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

Global pharmaceutical titans are increasingly turning to Chinese biotech firms to capitalize on the sector's vast potential for valuation growth, as revealed by speakers at the Global Health Summit held in Hong Kong. Xu Chenming, head of the healthcare group at Citic Securities, explained that multinational drug companies are shifting their focus in China from asset-heavy operations to investing in innovative companies that have deepened partnerships with local entities.

This shift could enable Chinese pharmaceutical firms to compete on a global scale. AstraZeneca recently formed a joint venture with CSPC Pharmaceutical Group, a leading Chinese drug developer, to establish a manufacturing site in Shijiazhuang, Hebei province. Under the agreement, AstraZeneca will own 49 percent while CSPC holds the remaining shares, with the joint venture initially concentrating on producing and supplying products to the global market, with future expansion planned.

Swedish wound care and surgical products company Mölnlycke also formed a joint venture with Zhende Medical, a domestic medical care and protection items supplier, to combine their business portfolios and co-develop future products. Jiang Yu, chairman of Huatai United Securities, noted that cross-border deals for innovative drugs reached a record $110 billion in the first half of 2026, representing approximately 80 percent of last year's total.

However, Chinese healthcare companies still lag behind their US counterparts in valuations, Jiang pointed out, with only four mainland-listed healthcare firms valued over $20 billion, constituting 18 percent of the sector's total market cap, compared to 73 US-listed healthcare companies that exceed this threshold, accounting for 85 percent of total market cap.

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

The number of multinational corporations acting as cornerstone investors in biotech IPOs has risen significantly, according to Leung. During the first half of the year, 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, with pre-profit biotech listings increasing to seven from six the previous year.