The Rise of Chinese Innovative Drugs: How Can Hong Kong Seize the Opportunity

October 2025, at one of the most important conferences in European oncology—the “European Society for Medical Oncology Annual Meeting”—China delivered an impressive performance: 35 studies were selected for oral presentations, and three advanced to the highest-level“Presidential Sessions”. Such achievements would have been almost unimaginable a decade ago. McKinsey data are even more striking: China’s share of global innovative drug R&D has surged from 4% ten years ago to 30% today. In several frontier areas, Chinese innovative pharmaceutical companies are no longer followers, but are now advancing in parallel with leading European and American companies.

From One-Off Licensing to Collaborative Development

Even more noteworthy is the transformation of business models. In the past,most Chinese pharmaceutical companies adopted a “one-off licensing” approach, selling their technologies to international industry leaders and disengaging from subsequent development after receiving upfront fees. Today, an increasing number of companies are engaging in“equal-footing” co-development partnerships with global pharmaceutical giants, sharing both risks and profits.

Take Innovent Biologics (01801.HK) as an example: it is co-developing the next-generation oncology immunotherapy IBI363 with Japan’s Takeda Pharmaceutical, with development costs and profits shared on a 40/60 basis.

Another innovative drug from Sichuan Biokin Pharmaceutical (688506.SS)triggered a USD 250 million“milestone payment” from Bristol Myers Squibb, a U.S. pharmaceutical company —signaling that the drug had reached a critical development stage and that the partner was willing to increase its investment.

The data speak for themselves. In 2024, China’s total outbound licensing value for innovative drugs reached USD 52 billion. In the first half of 2025 alone, it approached USD 66 billion. China’s global share rose from less than 1% in 2016 to approximately 33% in 2025. Importantly, this capital did not come from equity markets, but represents “non-dilutive capital”earned through technological strength—allowing companies to secure funding without diluting ownership.

Meanwhile, the State Council of Chinahas announced the Regulation on the Administration of New Biomedical Technology Clinical Research and Translational Clinical Application, which will take effect in May next year. This marks Chinesedrug regulatory system moving from an exploratory phase toward greater internationalization and standardization.

Despite these impressive achievements, notable shortcomings remain. First, the number of Chinese innovative drugs approved by the U.S. FDA is still limited, indicating the need for further progress in meeting international regulatory standards. Second, China lacks long-term patient capital; many investors seek quick exits and are unwilling to accompany companies through lengthy R&D cycles. Third, most Chinese pharmaceutical firms still lack global sales networks, forcing them to rely on “technology sales” rather than independent commercialization.

In short, China has transitioned from a “cost advantage”to “innovation leadership”. Chinese R&D costs are only about one-third of those in the United States. However, substantial work remains in original discovery, control of core patents, and global market operations.

Hong Kong plays an indispensable role in China’s rise in innovative drugs. The Hong Kong Stock Exchange’s introduction of Chapter 18Ain 2018 enabled pre-revenue biotech companies to list and raise funds, opening a gateway for mainland innovative drug firms to access international capital markets. Despite recent market volatility, Hong Kong’s unique position as an international financial center continues to serve as a critical bridge connecting mainland biopharmaceutical companies with global capital, talent, and technology.

To secure a more prominent position in the global biopharmaceutical value chain, China must strengthen efforts in three key areas.

Three Strategic Directions Where Hong Kong Can Contribute

First, strengthen international cooperation.It is recommended to establish “Global Regulatory Centers of Excellence”in Beijing, Shanghai, and Hong Kong, and to build regular communication mechanisms with the U.S. FDA and the European Medicines Agency. Based on the Regional Comprehensive Economic Partnership(RCEP), joint R&D centers could be established in Southeast Asian countries. Approximately 20 leading enterprises should be selected and supported in setting up R&D bases in Europe and the United States. The goal is to increase the cumulative number of FDA approvals for Chinese innovative drugs to 25–30 by 2030.

Second, deepen institutional innovation.For breakthrough innovative drugs, “conditional approval” based on Phase II clinical data could be considered, enabling patients to access new therapies earlier. For innovative drugs already approved by the FDA or in Europe, approval timelines could be compressed to 90 working days. Efforts should also be accelerated to establish a “Commercial Insurance Innovative Drug Catalogue”, allowing commercial health insurance to become an important payment channel alongside public insurance and cover a broader range of innovative medicines.

Third, pursue forward-looking deployment.An “AI Drug Development 2030 Initiative” should be launched, leveraging artificial intelligence to shorten the average drug development cycle from 10 years to 6–7 years. Make forward-looking deployments in next-generation technologies such as mRNA vaccines, gene editing, cell therapy, and gene regulation. A “Global Capability Development Fund” should be established to cultivate more than 10 world-class enterprises with global R&D and commercialization capabilities by 2030.

In addition, China must strengthen talent development by attracting top international scientists as well as R&D and commercialization professionals with multinational pharmaceutical experience, while establishing cross-departmental coordination mechanisms.

China’sbiopharmaceutical industry now stands at a critical juncture, moving from an “innovation powerhouse” toward becoming an “innovation leader”. Hong Kong readers may ask: what does this have to do with us? The answer is: a great deal.Hong Kong serves both as a springboard for mainland innovative drug companies to go global and as a direct beneficiary of this industrial upgrading. By precisely aligning with international resources and deepening institutional innovation, China can secure a more prominent position in the global biopharmaceutical value chain—and Hong Kong will play an irreplaceable role across the three strategic directions outlined above.