Lin Cun, Chairman of Senrui Investment, expressed his honor in participating in the New Year's address event, extending sincere Spring Festival greetings to all investors. He wished everyone success and abundant opportunities in the coming year, with steady progress and fruitful results on their investment journey.
As we begin 2026, it is timely to look ahead at the global advancement of China's innovative drug sector. We believe innovative drugs represent a once-in-a-century investment opportunity. This is not only due to the continuously expanding global unmet medical needs but also because China's innovative drug industry has achieved a qualitative transformation—evolving from following and keeping pace to leading the way. It has entered a golden period of development with prominent global competitiveness and sustained upward momentum.
Looking back at 2025, China's innovative drug out-licensing (BD) transactions experienced explosive growth: the total value reached $135.7 billion (compared to $51.9 billion in 2024), with upfront payments of $7 billion (up from $4.1 billion in 2024), and a total of 157 deals—all setting new historical records. In just the first month of 2026, transaction volume has already reached $30 billion with $3 billion in upfront payments. This surge is driven by international pharmaceutical companies' urgent demand for blockbuster innovative drugs, combined with the rapid advancement of China's first-in-class (FIC) drugs. This has directly prompted multinational companies to seek patent licensing collaborations with Chinese firms—the proportion of Chinese-sourced pipelines in their external procurement has skyrocketed from 10% in 2020 to 42% in 2025. Today, China's innovative drugs are stepping onto a global stage approximately six times the size of the domestic market. In the future, they will move beyond simple BD cooperation models, accumulating international clinical and commercial experience to achieve the ultimate leap of independent global expansion.
2026 is a critical year for the validation of China's major innovative drugs, with multiple clinical milestones set to shine globally and trigger a revaluation of industry value. In the field of IO bispecific antibodies, Akeso's AK112 global clinical trials are particularly noteworthy. Key Phase III data for its first-line squamous non-small cell lung cancer indication are expected to be read out within the year. Through head-to-head comparisons with PD-1 inhibitors combined with chemotherapy, it has the potential to redefine the cornerstone standard for first-line lung cancer treatment.
In the ADC domain, Kelun-Botech's SKB264 will see its first major international Phase III clinical results, while Baili Heng's BL-B01D1, as the world's first bispecific ADC drug to enter Phase III trials, will also release key Phase III data for non-small cell lung cancer. Additionally, breakthroughs continue in new technology areas such as small nucleic acids and CAR-T, injecting further momentum into industry development.
It is worth noting that the CXO (contract research, development, and manufacturing organization) sector, deeply intertwined with innovative drugs, will also benefit simultaneously. The CXO track closely follows global technological trends, fully capitalizing on the dividends of breakthroughs in innovative drug technologies, and has comprehensively welcomed a rebound in industry prosperity.
Taking companies like WuXi Biologics, WuXi AppTec, and WuXi XDC as examples, despite years of unfriendly U.S. policies, their orders and performance have begun to recover, even reaching historical highs. The proposed U.S. Biosecurity Act ultimately failed to materialize. This serves as further evidence that China's industrial capabilities remain unhindered, and the long-term value of related companies has already been reassessed by the market.
However, ultimately, investment in innovative drugs still hinges on "efficacy." As biotechnology continues to innovate and therapeutic efficacy keeps breaking through, coupled with the future low-interest-rate environment, innovative assets with high growth potential are destined to become the core focus of market pursuit. As a vital component of the innovation economy, innovative drugs will never be absent.