Analysis of the Impact of the Surge in Out-Licensing by Chinese Innovative Pharmaceutical Companies on the CXO Industry and Valuations of Innovative Drug Enterprises

Based on the data I collected and analysis, I now provide a comprehensive analysis of the impact of the surge in out-licensing by Chinese innovative pharmaceutical companies on the CXO industry and valuations of innovative drug enterprises.

The Chinese innovative pharmaceutical industry achieved a historic breakthrough from 2024 to 2025, with both the amount and number of out-licensing deals hitting all-time highs. According to industry data, China’s innovative drug pipeline accounts for 30% of the global share, ranking second in the world [1]. The out-licensing amount reached approximately

From the data, innovative pharmaceutical companies and CXO leaders performed strongly in 2025, significantly outperforming the consumer sector.

• 3SBio & Pfizer
  : In May 2025, they reached an out-licensing partnership, receiving an upfront payment of up to
  1.25 billion USD
  , setting a record for Chinese innovative drugs going global. This collaboration licenses the global rights of the PD-1/VEGF bispecific antibody SSGJ-707 to Pfizer [3].

• Innovent Biologics & Takeda Pharmaceutical
  : Reached a multi-billion USD BD deal; Takeda Pharmaceutical’s 2024 revenue reached 30.6 billion USD, with a solid foundation in the U.S. market [4].

• Harbour BioMed
  : Known as the “King of BD”, it has completed 17 BD out-licensing deals and secured a 670 million USD BD deal in the first half of 2025 [5].

• Improved quality of Chinese innovative drugs, gaining international recognition
• Intense domestic competition forcing enterprises to internationalize
• Global MNCs seeking external innovation to supplement pipelines
• Policy support for innovative drug development

The increase in out-licensing of innovative drugs directly drives the business volume of CXO enterprises:

• Preclinical CRO
  : More innovative drug projects enter the preclinical research phase
• Clinical CRO
  : Demand for global multi-center clinical trials increases
• CDMO
  : Expected growth in commercial production orders

The valuation of the traditional CXO industry is greatly affected by the investment and financing environment. However, as innovative pharmaceutical companies obtain cash flow through out-licensing, R&D investment no longer relies entirely on external financing, making the demand for the CXO industry more stable [6]. According to industry analysis, as of November 2025, 27 out of 30 listed medical R&D outsourcing companies in the A-share market saw their stock prices rise, with 8 of them increasing by more than 50%, indicating signs of recovery in the CXO industry [6].

WuXi AppTec (2359.HK) saw its stock price rise by 76.25% in 2025 [0], reflecting the market’s revaluation of CXO leaders. The company reduces geopolitical risks through global layout and benefits from order growth brought by Chinese innovative drugs going global.

The valuation model of innovative pharmaceutical companies has shifted from relying solely on product sales to a dual-drive model of “product sales + licensing revenue”:

• Milestone payments
  : Provide sustained cash flow
• Upfront payments
  : Improve balance sheets
• Sales royalties
  : Long-term value realization

The market grants valuation premiums to innovative pharmaceutical companies that have successfully internationalized:

• Innovent Biologics
  : +105.53% stock price growth in 2025 [0]
• Junshi Biosciences
  : +80.85% stock price growth in 2025 [0]
• Everest Medicines
  : Released 2030 strategy, aiming for revenue exceeding 15 billion CNY by 2030 [7]

Cash flow from out-licensing allows innovative pharmaceutical companies to continue investing in R&D, forming a positive cycle:

• 3SBio’s R&D expenses increased from 690 million CNY to 1.33 billion CNY from 2022 to 2024 [3]
• The company raised 3.087 billion HKD through a rights issue, with 80% to be used for R&D-related expenses [3]

• Improved quality of innovative drugs
  : Chinese innovative drugs continue to perform better in global clinical trials
• Abundant pipeline reserves
  : China’s pipeline accounts for 30% of the global total [1], with huge future out-licensing potential
• Accelerated internationalization
  : More innovative pharmaceutical companies are establishing overseas teams and promoting global multi-center clinical trials

• Geopolitics
  : U.S. regulatory policies on Chinese biotech enterprises
• Intensified competition
  : Competition among innovative pharmaceutical companies may lead to price pressure
• Clinical failure risk
  : Innovative drug R&D itself has high risks

• CXO leaders
  : Focus on leading enterprises with perfect global layout and diversified customer structure
• Innovative pharmaceutical companies
  : Focus on Biotechs with internationalization capabilities and high-quality pipelines
• Differentiated advantages
  : Choose enterprises with technical barriers in specific therapeutic areas

The surge in out-licensing amount by Chinese innovative pharmaceutical companies reflects the improvement of the industry’s overall strength, which has a positive impact on both the CXO industry and the valuations of innovative drug enterprises:

1. CXO industry
   : More stable demand, valuation recovery from the bottom, and outstanding performance of leading enterprises
2. Innovative pharmaceutical companies
   : Diversified revenue models, improved cash flow, and increased valuation premiums
3. Industry ecosystem
   : Formed a positive cycle of “R&D-licensing-reinvestment” to promote sustainable industry development

With the continuous improvement of the quality of Chinese innovative drugs and the enhancement of internationalization capabilities, it is expected that the out-licensing amount will continue to grow, and the valuations of the CXO industry and innovative pharmaceutical companies are also expected to further recover and increase.

[1] Jinling API Data - Stock Price and Transaction Data (2025)

[2] Yahoo Finance - Charts and Data on Chinese Innovative Drug Out-Licensing Amounts

[3] Yahoo Finance - 3SBio’s Rights Issue Focuses on Innovative Drug Pipeline Layout (December 2025)

[4] Yahoo Finance - Innovent Biologics Reaches Multi-Billion USD BD Deal (2025)

[5] Yahoo Finance - Harbour BioMed Secures 670 Million USD BD Deal (2025)

[6] Zhihu - Haoyuan Medicine’s Stock Price Rises by Over 150%, Is the Spring of CXO Near? (November 2025)

[7] Yahoo Finance - Everest Medicines Releases 2030 Strategy (December 2025)