Fundamental factors for China's innovative drug industry are steadily improving in H2 2026, driven primarily by enhanced R&D quality, global validation of value, and better profitability. China's innovative drugs are gradually entering a phase of "global registration and commercial realization." In terms of R&D, the selection of 94 original Chinese research studies for oral presentations at the 2026 ASCO, including the HARMONi-6 trial in the Plenary Session and SKB264's head-to-head victory over Keytruda, signifies the continuous improvement in the quality of China's drug pipelines. Regarding global partnerships, the total value of Chinese innovative drug license-out deals reached $94.3 billion year-to-date in 2026, up 80.8% year-on-year, with upfront payments hitting $5.5 billion, a 124.2% increase, indicating multinational corporations' growing recognition of Chinese innovative drug pipelines. Financially, some innovative drug companies have already turned profitable in 2025. Looking ahead to the second half of the year and beyond, upcoming conferences like WCLC, ESMO, ACR, and ASH, the readout windows for multiple registration studies, the ongoing progress of global Phase III/registration trials, and the gradual realization of overseas commercialization are expected to jointly drive the performance of the innovative drug sector.

Key Data Readouts for Multiple Global BIC-Potential Blockbuster Pipelines Validate China's Innovative Drug R&D Strength

The quantity and quality of Chinese innovative drug reports at the 2026 ASCO meeting continued to rise, with 94 original research achievements selected for oral presentations, a 29% increase from 73 in 2025. Additionally, multiple clinical data readouts have been reported, demonstrating differentiated clinical value in disease areas such as psoriasis, MASH, TNBC/nasopharyngeal carcinoma, among others. Overall, the R&D quality of Chinese innovative drugs is constantly improving, with assets possessing global Best-in-Class (BIC) or First-in-Class (FIC) potential continuously emerging, accelerating the enhancement of international competitiveness.

Chinese Innovative Drug Globalization Enters Realization Phase, Blockbuster Commercialization Supports Non-linear Growth

The globalization of Chinese innovative drugs is progressively entering the stages of global registration and commercial realization. Assets that have initiated global Phase III/registration studies cover areas including ADC, IO 2.0, GLP-1/metabolism, hematological oncology small molecules, and autoimmune diseases. Among these, ADC remains the most mature field for globalization. The CLARITY-Gastric01 trial is expected to read out global Phase III data for 2L+ CLDN18.2-positive gastric/gastroesophageal junction adenocarcinoma in H2 2026, representing a crucial milestone for validating the global registration value of CLDN18.2 ADCs. Beyond this, assets like RC48, iza-bren, DB-1303/DB-1311 have also entered global registration or late-stage development phases.

IO 2.0 is represented by PD-1/VEGF bispecific antibodies; GLP-1/metabolism and hematological oncology small molecules open up long-term potential beyond ADC/IO. In terms of progress, sac-TMT, CMG901, furmonertinib, and savolitinib are expected to be among the first to reach overseas submission/approval windows, while assets like B7-H3/B7-H4 ADC, PD-1/VEGF bispecifics, GLP-1, BCL-2/BTK inhibitors form the subsequent realization pipeline for 2028–2030. Key focus for H2 2026 includes registration data from trials such as HARMONi-3, SAFFRON, CLARITY-Gastric01, and FURVENT, as their results will impact the overseas submission pathways and valuation reassessment of core assets.

Accelerated Pace of Innovative Drug Globalization Continues

According to Insight Database, since 2026, Chinese innovative drug license-out deals have maintained strong growth momentum. Year-to-date total deal value reached $94.3 billion, up 81% year-on-year; upfront payments amounted to $5.5 billion, a 124% increase. The deal structure continues to optimize, with the proportion of upfront payments rising, and the share of Chinese assets in global major BD transactions steadily increasing. This reflects, on one hand, the further strengthening recognition by overseas MNCs of the quality, clinical certainty, and platform capabilities of Chinese innovative drug pipelines. On the other hand, it provides R&D funding support for domestic innovative drug companies, fostering a positive cycle of "BD proceeds → R&D investment → pipeline advancement."

Domestic Commercial Scale-up Drives Earnings Realization, Accelerating Profit Inflection Point for Innovative Drug Firms

As marketed products continue to scale up, new indications expand, and BD licensing revenue contributions increase, the profitability of leading innovative drug companies is beginning to materialize. It is believed that innovative drug companies are transitioning from past stages of R&D investment and BD validation, gradually entering a positive cycle of "domestic commercial scale-up + overseas licensing revenue + global registration advancement." The business model is accelerating its shift from pipeline value validation to the realization of revenue, profit, and cash flow.

Risk Factors

Risks include intensified geopolitical friction; slower-than-expected macroeconomic recovery; risks of greater-than-expected price reductions and intensity in volume-based procurement; declining financing enthusiasm in the primary market for biopharmaceutical companies; risks of clinical R&D failure for innovative drugs; medical accident risks; risks of industry policy changes falling short of expectations; risks of slower-than-expected development in medical AI; risks of slower-than-expected progress in commercial insurance policies and product development; intensifying industry competition; impacts of anti-corruption policies, among others.

Investment Strategy

It is recommended to prioritize allocation to Chinese innovative drugs in H2 2026, focusing on three types of companies: first, leading Pharma/Biopharma companies with a continuously increasing proportion of innovative drug revenue and strong commercialization and profit realization capabilities; second, innovative platforms whose core pipelines possess global BIC/FIC potential, have entered global registration or late-stage clinical phases, and face dense future data and BD catalysts; third, growth-stage biotechs with clearly differentiated product mechanisms, possessing growth elasticity and subsequent catalysts.