Hengrui Pharma Files Prospectus for Next BD Deal Following $12.5B GSK Agreement

Recently, Hengrui Pharma andA GSK BD deal with a potential total amount of approximately $12.5 billion has caused a stir in the industry. This not only led to Hengrui Pharma's A-shares hitting the upper limit on the same day and its Hong Kong stocks soaring over 24%, but also set the entire industry abuzz.

Huayuan Securities stated that this transaction highlightsMNC's Recognition of Hengrui Pharma's Innovation Strength. In fact, Hengrui Pharma has long shown active momentum in the BD field ——According to statistics, Hengrui Pharma has cumulatively achieved16 innovative drug out-licensing collaborations, including 10 in the past three years.

And from the perspective of Hengrui Pharma's existing product pipeline, its subsequent innovation potential goes far beyond this. PharmaCube's database analysis found that Hengrui Pharma is globally positioned.Approximately 40 pipelines are in the TOP3 development progress.

In 2024, Hengrui Pharma achieved revenue and net profit attributable to shareholders of RMB 27.985 billion and RMB 6.337 billion respectively, representing year-on-year growth of 22.63% and 47.28%. Notably, Hengrui Pharma's R&D investment reached RMB 8.228 billion in the same year, hitting a new historical high. Undoubtedly, the BD potential of its subsequent products is also crucial to its performance growth. Huayuan Securities stated that robust BD potential is expected to provide stable profit income and create a second growth curve.

In fact, from Hengrui Pharma's listing on the Hong Kong stock market this year, internationalization has become one of its main focuses. Whether through capital market financing or via certain products,BD Drives Revenue and Overseas Expansion: Hengrui Pharma's Focus Remains on Global Innovation for a Win-Win in Domestic and International Markets.

PharmCube statistics show that the total transaction amount in the past decadeBlockbuster deals of ≥$1 billion mainly focus on highly innovative drugs with R&D progress ranking among the top five globally. The closer to the front, the more BD opportunities are captured, and the higher the upper limit of the transaction amount.

Image Source: PharmaCubeA Comprehensive Review of China's Innovative Drug Transactions Over the Past Decade

Visible,Being in a forward position leads to great achievements.The necessary conditions for BD.This is from within China"Pharma Leader" Hengrui Pharma's BD journey in recent years also offers a glimpse: to date, Hengrui Pharma has negotiated 16 license-out deals with overseas pharmaceutical companies.Among which, the upfront payment and the total amount both rankThe TOP5 transactions are allThe target or track is relatively mature, with around ten to nearly a hundred global competitors, while Hengrui Pharma-related clinical...Phase 2 to Phase 3 assets rank among the top three globally.

Sometimes, in风口-level hot tracks,BD opportunities can spill over to the fourth and fifth assets. Recently, Hengrui Pharma reached a deal with GSK on a PDE3/4 inhibitor and eleven other innovative drug projects, seizing such an opportunity.

From this perspective, Hengrui Pharma's current pipeline still holds quite a few significant assets."Seed players" in BD transactions.According to the NextPharma database by PharmaCube,Hengrui Pharma has currently disclosed clinical-stage (In the pipeline from Phase 1 to Phase 3, there are over 30 projects that have secured a place in the global top 3 for R&D progress.

Hengrui Pharma in Clinical Stage, Global R&D RankingTOP3 Pipeline

(Assets marked in blue are already BD assets)

Image&Data source: NextPharma database by PharmaCube

Current Trends in the Oncology FieldAmid the craze for "snatching up" ADC and bispecific antibodies, Hengrui Pharma's assets in this area are undoubtedly the most watched:

In terms of ADC, Hengrui Pharma is focusing on HER3 and Nectin-4、CD79band other popular targetsLIV-1, PSMA and other relatively emerging targets have secured the top two positions globally;

In terms of bispecific and multispecific antibodies, Hengrui Pharma, besides inTIGHT/CD112R、HER3/c-MET、DLL3/CD3、CLDN18.2/4-1BHengrui Pharma has leading assets in the B-class potential target combinations and is also actively exploring globally innovative drugs such as RANKL/NGF bispecific antibodies, CTGF monoclonal antibodies, and CRBN modulators.

In several key disease areas outside of oncology, Hengrui Pharma has continued toThe strategy of "securing a leading position in competitive fields and pursuing innovation in untapped markets" – after establishing a strong position in the race to develop potential blockbuster drugs such as CFB inhibitors in autoimmune diseases, myosin inhibitors in cardiovascular and metabolic diseases, and Aβ monoclonal antibodies in central nervous system disorders, the company has also begun exploring more novel, first-in-class global targets and drug modalities, capturing growth opportunities across the entire development cycle.

Hengrui Pharma This Year in ChinaHengrui Pharma's continuous efforts in BD inevitably remind people of its simultaneous listing in Hong Kong this year, as a key layout of its internationalization strategy. However, it now appears that Hengrui Pharma’s current “internationalization” goal is not to fully independently advance the overseas clinical trials and commercialization of all innovative drugs, but rather to first build an innovative R&D capability that can "win" globally.

In fact, at Hengrui PharmaAt the 2024 earnings briefing, the company's board secretary stated:The company's top priority at this stage remains to solidify the domestic market in China, but in the long term, it must further engage in global competition. A Hong Kong stock listing will help the company develop diversified financing channels, effectively supporting its future international clinical layout.At the same time, listing on the Hong Kong stock exchange is also conducive to building the company's international brand and innovative image. In addition, listing on the Hong Kong stock exchange can also attract more overseas investors and further improve the company's shareholder structure.

Correspondingly, nearly 10 billion of its fundraising,"Internationalization" mainly focuses on conducting overseas clinical research, enhancing global R&D capabilities, and recruiting top R&D talents with international experience; although it isFunds have been set aside for the construction of production and R&D facilities in overseas markets, but it was also clearly stated that there are no specific plans in this regard at present.

To establish world-class innovative R&D capabilities and competitive strength ultimately aims at accessing the global innovative drug market and monetization potential.Previously, Hengrui Pharma had also personally conducted clinical trials overseas, possibly with the ambition of independent commercialization, but only until...As BD rises, Hengrui Pharma, with its rich pipeline, has every reason to adopt this faster and more certain approach to start "nurturing the internal with the external" ahead of time.

In fact, inAfter making a strong comeback in 2023, Hengrui Pharma has already reaped the benefits of this strategy in 2024: confirming outbound licensing revenue of approximately US$273 million, equivalent to RMB 1.98 billion, driving a significant increase in net profit for the year.47%ToR&D investment reached a new high of 6.337 billion yuan, reaching an all-time high. This undoubtedly provided tremendous support, especially as the same year saw R&D spending exceed 8 billion yuan, setting another new record.

As of this year, Hengrui Pharma has respectively collaborated with Merck & Co., Merck KGaA, andGSK Reaches Three Deals with Total Upfront Payments Exceeding $700 Million, Approximately RMB 5 Billion.A historic highlight is the massiveUnder the support of BD funds, can Hengrui Pharma's net profit in 2025 fully cover its R&D investment?

More importantly, Hengrui Pharma, which is large and mature at this stage, also does not need to be likeBiotech is less concerned about the sustainability of BD "selling green seedlings."

On the one hand, from Hengrui Pharma'sFrom a BD strategy perspective, what has been divested are mostly advanced assets in verified tracks/targets. For a mature pharmaceutical company like Hengrui Pharma, this development approach can be replicated. Moreover, the efficiency and cost advantages of China's biopharmaceutical industry, combined with its extensive experience and execution capabilities in clinical development, all contribute to maintaining its leading speed.

On the other hand, Hengrui Pharma generally retained the development and commercialization rights for the Chinese market when designing these deals. This is different from companies that lack commercialization capabilities.Biotech can only share the benefits of the R&D stage, while Hengrui Pharma, leveraging its mature production capacity and marketing capabilities in China, can achieve a multiplier effect in innovative drug sales, spread out costs, and use the income from licensing overseas rights as profit to reinvest in innovative R&D.

In this case, within the current global biopharmaceutical innovation ecosystem, Hengrui Pharma may beBD, embarking on a new journey of international exploration.

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