A research report indicates that China's innovative drug sector has established a pyramid-like structure led by frontrunner companies and supported by numerous high-quality enterprises, demonstrating strong industry sustainability. The deepening collaboration between industry, academia, and research institutions is building momentum for First-in-Class (FIC) molecule development. China has emerged as one of the most efficient countries globally in the pathway from target validation to Investigational New Drug (IND) applications. This research and development efficiency combined with cost advantages will drive the industry toward developing molecules with higher innovation levels, which translates to greater commercial value.
Investment recommendations include: ①Global blockbuster potential: BEIGENE (06160), SKB BIO-B (06990), INNOVENT BIO (01801), AKESO (09926), 3SBIO (01530), Bailing Tianheng (688506.SH), Xinluowei (300765.SZ), CSPC Pharmaceutical Group (01093), Hansoh Pharma (03692), China Biologic Products (01177), Yipinhong (300723.SZ), Yingent Bio (09606); ②Global Best-in-Class potential: Yifang Bio (688382.SH), Zelgen Bio (688266.SH), CStone Pharmaceuticals (01592), Yuandong Bio (688513.SH), CAR-T Bio (02171), Laekna (02105), Henlius (02696), Zai Lab (09688), Hutchmed (00013), Yaojie Ankang (02617), Jacobio (01167), Ascletis Pharma (01672); ③Domestic blockbusters: Schutai Shen (300204.SZ), Allist (688578.SH), Everest Medicines (01952), Hengrui Medicine (600276.SH), Beida Pharma (300558.SZ), Hua Medicine (02552); ④Asset value plays: Harbour BioMed (02142), Heyou (02256).
Current Focus: Advancing Global Commercialization with Numerous Quality Projects Continuing to Drive Industry Growth
China's innovative drug industry has developed a pyramid structure with leading enterprises at the forefront and substantial quality companies providing support, ensuring strong industry sustainability. The underlying logic of this cycle centers on Chinese innovative drugs in development possessing global competitiveness, with monetization shifting from domestic market expansion to international data generation and licensing transactions (license-out BD deals), opening up commercial opportunities and creating a healthier, more mature ecosystem that gradually enters a dual-driven phase of products and business models.
Molecule quality represents the core element in business development deals, with BD completion serving as a starting point rather than an endpoint. Project licensing marks the beginning of global development, with subsequent project advancement potentially bringing continuous milestone revenues and sales sharing. "Quality molecules" with differentiated mechanisms or high clinical value remain the primary focus of international buyers. Chinese innovative drugs now possess global competitiveness and can enter licensing windows once they demonstrate advantageous early-stage data.
Historical Perspective: China's Innovative Drug Industry Achievements and Global Competitiveness
China's innovative drug sector has entered the industry monetization phase, driven by coordinated support across funding, policy, and talent dimensions. Funding aspect - achieved self-sustaining capability: Early innovative drug development received capital market support and now enters self-sustaining phases through BD licensing and drug commercialization. Policy aspect - comprehensive support for "genuine innovation": From top-level design to local implementation, forming synergy to comprehensively support innovation. Talent aspect - reasonable talent pipeline: Strategic-level plus execution-level coordinated deployment has become crucial for efficient implementation across all drug development stages, representing local Chinese biotech companies building their own sustainable R&D engines.
Future Outlook: Enhanced Innovation Levels Will Further Expand Commercial Value Space
Industry-academia-research collaboration continues deepening, building momentum for FIC molecule development. China has become one of the world's most efficient countries in the target validation to IND pathway. This R&D efficiency and cost advantage will propel the industry toward developing higher innovation-level molecules, with greater innovation translating to higher commercial value.