export. Additionally, the strategic partnership between Cinda Biologics and Takeda signifies a shift from “product export” to “organizational export.”

Technological breakthroughs include multi-point advances in small nucleic acids, IO multi-antibodies, ADCs, and GLP-1 weight-loss drugs. Small nucleic acid drugs are achieving multi-dimensional breakthroughs in commercialization, indication expansion, and extrahepatic delivery, with Chinese companies evolving in sync with global trends. The next 1–3 years will see dense clinical and approval milestones; IO multi-antibodies like PD-1+ are achieving breakthrough data in key indications, with further clinical data expected to validate their potential; ADC pipelines continue to show potential BIC/FIC candidates; weight-loss tracks are upgrading toward multi-target, long-acting, and oral formulations.

Policy-wise, the dual drive of medical insurance negotiations and the new commercial insurance drug catalog continues to improve drug accessibility. Negotiation efficiency has significantly increased, with stable average price reductions and high approval rates for truly innovative drugs; the 2025 establishment of the “Commercial Insurance Innovative Drug Catalog” is expected to expand the volume of innovative drugs.

International competitiveness continues to improve, driven by new technologies and rapid industry development, supported by national policies encouraging innovation. We remain optimistic about related innovative drugs and pharmaceutical companies.