Hengrui Medicine, China's Sole Pharma Firm in Global Top 500 by Market Cap, Files S-1 Amid Landmark $12B Deal with GSK

Today, the out-licensing deal reached between Hengrui Pharma and GSK, with a potential total value of up to 12 billion US dollars, undoubtedly pushed the boom in China's innovative drug stocks to new heights. This heavyweight cooperation not only drove Hengrui Pharma's stock price to hit the upper limit in the afternoon of the same day, reaching a new high in recent years, but also lifted its total market value to more than 410 billion yuan.

The core of this agreement is that Hengrui Pharma has granted GSK the global exclusive rights (excluding Greater China) to its independently developed, potentially best-in-class PDE3/4 inhibitor, HRS-9821, under a paid license. HRS-9821 is currently in clinical development and is primarily intended for the treatment of chronic obstructive pulmonary disease (COPD).

The agreement also includes a scaled collaboration plan, under which GSK has obtained exclusive options for up to 11 innovative candidate projects in the non-clinical research stage. These projects cover multiple therapeutic areas including oncology, respiratory, autoimmune, and inflammation.

According to the terms of the agreement, GSK will pay Hengrui Pharma an upfront payment of 500 million US dollars. If all projects are opted into and exercised, and all milestone payments are achieved, Hengrui Pharma will be eligible to receive potential future payments totaling up to 12 billion US dollars. In addition, Hengrui Pharma will also receive corresponding tiered sales royalties (excluding the China region).

Hengrui Pharma stated that the specific milestone payment timelines and sales royalty percentages involve commercial confidentiality and are not convenient to disclose. However, the choice of GSK is based on its diverse collaboration models and its ability to maximize the value of innovative drugs. This cooperation is expected to directly increase Hengrui's revenue and profits.

MajorThere is also fierce competition among MNCs, coupled with the patent cliff, making it urgent for them to find new growth points and innovative products to replenish their R&D pipelines. Chinese innovative pharmaceutical companies, with years of accumulated R&D capabilities, have produced a large number of high-quality innovative assets, becoming ideal partners for these MNCs seeking external collaborations.

For a long time, the treatment options for COPD have been relatively limited, primarily focusing on the combination of bronchodilators and inhaled corticosteroids. HRS-9821, as a PDE3/4 inhibitor, is able to achieve both bronchodilation and anti-inflammatory effects simultaneously, and is considered a dual-pathway innovation in this field.

Prior to this, Merck had spent $10 billion to acquire Verona Pharma, gaining the world's first PDE3/4 dual inhibitor Ohtuvayre, which was approved for marketing in the United States in July 2024. This undoubtedly signals the enormous market potential of such innovative mechanism drugs. GSK has a long-term presence in the COPD field, and the introduction of HRS-9821 aims to further solidify its leading position in the respiratory disease sector and provide treatment options for a broader range of COPD patients.

GSK previously acquired Aiolos Bio for $1.4 billion, and Aiolos Bio's core product, AIO-001, is licensed from Hengrui Pharma's SHR-1905.

In recent years, Hengrui Pharma has made going global an important strategy and has continued to achieve breakthroughs. The company has significantly increased its investment in the research and development of innovative drugs with global rights and the number of overseas clinical trials. This deep cooperation with GSK has expanded from single-project authorization to a platform-based cooperation model covering multiple pipelines.

In the long term, potential milestone payments of up to 12 billion US dollars and sales royalties will provide Hengrui Pharma with a continuous and substantial revenue stream. This collaboration further enhances Hengrui Pharma's brand influence and market position in the global innovative drug sector. The market has re-evaluated the value of Hengrui Pharma, and the surge in the company’s stock price reflects the market’s confidence.

The number of high-value out-licensing deals continues to grow. In just the first half of 2025, the total amount of BD transactions for innovative drugs in China has exceeded 48 billion US dollars, including 18 deals with values surpassing 1 billion US dollars.

Hengrui Pharma's business structure has thus been optimized, with the revenue share of innovative drugs continuously increasing. This is crucial for maintaining the company’s long-term profitability in the context of the centralized procurement policy. In the coming years, Hengrui Pharma is expected to receive approvals for more innovative drugs to be launched on the market. Combined with its sustained growth in R&D investment and the ongoing optimization of its sales expense ratio, the company is stepping into a healthier development track driven by innovation.

Currently, Hengrui Pharma is the only pharmaceutical company in China to rank among the top 500 global companies by market value, positioned at 381.

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