As global drug giants grow cautious, can Chinese biotech keep cashing in on out-licensing?
Record-breaking cross-border deals helped make some formerly loss-making Chinese biotech companies profitable in the first half of the year, but multinational drugmakers are now signalling plans to tighten deal budgets. Analysts said deals with global partners had overtaken initial public offerings and pre-IPO fundraising as the main funding option for cash-starved Chinese biotech firms wanting…
Chinese biotech firms experienced a surge in profitability during the first half of the year, largely due to record-breaking cross-border drug deals. However, multinational pharmaceutical companies are now expressing caution about stretching their budgets for such partnerships. Analysts predict that out-licensing agreements with global partners have become a favored funding route for cash-strapped Chinese biotech firms, surpassing initial public offerings and pre-IPO fundraising as the primary source of capital.
While Chinese biotech assets are deemed cost-effective compared to global counterparts, there are concerns about the long-term sustainability of reliance on overseas licensing income. In the first half of the year, China witnessed a record US$110 billion in cross-border deals for innovative drugs, with 81 agreements signed – nearly 80% of the total for all of the previous year.
Despite a significant increase in funding through public listings, with HK$14.1 billion raised via 11 listings in Hong Kong and 2.12 billion yuan raised on mainland China’s A-share market, the future of this funding model remains uncertain.
Written by urgent.news from SCMP Tech's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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