Innovation-Driven Growth in China's Pharmaceutical Sector: Innovative Drugs Emerge as Key Revenue Engine While Global Expansion Remains a Work in Progress

[Global Times Finance Comprehensive Report] Recently, the 2025 half-year reports released by several listed pharmaceutical companies show that the innovative drug business has become the core of corporate performance growth.Driving ForceThe revenue share of innovative drugs in some companies has exceeded 50%, even becoming a major revenue pillar. Meanwhile, the transformation of traditional pharmaceutical companies into innovative drug enterprises continues to deepen, but international expansion still primarily relies on out-licensing, with the establishment of overseas sales systems still in its infancy.

Hengrui Pharma(600276.SH, 01276.HK) Hengrui Pharma's semi-annual report shows that in the first half of 2025, the company achieved operating revenue of 15.762 billion yuan, a year-on-year increase of 15.88%; net profit attributable to shareholders was 4.45 billion yuan, a year-on-year increase of 29.67%. Despite a slight decline in revenue from generic drugs included in centralized procurement, the innovative drug business became the key driver of performance growth – with innovative drug sales and licensing revenue reaching 9.561 billion yuan during the period, accounting for 60.66% of total revenue, of which pure innovative drug sales revenue was 7.57 billion yuan. Since the launch of China’s national drug centralized procurement in 2018, Hengrui Pharma's generic drug business has been under continuous pressure, with performance declining consecutively from 2021 to 2022. Starting from the first quarter of 2023, performance gradually improved due to the growth in innovative drug sales and external licensing revenue.

Hansoh Pharma (03692.HK) also exhibits a similar transformation trajectory. In the first half of 2025, the company's innovative drug and collaboration product sales revenue reached approximately RMB 6.145 billion, representing a year-on-year increase of 22.1%, accounting for 82.7% of total revenue, becoming the core driver of sustainable performance growth. During this period, the company’s total revenue was RMB 7.434 billion, a year-on-year increase of 14.3%; net profit was RMB 3.135 billion, a year-on-year increase of 15%.

Grand Pharmaceutical Group Limited (00512.HK)’s semi-annual report shows that the revenue in the first half of 2025 hit a record high, reaching approximately HKD 6.11 billion. Among this, the revenue from innovative and high-barrier products accounted for about 51%, increasing nearly 15 percentage points year-over-year (after excluding the impact of centralized procurement and exchange rates, the year-over-year revenue growth was approximately 13%), with a net profit of approximately HKD 1.17 billion. Simcere (02096.HK) achieved total operating revenue of CNY 3.585 billion, a year-over-year increase of 15.1%; adjusted net profit was CNY 651 million, a year-over-year increase of 21.1%. The company has launched ten innovative drugs, generating revenue of CNY 2.776 billion from innovative drugs, a year-over-year increase of 26%, accounting for the first time more than three-quarters (77.4%) of total revenue.

The rise of the innovative drug business is inseparable from the continuous increase in R&D investment by pharmaceutical companies. In the first half of 2025, Hengrui Pharma invested 3.871 billion yuan in R&D (including 3.228 billion yuan in expense-based R&D investment). By the end of June, its cumulative R&D investment exceeded 48 billion yuan. Currently, it has more than 100 self-innovated products in clinical development and over 400 clinical trials being conducted simultaneously in China and abroad. Simcere's R&D investment ratio reached 28.7% during this period, with cumulative R&D investment exceeding 10 billion yuan over the past decade, establishing an innovative drug R&D pipeline covering more than 60 projects globally. Although China Biologic Products (01177.HK) has yet to reach 50% of its revenue from innovative drugs at 44.4%, it has accelerated its layout through acquisitions—on July 2025, it acquired Limin Pharmaceuticals, a Shanghai-based innovative drug company, for a net consideration of $500 million to strengthen its core competitiveness and international influence in related fields.

Notably, despite the significant growth in revenue from innovative drugs by Chinese pharmaceutical companies, the primary market remains concentrated within China. Data from the Insight database shows that in the 2024 list of the top 100 drugs by global sales, onlyBeiGeneThe BTK inhibitor zanubrutinib (with revenue of $2.644 billion in 2024), a domestically produced drug, made the list, and BeiGene is not a traditionally transformed pharmaceutical company. The annual sales threshold for the world's top 100 drugs exceeds $1.7 billion, and they are generally sold in multiple global markets.

Currently, the internationalization path of Chinese pharmaceutical companies still focuses on out-licensing. Hengrui Pharma has cumulatively reached 15 out-licensing cooperation agreements, and its semi-annual report emphasized the commitment to "balancing independent research and development with open collaboration," accelerating the transformation of results through cooperation with leading international pharmaceutical companies and startups. Simcere stated that with the successful dual China-U.S. filings of multiple new drugs under development, it has achieved three overseas deals for self-developed products, and out-licensing will become a source of sustainable growth. Grand Pharmaceutical Group Limited also noted that it is advancing "innovative globalization" to create a "second growth driver." The exploration of building overseas sales teams remains in the early stages.