China’s biotech firms move up value chain as drug deals evolve beyond licensing: analysts

Chinese biotech firms are increasingly moving up the value chain in drug development, shifting from mere licensing to strategic collaborations and partnerships, according to analysts. Beijing-based InnoCare Pharma recently signed a deal with US giant Eli Lilly that could be worth up to $3.35 billion. The collaboration involves InnoCare using its drug discovery platform to identify and advance compounds against up to five targets, addressing critical unmet medical needs.

This transition from licensing to co-development reflects China's transformation from a follower to a global innovation leader, analysts say. Cui Cui, head of Asia healthcare research at Jefferies, predicts more globally significant drug-development partnerships from China, citing private discussions at the APAC Healthcare Conference in Shanghai.

While Chinese biotech companies initially relied on out-licensing, they are now increasingly moving towards co-development arrangements and platform partnerships. Eli Lilly will pay InnoCare $100 million upfront, with potential milestone payments of up to $3.25 billion. Jialin Zhang, Nomura, notes that recent deals like Jiangsu Hengrui Pharmaceutical's collaboration with Bristol Myers Squibb worth up to $15.2 billion further demonstrate the rapid expansion of China's biotech firms in global deal making.