Multinational Pharma Exits Mature Drugs in China as Domestic Capital Steps In

In 2025, MNCs' strategies in China are still undergoing continuous adjustments. Specifically, regarding drugs, as domestically produced generic drugs expand their market share after centralized procurement, several original "old drugs" are gradually phasing out of the Chinese market, such as Sanofi's lipid-lowering drug Polypill and GSK's anti-inflammatory drug Cefradine.The withdrawal of some drugs has even led to the conclusion that "after the centralized procurement, original research pharmaceutical companies are withdrawing from China."

But this simple conclusion may not be the fact.China has centralized procurement, the U.S. has the IRA and prescription drug price reduction orders, and Europe has HTA. In major global markets, government-led efforts to lower prices for mature drugs and encourage the development of new drugs are a significant trend.

Some original research drugs are withdrawing from China. On one hand, it is indeed due to the logic of "domestic substitution" — original research drugs lose their price advantage, their distribution channels are impacted, and their profits gradually become too thin, leading to a decision to exit. On the other hand, these older drugs also fall under "non-strategic products," and foreign pharmaceutical companies intentionally phase them out to concentrate resources on new drugs not yet affected by bulk procurement.

But in the process of "phasing out" old drugs from the Chinese market, multinational pharmaceutical companies have discovered a better approach that allows them to maintain the supply and brand visibility of these drugs in China without continuing to incur high channel and sales costs.

That is to sell the old drugs to Chinese investors, or even directly sell the shares of Chinese companies.

-01-

The密集转移 of Old Drugs from Original Research to Chinese Capital

On October 27, 2025, Novartis transferred the exclusive import, commercial promotion, and distribution rights of its two ophthalmology products, ranibizumab (trade name Lucentis) and brolucizumab (trade name Beovu), in China to Kangzhe Vision, a wholly-owned subsidiary of China Medical System Holdings. The agreement lasts for 5 years, with Novartis continuing to be responsible for production and supply.

Just two days later, news came that Bayer would sell the intellectual property rights, brand ownership, and global commercial rights of the antibiotic Moxifloxacin (brand name Avelox) to Sequoia China. The scale of the deal is expected to be between 160 million euros and 260 million euros (RMB 1.32 billion to RMB 2.15 billion).

These few products were once the flagship offerings of MNCs.

Lucentis, the world's first VEGF ophthalmic drug, once rewrote the treatment paradigm for wet age-related macular degeneration and other fundus diseases, ranking first in ophthalmic drug use in public medical institutions for 12 consecutive years, with sales reaching billions of yuan in China in 2020; Beovu, a new drug that was only launched in the United States in 2020, was highly anticipated by Novartis to continue its success in ophthalmology.

Moxifloxacin has a long history in China and may be one of the most familiar antibiotics to the Chinese people.Bayer's Avelox entered the Chinese market in 2002, and by 2018, the sales revenue of Moxifloxacin in China's public medical institutions had exceeded 4 billion yuan.

However, these drugs have entered another phase of their life cycle due to patent expiration, the entry of competing products, and centralized procurement.

As early as 2017, Lucentis entered the national medical insurance catalog in China, and subsequently renewed through national medical insurance negotiations, with its price continuously decreasing. Later, competing products such as Conbercept from Kanghong Pharmaceutical and Faricimab from Roche gradually expanded their market share. More pressingly, the core patent for Lucentis has recently expired, and domestically produced generic versions, such as those from Qilu Pharmaceutical, have already entered the market.

Beovu's sales performance was affected by safety issues. It was launched in the U.S. in 2019, and its sales reached only $100 million in the first half of 2023. After that, Novartis no longer disclosed the sales of this drug separately.

Moxifloxacin, as an old drug, has witnessed the reform process of China's pharmaceutical regulatory approval. The accelerated approval started in 2015, and by 2020, there were already 15 domestically produced generic versions of moxifloxacin on the market in China. Subsequently, with several rounds of centralized procurement, the price of moxifloxacin dropped by more than 80%, and the market share of the original drug, Avelox, also declined.

Compared to Moxifloxacin, the transfer of Novartis' two newer ophthalmic drugs may be more surprising. This is actually related to Novartis' reform trend in recent years.Novartis is gradually scaling back its ophthalmology business to focus resources on four core areas: oncology, immunology, cardiovascular, renal and metabolic diseases, and neuroscience.

The divestiture of Novartis' ophthalmology assets is not limited to China. From 2022 to 2023, Novartis consecutively transferred nearly 10 ophthalmic drugs to the U.S. companies Harrow Health and Bausch + Lomb.

Although the sales life cycles of several products have reached a certain stage, and they need to be further cleared out due to strategic considerations at the company level, these products still hold significant positions in the Chinese market after all. Consumers have a considerable degree of awareness and recognition of their brands. Therefore, selling them to Chinese-funded enterprises while ensuring the continued supply of the medicines in China has become the optimal choice.

It is precisely due to these strategic considerations that when these assets were divested by MNCs to Chinese companies, the price was not particularly high.The transfer price of Avelox is around 2 billion RMB at most, and this may just be its sales revenue in the Chinese market for more than a year.

-02-

BMS Directly Sells Equity in Chinese Companies

Regarding multinational pharmaceutical companies, the biggest news this year might be BMS selling 60% of the equity in Sino-American Shanghai Squibb Pharmaceutical Co., Ltd. (SASS) to an affiliate of Hillhouse Capital.

The transaction is expected to be completed in early 2026. The specific amount of the deal has not been disclosed, but based on SASS's revenue of $380 million and net cash of $80 million in 2024, market forecasts estimate the equity consideration to be approximately $600-760 million (RMB 4.2-5.4 billion).

SASS was established under special historical circumstances. Founded in 1982, it was jointly invested in by BMS, Shanghai Pharmaceutical Group, and Sinopharm Group. It became the first Sino-American joint venture pharmaceutical company in China after the country’s reform and opening up. However, this "Sino-foreign joint venture" model emerged because, at the time, foreign pharmaceutical companies were not allowed to operate independently, making joint ventures the only way to enter the Chinese market. Today, China permits wholly-owned operations by foreign pharmaceutical companies, meaning the policy advantages of the joint venture model no longer exist.

BMS Sells Equity in Chinese Companies, and MNCs Sell "Old Drugs" to Chinese Companies for the Same Reason: Both Are Spin-offs of Non-core Businesses to Concentrate Resources on Innovative Products with Higher Gross Margins.

This time, several related products that are manufactured and sold only in the Chinese mainland market were also sold to Hillhouse simultaneously. These include Baraclude, Bufferin, Centrum, Monopril, and Cefradine, which are, respectively, a first-line hepatitis B treatment drug included in the national bulk procurement program, a classic OTC cold medicine, a vitamin supplement, an antihypertensive, and an antibiotic. All of them are "long-standing domestic drugs" that have accompanied the Chinese people for many years.

Industry insiders analyzed that in the future, BMS might basically withdraw from its joint venture production business in China and will continue to supply innovative drugs through imports and local cooperation.BMS will continue its "China 2030 Strategy," and on the basis of the plan to "introduce nearly 30 innovative products/indications by 2025," further expand its introduction plan in the coming years.

-03-

Why Does Chinese Capital Buy?

Chinese companies acquire mature products from multinational pharmaceutical enterprises,"In the view of Liu Jun, Investment Director of Huajie Gaojing Medical Industry Fund, 'the logic behind Bain and Bowei’s acquisition of Starbucks, CPE Yuanfeng’s acquisition of Burger King, and CITIC Carlyle’s acquisition of McDonald's is the same.'"Compared with pharmaceutical products, mature original research drugs do not enter bulk procurement, and most of their revenue comes from outside hospitals. Their operation logic may be more like consumer goods.

"Acquiring these projects, although growth may not be rapid, will yield stable profits and cash flow. 'If acquired at a relatively low price, the annual dividends alone can provide a decent return,' said Liu Jun. Moreover, Chinese-funded enterprises can achieve what foreign companies are unwilling or lack the advantage to do by leveraging local channel advantages to further penetrate these 'consumer goods' into grassroots markets."

Therefore, this type of acquisition investment is also referred to as "acquisition of cash flow."

In the pharmaceutical industry, the practice of "acquiring cash flow" can be traced back 10 years, coincidentally also marking the collaboration between Novartis and Sinopharm A-Thinker.In 2015, Novartis sold the assets of two drugs in the Chinese market to China Medical System Holdings, namely the antifungal drug Lamisil tablets and the dopamine receptor agonist Bromocriptine tablets. This was one of the earliest cases of domestic pharmaceutical companies in China acquiring original research drugs from multinational corporations (MNCs).

Pharmark is a company that has transformed from a CSO to an innovative pharmaceutical enterprise, with over thirty years of commercial channel accumulation and an annual revenue of approximately 7.5 billion yuan. While facing pressure from the centralized procurement of older drugs, the realization of value from innovative drugs takes time. Pharmark experienced consecutive declines in both revenue and net profit for two years in 2023 and 2024, and only resumed growth in the first half of 2025.

While laying out innovative drugs, Kangzhe's existing sales channels still require new large-volume products to keep operations running. Continuing to develop the sales of mature drugs locally is not a difficult task for Kangzhe, and these products can also improve the company’s financial situation. Therefore, the cooperation with Novartis came naturally.

The logic of channel下沉 not only applies to the old CSO, Tibet Rhodiola Pharmaceutical Holding Co., but also to one of the largest pharmaceutical distributors in China, Shanghai Pharmaceuticals. Similarly, Novartis signed a contract with Shanghai Pharmaceuticals Holding in May this year. Novartis will leverage Shanghai Pharmaceuticals' marketing capabilities and market channels to accelerate the下沉 of its mature products for anti-infection and glaucoma to "non-target market terminals."

Sequoia, which bought Moxifloxacin, and Hillhouse, which acquired 60% of SASS, may have more complex backgrounds.

As two of the most representative private equity funds in China, Sequoia and Hillhouse have recently made high-profile investments in innovative drugs, with a number of well-known successful cases in their early stages, such as BeiGene, Akeso Biopharma, Legend Biotech, Innovent Biologics, and Junshi Biosciences, accompanying these companies to grow into representative biotechs in China.

But during the years when bubbles emerged in the innovative drug capital market, Sequoia and Hillhouse also entered at high positions in some biopharmaceutical companies, resulting in considerable losses.

For venture capital firms, the natural rule is 'invest in 10 companies, succeed with 1.' Betting on a sector and investing heavily in companies within the same field can understandably lead to failed investments.

But this probability, combined with the characteristics of long R&D cycles and high risks in innovative drug development, has led multiple investment institutions in China to start adopting the approach of setting IPO or performance-based wagering agreements for companies to ensure their returns. This approach has sparked controversy at times, such as in the early days when BrightGene Bio-Medical was "forced into an IPO."

In the past, it was uncommon for veteran VCs to acquire mature pharmaceutical assets. However, under various pressures and with innovative drugs facing a reevaluation of value at present,To "acquire cash flow" by purchasing an asset that already has a stable market and brand recognition may have its merits in improving the financial standing of an investment firm and balancing the risks associated with investing in innovative drugs.

In recent years, there have been similar cases, such as in 2024 when CBC Group, in partnership with Mubadala, acquired UCB's well-established neurology and allergy business in the Chinese market. This acquisition involved five drugs and a production base in Zhuhai. UCB stated that the combined net sales of these products in the Chinese market in 2023 were 131 million euros. CBC Group and Mubadala will jointly establish a new company based on these operations to achieve scaled operations.

Overall, the systematic clearance of older drugs by multinational pharmaceutical companies and the systematic承接 by local capital will continue in the coming years.The value of mature brands will be redistributed, and the market landscape will also be reshaped.

References:

Oliver. BMS Divests Mature Drug Business in Greater China, Will 2025 Be the Year of MNC Exodus? [EB/OL] https://mp.weixin.qq.com/s/2qHLDmj-a-mDKdvcqq9LPw, 2025-09-20

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