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

In a recent summit held in Hong Kong, global pharmaceutical leaders discussed their growing investment in China's burgeoning biotech sector. Xu Chenming, a healthcare expert at Citic Securities, noted that multinational pharma firms are shifting their strategies in China from asset-heavy approaches to prioritizing companies with robust innovation capabilities and closer partnerships with local entities. This move could propel Chinese biotech firms onto the global stage, according to Xu.

AstraZeneca recently joined forces with CSPC Pharmaceutical Group in China to co-build a drug manufacturing facility in Shijiazhuang, Hebei province. The joint venture will initially concentrate on producing and supplying products to the global market, with potential future expansions. Mölnlycke, a Swedish wound care and surgical products firm, formed a partnership with Zhende Medical, a Chinese medical protection supplier, to merge their business portfolios and jointly develop new products.

China has emerged as a significant global source of innovation in pharmaceutical mergers and acquisitions, with cross-border deals for innovative drugs reaching a record US$110 billion in the first half of 2026, representing approximately 80% of the year's total, as reported by state media. However, Chinese healthcare companies remain behind their US counterparts in valuations, with only four mainland-listed healthcare firms valued at over US$20 billion, accounting for just 18% of the sector's total market capitalization.

In the US, 73 healthcare companies surpass this benchmark, contributing to 85% of the overall market cap.

Investor interest in Hong Kong-listed biotech and healthcare stocks has improved over the past two years, leading to a full recovery in the Hong Kong capital market. Leung Chuen-yan, a healthcare investment partner at Value Partners Group, observed that investors in biotech initial public offerings (IPOs) in Hong Kong, as well as those investing post-listing, are increasingly international.

Multinational corporations are becoming key investors in these IPOs, she added. In the first half of the year, Hong Kong's healthcare and drug sector saw 11 companies raise a combined HK$14.1 billion (US$1.8 billion) through initial public offerings, with the number of pre-profit biotech listings rising to seven from six in the previous year.