Hengrui Pharma Strikes $12 Billion Deal with GSK, Ushering in a New Era of Global Expansion

Author| Gao LinglangEditor| On July 28, Wang Gefa, Hengrui Pharma issued an announcement declaring a cooperation agreement with British pharmaceutical giant GSK (GlaxoSmithKline). According to the agreement, Hengrui will grant GSK the overseas exclusive rights to its PDE3/4 inhibitor HRS-9821 project, along with global options for another 11 early-stage projects.

GSK will pay $500 million as the upfront payment, and if all conditions are met, the total value of the deal could reach $12 billion, approximately RMB 86 billion.

Upon the release of this news, Hengrui Pharma's A-shares directly hit the upper limit, with its stock price reaching 65.43 yuan on July 29, refreshing a near four-year high. The company's market value also exceeded 420 billion yuan. The Hong Kong stock performed even more strongly, with a single-day increase of 24.54%, and its market value once surpassed 560 billion Hong Kong dollars.

Moreover, as the scale of a single transaction set a new record for overseas licensing by Chinese pharmaceutical companies, Hengrui Pharma directly drove the entire innovative drug concept stock group to strengthen collectively.

This pharmaceutical company, which originated in Lianyungang, Jiangsu, is redefining its value through a series of overseas licensing deals. In an environment where the profit margins of generic drugs in China are continuously being squeezed by centralized procurement, Hengrui Pharma is attempting to carve out a second growth curve by internationalizing its innovative drugs.

Hengrui Pharma previously disclosed that the cumulative R&D investment for the HRS-9821 project was approximately 38.43 million RMB, equivalent to over 5 million USD. The 500 million USD upfront payment offered by GSK represents nearly a hundredfold return on investment. Even if all 11 subsequent early-stage projects were to fail, Hengrui Pharma would still be in an unbeatable position financially.

HRS-9821 itself has unique competitive advantages. As a dual-target inhibitor for chronic obstructive pulmonary disease (COPD), the drug can simultaneously achieve bronchodilation and anti-inflammatory effects, covering a wide range of applicable populations, especially suitable for patients who are intolerant to traditional hormone-based medications.

In the market, the similar product Ensifentrine by a U.S. company was just approved in July last year. According to EvaluatePharma, the drug's sales are estimated at approximately $42 million in 2024 and have already reached $71.3 million in the first quarter of this year, demonstrating strong commercial potential.

Coincidentally, just two weeks before the announcement of this transaction, Merck had just spent $10 billion to acquire Verona Pharma, targeting the world's first PDE3/4 inhibitor product. The two deals, each worth tens of billions of dollars, have almost simultaneously targeted this niche track, highlighting the strong demand of multinational pharmaceutical companies for emerging respiratory treatment technologies.

Hengrui Pharma's ability to frequently complete high-value licensing deals is inseparable from its rich product pipeline. The 2025 global pharmaceutical pipeline ranking released by overseas media shows that Hengrui ranks 13th with 173 ongoing projects, of which as many as 163 are self-developed projects—a figure that even surpasses GSK, ranked 10th.

From the perspective of technology distribution, there are layouts in cutting-edge fields such as PROTAC, peptides, monoclonal antibodies, bispecific antibodies, and ADCs, providing ample ammunition for continuous out-licensing.

Since 2018, Hengrui Pharma has completed 14 overseas licensing deals, involving 16 molecular entities, with a potential total transaction value of approximately $140 billion. Especially after Jiang Ningjun joined in 2023, the company's business development pace has significantly accelerated, successively establishing cooperative relationships with international giants such as Merck and MSD.

In April this year, Feng Ji, who has global business experience at AstraZeneca, was appointed as the General Manager of Hengrui Pharma, further enhancing the company's international operational capabilities.

Despite its impressive performance in licensing deals, Hengrui Pharma's international revenue structure remains weak. Data from the past eight years shows that the company's overseas revenue has consistently hovered between 600-800 million yuan, never exceeding 5% of total revenue. In contrast, BeiGene's international revenue reached 17.1 billion yuan in 2024, while Baili Tianhe's stood at 5.332 billion yuan, highlighting a significant gap.

This phenomenon reflects the diversity of paths for Chinese innovative pharmaceutical companies to go global. As early as 2005, Sun Piaoyang, the founder of Hengrui Pharma, invested $2.9 million to establish an office in the United States, marking the beginning of its international journey.

In 2011, Hengrui Pharma's Irinotecan became the first Chinese injectable product to gain approval from the U.S. FDA. However, the FDA's stringent requirements regarding the racial distribution of participants in clinical trials once hindered Hengrui's new drug from entering the mainstream markets of Europe and America.

BeiGene Performs More Maturely in This Aspect. At least four members of the company's management team have backgrounds in global pharmaceutical giants. Its self-developed anti-cancer drugs have successfully passed international regulatory approvals and achieved scaled sales. In 2024, BeiGene's revenue from the U.S. market alone reached tens of billions, while Hengrui Pharma's overseas revenue for the same period was only 716 million yuan.

Hengrui Pharma’s Choice of Licensing Model is Actually a Pragmatic Strategy. By transferring early-stage projects to partners with global operational capabilities, the company can quickly recoup funds to support subsequent R&D while leveraging the partner’s international network to achieve product globalization. This "leveraging external strength" approach is particularly suitable for Chinese pharmaceutical companies with strong R&D capabilities but relatively limited overseas operational experience.

Statistics from Founder Securities show that the total amount of overseas licensing for China's innovative drugs increased by 26% year-on-year in 2024, with upfront payments exceeding $2.5 billion in the first half of 2025 and the total transaction value surpassing $50 billion. Major licensing deals have also been finalized by peers such as Hansoh Pharma and CSPC Pharmaceutical Group, marking a shift from sporadic overseas expansion to systematic value output for China’s innovative drug sector.

On May 23, Hengrui Pharma was listed on the Hong Kong Stock Exchange, with institutional subscription amounting to 4.1 billion Hong Kong dollars and a subscription multiple exceeding 454 times. The A+H dual listing provides the company with more convenience in accessing global capital and ensures funding for its internationalization strategy.

Goldman Sachs research report points out that the overall valuation of Chinese biotechnology companies is only 14%-15% of that of their American counterparts, but their contribution to global innovative drug development has reached nearly 33%, indicating significant room for valuation recovery.

According to the current pace of licensing, Hengrui Pharma expects to complete overseas transfers for 2-3 projects each year. As the licensed products gradually enter the market, the company will also receive substantial sales-based revenue.

For Hengrui Pharma, a pharmaceutical leader with a market value exceeding 400 billion yuan, its internationalization strategy is moving from concept to reality.

Disclaimer: The content of this article is for reference only. The information or opinions expressed in the text do not constitute any investment advice. Readers are advised to make investment decisions with caution.

       Title: Hengrui Pharma Has Struck a Goldmine