Beyond One-Time Deals: Non-Dilutive Equity and Dividends Unlock a New Paradigm for Chinese Pharma’s Global Expansion

In 2025, the total value of business development (BD) deals in China’s innovative drug market surpassed $100 billion. This translates to nearly $300 million in transactions completed each day on average, with upfront payment records being continually broken. Beigene, Legend Biotech, Hutchmed, and others—every few weeks, a licensing deal shatters previous figures and makes industry headlines.

But amid the frenzy of “selling green shoots,” one question becomes increasingly unavoidable: Signing the deal is merely the prologue; true value creation often occurs after the transaction. So, what happens after the sale?

The vast majority of license-out deals follow this pattern: Chinese pharmaceutical companies receive upfront payments and milestone commitments, handing over overseas rights to multinational pharmaceutical firms. Subsequent development progress, commercialization strategies, and pricing decisions are entirely beyond their control. If the drug succeeds, the bulk of the profits go to the partner; if it fails, they do not even have the opportunity to participate in corrective measures.

In essence, this is “selling green shoots”—selling immature crops to middlemen at a fixed price, whereby any future yield from the land and the revenue generated from selling the harvest are no longer of any concern to the seller.

Yet another model is quietly emerging. From Innovent Bio’s deep partnership with Eli Lilly, to Harbour BioMed’s NewCo collaboration with Solstice Oncology, and further to Alebund’s joint venture with R1 Therapeutics (hereinafter referred to as “R1”) backed by industrial capital—this is not a simple license-out deal, but an evolution of the global expansion model.

What sets Alebund apart this time is that it did not sell its pipeline to a major pharmaceutical company, but ratherwith DaVita, one of the largest dialysis chains in the United StatesTogether with industrial partners, a new company was established overseas; for this new entity, DaVita is not merely a financial investor but also the most critical prescription channel in the future. This means that Alebund’s AP306 has yet to be launched, but"Already embedded in the largest dialysis network in the United States."。

If traditional licensing deals are akin to “selling green shoots”—selling off crops before they have fully matured in a one-time transaction—then this new model is more like overseas“Build Your Own Forest”, and remain a co-owner of these trees, sharing the fruits year after year.

Over a longer timeframe, the model for Chinese innovative drugs going global has actually undergone three leaps.

The earliest and most common approach can be referred to as1.0 version of "selling molecules,"Specifically, Chinese pharmaceutical companies directly sell overseas rights to multinational pharmaceutical companies in exchange for upfront payments, milestone payments, and sales royalties.

The advantages of this model are high certainty and rapid results, as Chinese pharmaceutical companies do not need to bear the high costs and unknown risks associated with overseas clinical trials and commercialization.

But the cost is equally clear: the moment the deal is closed, Chinese pharmaceutical companies completely lose control over the overseas fate of their products. Subsequent clinical strategies, indication selection, pricing plans, and market promotion—all these key decisions—are no longer related to the original developers.

In essence, this is “selling green shoots”—selling immature crops to middlemen at a fixed price, whereby neither the future yield of the land nor the eventual selling price of the grain has any further bearing on the seller.

With the enhancement of R&D capabilities and bargaining power of Chinese pharmaceutical companies,The "Co-Development" Model Version 2.0 Begins to EmergeChinese pharmaceutical companies retain rights to certain territories or global co-development rights, share clinical trial costs with partners, and participate deeply in global development. This is a “jointly cultivating a tree” model—the tree belongs to both parties, and both must contribute to watering and fertilizing it.

This is a clear step forward—Chinese pharmaceutical companies are no longer completely hands-off, but retain participation rights and partial upside potential. However, when it comes to real decision-making power, the partner remains the dominant party, with Chinese pharmaceutical firms playing more of a "co-investor" role rather than true decision-makers.

Thus, from version 1.0 to 2.0, even though Chinese pharmaceutical companies have significantly deepened their participation in the value chain, a fundamental issue remains unresolved: As products enter the global market, are they the masters or merely guests? Are they true partners in “co-cultivating a tree,” or more akin to minority shareholders who simply contribute land and labor?

Alebund’s collaboration with R1 represents a new answer to this issue. ItRepresents the "co-construction of industrial capital" in Version 3.0—evolving from "jointly planting a tree" to "building a forest on one's own."Alebund did not sell the overseas rights to AP306 to a large pharmaceutical company; instead, it co-founded a new independent entity, R1, dedicated to the global (excluding China) development and commercialization of its pipeline asset AP306. In this “new forest,” Alebund is not merely a partner contributing resources and effort, but has been a co-owner from the outset.

R1’s equity structure is intriguing.

First,Alebund, as a significant shareholder, holds non-dilutive equity.This means it is not a case of taking the money and running; rather, it offers the potential for ongoing dividend income in the future—not a one-off, milestone-based payout, but continuous participation in the equity value derived from the company’s growth and profitability.

More importantly, R1's strategic shareholders includeOne of the Largest Independent Hemodialysis Service Providers in the United StatesDaVitaand U.S. Renal Care, a global leader in kidney care services. This meansCommercialization channels are directly embedded in the shareholder structure.In addition, the transaction includes milestone payments and a clinical cost-sharing mechanism, with R1 assuming financial responsibility for subsequent development.

This is not about selling molecules, nor is it merely co-development. This isEstablish a Global Drug Development and Commercialization Platform Overseas Through an Industrial Capital Approach。

Why Is the “Joint Construction with Industrial Capital” Model Considered a Superior Solution? Understanding from Three Dimensions.

One is that the ceiling for economic benefits is entirely different.

The financial upside of traditional license-out deals is clearly capped: an upfront payment plus milestones, along with single-digit to low double-digit sales royalties. No matter how much of a blockbuster the drug ultimately becomes, the returns for Chinese pharmaceutical companies are locked in by the contractual terms.

An industry insider once used an analogy to describe this difference: Traditional license-out deals are like selling a house—you receive the payment upfront, and any future appreciation in value is no longer your concern. In contrast, co-development with industrial capital is like starting a joint venture—you relinquish a portion of equity in exchange for a future of continuous dividends. The former is “selling assets,” while the latter is “nurturing assets.”

In Alebund’s business model, holding anti-dilutive equity as a major shareholder secures future dividend income from R1. This differs fundamentally from traditional sales royalties: while sales royalties are akin to “rent collection” based on a fixed percentage of sales revenue with a clearly visible ceiling, dividends represent a share of the company’s net profit, with the upside determined by the commercial scale of the product itself. According to industry analysts, Alebund’s equity stake in R1 is expected to exceed 20%, meaning that the commercial success of AP306 in the U.S. market will directly translate into net profit dividends for Alebund—far surpassing the typical ~10% cap on sales royalties in traditional license-out deals. Additionally, Alebund will receive tiered royalties in the low double-digit percentages, thereby fully unlocking its overall revenue potential.

Currently, no other first-in-class drugs for hyperphosphatemia are in clinical development globally, positioning AP306 to potentially dominate this market. If AP306 achieves the anticipated commercial success in the U.S. market, the profits generated by R1 will be continuously returned to Alebund in the form of dividends. This “equity + dividend” revenue structure ensures that Alebund’s long-term returns are no longer limited to a fixed sales royalty rate, but are instead deeply tied to the overall growth of the product.

More notably, R1 may expand its indications, introduce new pipeline assets, or even pursue an independent listing in the future—Alebund’s equity value will continue to appreciate alongside the growth of the entire platform. While returns from traditional license-out deals are capped by contractual terms, under the “equity plus dividends” model, Alebund’s upside potential depends on how large AP306 can become. This is not a case of taking a one-time payment and walking away, but rather becoming a co-owner of a forest, continuously harvesting its fruits.

Second, the logic of commercialization has been thoroughly reconstructed.

The commercialization phase of most license-out deals is a black box. Once the drug is sold to the partner, Chinese pharmaceutical companies have no say—and often no visibility—into how the sales team is built, how distribution channels are established, or how pricing is determined.

However, R1’s model is fundamentally different: DaVita and U.S. Renal Care, as strategic shareholders, are not passive financial investors but rather the most critical prescription channels for AP306 in the future. The interests of these channel partners are fully aligned with the product’s commercial success.

In the U.S. dialysis market,DaVita, the Largest Dialysis Chain in the United StatesHarbour BioMed and Fresenius: The DuopolyAccounting for approximately 80% of the market share, together with regional renal care providers such as U.S. Renal Care, the entry of leading providers means that the commercialization of AP306 does not require building distribution channels from scratch, but rather achieves “penetration before launch.” This is not all. The U.S. TDAPA policy allows innovative drugs to receive separate Medicare reimbursement prior to being included in the dialysis bundled payment system, so dialysis centers do not need to bear the cost of new drugs themselves. The combination of channel advantages and reimbursement policies creates a dual boost.

Third, the transaction participants have completed their identity transformation from bystanders to co-decision-makers.

Traditional license-out deals carry a hidden cost that is often overlooked: the completion of the transaction marks the Chinese pharmaceutical company’s exit from the table. What happens if overseas development encounters difficulties? What if commercialization strategies need adjustment? The Chinese pharmaceutical company can only stand by as an observer, lacking even access to information on how these issues are being addressed.

Under the co-development model, Alebund, as a significant shareholder of R1, retains the power to participate in major decision-making. This serves not only to safeguard economic interests but also to ensure certainty in product development. By holding equity in Solstice Oncology, Harbour BioMed maintains a certain degree of influence in corporate decisions, allowing it to engage in formulating development strategies for HBM4003 outside China, designing clinical trial protocols, and planning commercialization efforts, thereby overseeing the product’s development in alignment with its own interests and strategic direction.

Given the clear advantages of the “industrial capital co-development” model in terms of returns, commercialization, and decision-making authority, a natural question arises: Can this model be applied to all innovative drugs?

The co-investment model between industrial capital sounds appealing, but it imposes nearly stringent requirements on product strength. Not all drugs are worthy of “co-investment”—only those with genuine global first-in-class (FIC) potential and the ability to reshape the therapeutic landscape can convince industrial capital to willingly enter the fray. Why does AP306 qualify? This can be examined from five dimensions.

First, it features a globally first-in-class mechanism with no competing products sharing the same mechanism.AP306 is the world’s first and only pan-phosphate transporter inhibitor currently in clinical development. By broadly inhibiting the active intestinal absorption of phosphate at its source, it holds the potential to dominate the next-generation global market for hyperphosphatemia treatment. This represents a fundamental mechanistic advantage: while traditional phosphate binders passively “bind” phosphate in the gut, AP306 actively shuts down the key channels for intestinal phosphate absorption by inhibiting transporters. This irreplaceable mechanism forms the cornerstone of why industry capital is willing to invest.

Second, a vast unmet need.Among the approximately 600,000 dialysis patients in the United States, 70% to 80% suffer from hyperphosphatemia. Existing phosphate binder tablets impose a high pill burden and are associated with poor adherence, while there are currently no medications on the market capable of achieving target phosphate levels. Phase II data for AP306 demonstrate significant phosphate-lowering efficacy, with the treatment group showing a mean reduction in serum phosphate of 2.51 mg/dL from baseline, far exceeding the 1.08 mg/dL reduction observed with the active control. This suggests that AP306 has the potential to become the first drug to enable patients to truly achieve target phosphate levels. The substantial gap left by existing therapies creates a sufficiently broad value proposition for new entrants.

Third, a sufficiently large market space.Based on a patient population of 600,000, a penetration rate of 15% to 25%, and an annual treatment cost of approximately $34,000 (benchmarked against the pricing of the comparable drug tenapanor), peak sales in the U.S. market alone are projected to reach $3 billion. In the nephrology sector, this figure is sufficient to rival Amgen’s EPO franchise. Only a market of such magnitude can sustain the business model of an independent company and provide the strategic upside necessary to attract channel partners as strategic shareholders.

Fourth, clinical data validation.After acquiring global rights, Alebund led the completion of Phase IIa trials, validating the efficacy and safety of phosphate lowering; R1 plans to initiate a global Phase IIb trial. AP306 was granted “Breakthrough Therapy” designation by China’s CDE in 2024.

5. Chinese Rights Reserved.Alebund has retained full rights in China. This means that if AP306 achieves success in the global market, Alebund Pharmaceuticals will not only share in overseas revenues but also independently develop the Chinese market—a significant source of incremental growth. This rights arrangement not only demonstrates the company’s confidence in its product but also preserves greater potential for future expansion.

In short,Innovation in business models must be grounded in the irreplaceability of the product.Only products with genuine global first-in-class potential, substantial market size, and high clinical certainty are worth pursuing under this model. If a product is merely a me-too drug, industrial capital will not invest in it, regardless of how sophisticated the model may be.

The successful “co-development” of AP306 has enabled Alebund to chart a course distinct from traditional license-out models. Yet the value of this deal extends far beyond the company itself.

Following in the footsteps of Alebund, the horizon naturally broadens. When we lift our gaze from this specific transaction, deeper questions emerge: Can this model be replicated? What does it signify for the broader landscape of Chinese innovative drugs going global? And how should investors reinterpret the definition of “high-quality assets”?

A significant trend is that,Chinese Innovative Drugs’ Global Expansion Is Shifting from “Deal-Driven” to “Value-Driven”.In recent years, the core narrative has revolved around “deal value”—that is, who secured the highest upfront payment and the largest total milestone payments. However, this metric is becoming increasingly inadequate. A more meaningful indicator is the depth of Chinese pharmaceutical companies’ participation in the global value chain. Are they opting for one-time buyouts, or are they continuously sharing in the success of global commercialization? Are they mere bystanders, or active players at the table?

In the beginning of 2026, Innovent Bio’s $8.85 billion collaboration with Eli Lilly, CSPC Pharmaceutical Group’s $18.5 billion strategic partnership with AstraZeneca, and RemeGen’s $5.6 billion bispecific antibody licensing deal with AbbVie… Behind these landmark deals, the role of Chinese pharmaceutical companies is evolving from “asset sellers” to “strategic partners.”

Yang Huang, Head of Healthcare Research for Greater China at JPMorgan Chase, pointed out that large multinational pharmaceutical companies currently maintain robust cash flows. Given the high uncertainty associated with the early-stage development of innovative drugs, supplementing product pipelines through in-licensing or acquisitions is likely to be a long-term strategy. After accumulating strengths over the past ten to twenty years, Chinese innovative drug developers have gradually established their competitive advantages. Alebund’s practice serves as a forward-looking answer to the question of “how far Chinese pharmaceutical companies can go” within this broader trend.

Can the Alebund/R1 model be emulated by more companies? The answer is yes, but with prerequisites. The replicability of this model depends on three progressively layered conditions.

First is product strength,Specifically, it must be a global first-in-class therapy capable of reshaping the treatment landscape for its indications. This is the most fundamental prerequisite; without it, there is no room for discussion. Industrial capital is willing to enter the field not because of an ingeniously designed business model, but because the product is sufficiently scarce and irreplaceable.

Second is industrial resources,This refers to the ability to bring in channel partners as strategic shareholders, rather than purely financial investors. Only by aligning the interests of channel partners with the product’s success can one achieve the commercialization advantage of “market penetration prior to listing.” The reason DaVita and U.S. Renal Care were willing to become shareholders in R1 was not due to Alebund’s persuasive prowess, but because AP306 was worth their bet.

Third is strategic patience,Be willing to accept a lower upfront payment in the short term in exchange for long-term equity upside potential. This requires sufficient consensus and resolve among founders, teams, and investors, so they are not tempted by immediate financial figures. At a time when everyone is chasing record-high upfront payments, choosing a path that appears “unfavorable” in the short term is itself a demonstration of strategic discipline.

Three conditions, progressing step by step, are all indispensable. Product strength is the ticket to entry, industrial resources serve as an amplifier, and strategic patience is a “friend of time.” Over the next 3 to 5 years, as more Chinese pharmaceutical companies enter the late-stage global clinical development phase and overseas recognition of Chinese innovation continues to rise, similar models of “industry-capital co-development” will become increasingly common. However, only those enterprises that simultaneously meet all three conditions will succeed.

For investors, this means that the framework for evaluating Chinese innovative drug assets needs to be reshaped.It is not enough to look only at the total value of BD deals; more importantly, one must examine the “structure” of the transaction—whether Chinese pharmaceutical companies are executing a complete sell-off and exiting, or retaining the right to continuously share in the value. The latter represents assets with genuine long-term value.

A diversified revenue structure (upfront payments, equity returns, milestone payments, and sales royalties) enables Chinese pharmaceutical companies to secure more long-term and substantial economic returns, improve their financial positions, and establish a solid funding base for subsequent R&D. As the secondary market increasingly focuses on companies’ self-sustaining capabilities and long-term growth potential, this “structural” advantage will gradually be reflected in their valuations.

In 2025, the main theme of Chinese innovative drugs going global remained license-out, but variations have already begun to emerge.

From the co-development partnership between Baili Tianheng and BMS, to the deep strategic alliance between Innovent Bio and Eli Lilly, to the NewCo collaboration between Harbour BioMed and Solstice Oncology, and further to the joint industrial capital venture between Alebund and R1 Therapeutics—the model for global expansion is evolving from “selling molecules” to “building ecosystems.” This evolutionary path is clear: Chinese pharmaceutical companies are moving from the periphery to the center of the global value chain, shifting from passive to active roles, and transitioning from short-term gains to long-term strategies.

As the ceiling for upfront payments in “selling green shoots” ultimately peaks, the true winners are those who choose to “cultivate their own forest.” Alebund’s practice is not merely a transaction, but an evolution of the paradigm for Chinese innovative drugs going global—shifting from deal-driven to value-driven, and from licensing out rights to co-building the industry. Through its actions, it answers a fundamental question: When the tide recedes, what truly defines a company’s stature is not how many “green shoots” it has sold, butHow many “big trees” capable of bearing continuous fruit has it planted with its own hands, forming a forest?

From selling green crops toBuild Your Own Forest, a difference of just a few characters has opened up entirely new possibilities for Chinese innovative drugs to go global. The true significance of this leap may only be fully understood in a few years’ time, when these “saplings” have grown into towering trees and borne abundant fruit.