By Eric Ng,Julie Zhang

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When Zhao Hong, chief doctor of China’s leading cancer hospital at the Chinese Academy of Medical Sciences, told his fellow delegates at a Communist Party meeting in March that a little-known Guangzhou biotech firm’s cancer drug had beaten the world’s bestselling medicine, investors took notice.
“As a long-serving front-line doctor, my most profound feeling is that China is at the best time of its biopharmaceutical sector’s development,” he told state media on the sidelines of the annual Chinese People’s Political Consultative Conference. “In the past year, besides having the world’s second biggest number of novel drugs under development, China has also witnessed a domestic novel drug outclassing the planet’s number one cancer drug.”
Indeed, some Western media outlets suggested the success of start-up Akeso’s cancer drug ivonescimab was a “DeepSeek moment” for China’s drug industry – similar in impact to the artificial intelligence start-up’s launch earlier this year of high-performing models developed at a much lower cost than global peers.
But was the comparison apt? While Chinese drug-development companies have made strides, analysts and experts question whether they can continue to churn out successes on the level of ivonescimab, let alone deliver truly novel breakthroughs – especially in a complex and highly regulated sector that may not be fertile ground for the kind of step-change advances DeepSeek delivered.
Akeso announced in May last year that a late-stage clinical trial showed that ivonescimab could delay non-small-cell lung cancer progression for five months longer than US giant Merck’s Keytruda, which is used to treat a wide variety of cancers and raked in US$29.5 billion in sales in 2024.
The subsequent media attention sent Akeso’s stock shooting up by 150 per cent amid a wider boom driven by an unprecedented volume of licensing deals, which meant that multinational peers were recognising China’s prowess in drug development.

After a three-year sector slump, investors piled back into Chinese drug firms this year, emboldened by evidence that a decade of reform in the country’s regulatory regime – to incentivise innovation and discourage copying of foreign branded medicines – had borne fruit.
The Hang Seng Biotech index, which tracks the 50 largest biotech, pharmaceutical and medical-device firms listed in Hong Kong, has surged 107 per cent this year after slumping 70 per cent from its mid-2021 peak. While still 40 per cent below the apex, it handily beat the 251-stock Nasdaq Biotechnology Index’s 9.2 per cent year-to-date gain.
“Chinese companies’ research and development commitment is paying off, demonstrated by a jump in oncology trials to 39 per cent of the global total last year from only 5 per cent in 2014,” said Cui Cui, Jefferies head of healthcare research for Asia, citing US healthcare data provider IQVIA.
She said that since 2022, Chinese firms had developed 639 drug candidates with “first-in-class” potential – a term that denotes a novel therapeutic approach. That was a nearly fourfold increase from 137 between 2018 and 2021 and was faster than the 100 to 150 per cent growth in such candidates developed by firms in the US, European Union and Japan, she said.
The figures showed a surge in Chinese firms’ willingness to invest in cutting-edge drugs development, and their rising competitiveness.
Mainland China and Hong Kong-listed pharmaceutical and biotech firms raised a combined US$11.3 billion this year by selling shares through 63 transactions as of September 18, according to Dealogic’s tally.

Comprising US$2.5 billion in new listing deals and US$8.8 billion in follow-on issuances, that was a drastic reversal of three consecutive years of sharp declines. Total transactions dropped from a peak of 95 deals worth US$29.2 billion in 2021 to 33 deals valued at US$2.9 billion last year, amid a protracted stock market slump and economic slowdown.
The enthusiasm this year was driven by multinational firms’ pressure to reduce drug costs and replenish their drug-development pipelines as they reached the so-called “patent cliff” triggered by the upcoming expiry of patents on a number of blockbuster products, Cui said.
The availability of good mid-stage drug candidates from China at prices far below those in the US biotech market was pushing big multinationals to seek licensing deals with Chinese firms, US brokerage Stifel said in a report in January.
“Compared to 2020-21, we have clearly [seen] that Chinese biotech firms have elevated their international competitiveness, deepened cooperation with overseas partners, and increased success at licensing their drug candidates to partners,” said Zhang Song, founder of Beijing-based healthcare-focused private equity CTS Capital, which manages over 5 billion yuan in assets.
Medications developed by Chinese companies were moving rapidly into cutting-edge fields, such as antibody-drug conjugates and bispecific antibodies, as well as cell and gene therapies, he said.
However, given China’s shorter biotech development history, a “glaring gap” still existed with multinational companies in terms of depth and breadth of development pipelines, research and development investment and resilience in conducting long-cycle, high-risk projects, he added.
“Most of China’s successful cases are based on known targets, rather than the discovery of new ones,” Zhang said, adding that most Chinese drug makers had yet to establish global sales teams and networks.
Much of the excitement this year focused on listed Chinese biopharmaceutical firms, while the private-equity market, dominated by professional and high-net-worth investors, has yet to show a recovery. Funding available to earlier stage, higher risk unlisted companies remains limited.

Funds raised by mainland and Hong Kong pharmaceutical and biotech firms from private equity and venture capital investors fell to US$7.7 billion via 444 transactions last year from US$20.42 billion through 799 deals in 2021, according to Preqin, part of asset manager BlackRock. In this year’s first half, only 220 transactions worth US$3.28 billion were recorded.
Meanwhile, the Hong Kong rally in biotech stocks attracted heavy participation from non-specialist investors more familiar with the broader technology sectors, said Tony Ren, head of Asia healthcare research at Macquarie Capital.
Many of these investors, coming from backgrounds in sectors like electric vehicles, e-commerce and AI, wrongly assumed the same success factors could be applied to the biotech sector, he said. He referred to business model innovations such as removing intermediaries from supply chains to reduce costs.
In drugs development, science-based regulations all along the supply chain – from clinical trials to payment reimbursement – left much less room for similar reinventions, he said.
Ren questioned the arrival of a “DeepSeek moment” for drug development in a September 22 report. “Attempts to apply the ‘move fast and break things’ motto to healthcare have largely been unsuccessful,” he said.
Helen Chen, head of L.E.K. Consulting’s China biopharmaceuticals and life sciences practice, said different drivers supported the current and previous stock booms.
“The 2020-21 boom was due to a globally robust biotech capital market, combined with faster investor exits facilitated by the introduction of Chapter 18A in Hong Kong and the emerging technology board in Shanghai,” she said. “Today, there is tremendous excitement around the recognition of Chinese innovative assets, and the potential part they can play in the global biopharma market.”
Chapter 18A is the Hong Kong’s stock exchange’s listing regime, launched in 2018, that allows new makers of drugs and medical devices that have yet to record any profit, or even revenue, to float shares in the city. The establishment of a science and technology innovation board by Shanghai’s bourse in 2019 also allowed dozens of unprofitable biotech firms to list.
This year brought an upsurge in transactions by Chinese drug developers licensing candidates to overseas partners to accelerate their overseas market development. The partners will invest in clinical trials, obtain regulatory approvals and launch the medicines in overseas markets.
Some 95 so-called “out-licensing” deals worth US$89 billion were struck by Chinese firms this year up to August 24, accounting for 33 per cent of the global total, nearly double last year’s level of 17 per cent, according to a September 14 Changjiang Securities report citing data from Insight.

While the deals highlighted the innovation capabilities of some industry leaders, the entire Chinese industry was still playing catch-up on the global stage, Chen said.
“It is clear that Chinese firms are leading the curve in certain areas,” she said. “That said, my expectation is that the median Chinese company is probably still a fast-follower.”
For example, besides Akeso, Chinese firms Biotheus and 3SBio had also developed globally leading candidates in the area of cancer drugs that restore immune cells’ effectiveness and inhibit tumour blood vessel formation, she said.
Chinese firms’ fast-mover strategy is also working well in obesity drugs, where over 60 candidates are under development and vying to take market share from dominant drugs launched by foreign firms.
Innovent Biologics, which licensed US-based Eli Lilly’s candidate mazdutide for development in China, was the first domestic firm to launch a weight loss drug in the nascent but fast-growing China market in July. It was billed as the world’s first dual-target drug shown to suppress appetite to enhance weight-loss efficacy and reduce liver fat.
Suzhou-based finance professional Li Weijia, a participant in the late-stage clinical trial of mazdutide, said he would welcome more product choices from domestic firms. Li said he shed 22 per cent of his weight from 108 kilograms over eight months and reversed his fatty liver condition.
Still, when it comes to approval from the US Food and Drug Administration (FDA) – a highly valued milestone that significantly enhances a product’s sales potential and investment appeal – Chinese successes are still at an early stage.
Chinese firms accounted for only about 5 per cent of the 58 drugs that were approved by the FDA or were under expedited approval review processes since January last year, said L.E.K. Consulting’s Chen, citing industry data provider Dingxiangyuan.
But it is a start.
“This demonstrates that Chinese assets can obtain acknowledgement and approval by the US FDA,” she said. “I expect that the 5 per cent is only the beginning, and the share will increase over time.”