The Chinese biopharmaceutical sector is experiencing significant growth, culminating in a remarkable surge in the value of licensing and drug development agreements. In 2025, the total value of such deals rose by an impressive 161%, reaching nearly $136 billion. This surge reflects a broader trend of innovation and investment within the industry, driven by supportive regulatory measures and a growing appetite for new therapies.
The Hang Seng Healthcare Index (HSHCI) witnessed a substantial increase of 76% in 2025, significantly outperforming the broader Hang Seng benchmark. This growth was fueled by a record influx of capital from Chinese investors into Hong Kong equities, particularly within the healthcare sector. Data from the Securities Times indicates that southbound capital flows into Hong Kong reached a net HK$1.4 trillion (approximately $180 billion) in 2025, with investments in healthcare surging by 126% to HK$540 billion.
As the biopharmaceutical market expanded, companies engaged in various licensing and partnership deals to advance their drug development efforts. Business development transactions, potentially valued at more than $130 billion, significantly bolstered the earnings of drugmakers, enhancing trading volumes and share prices. Yet, this windfall was not uniformly distributed; companies with promising drug prospects and established pipelines reaped the most benefits, while those dependent on a single product faced investor skepticism.
Several key players thrived during this period. For instance, the Weigao Group saw a share price increase of 38%, while MicroPort Scientific’s stock rose by 76%. In contrast, firms in dental and medical aesthetics experienced declines, with Arrail Group and Giant Biogene both suffering nearly 40% losses due to heightened competition and reduced consumer spending on non-essential medical services.
The regulatory environment proved advantageous for Hong Kong listings, with numerous companies opting to list on the Hong Kong exchange. In total, more than 90 biopharmaceutical firms applied for listings in 2025, and over 20 successfully achieved their objectives—double the number from the previous year. Among the notable successes was Hengrui Pharma, which raised HK$11.3 billion, positioning itself among the top five IPOs in Hong Kong for the year, and saw its shares rise by over 30%.
International collaboration also played a crucial role in the sector’s growth. According to data from PharmCube, the total value of outbound licensing and business development deals for innovative Chinese drugs increased to $135.66 billion by the end of 2025. Upfront payments totaled $7 billion, and the number of transactions reached a record high of 157. Notably, a groundbreaking agreement between Hengrui and pharmaceutical giant GSK involved 12 innovative drug programs, providing Hengrui with $500 million upfront and potential milestone payments totaling up to $12 billion.
Looking ahead to 2026, favorable credit conditions in the United States and efforts to incorporate more innovative drugs into China’s medical system could further enhance profitability for leading firms like BeiGene. The Hong Kong-listed pharmaceutical companies may be entering a phase where investment potential translates into tangible value.
Chinese regulators are facilitating this transition, having approved a record 76 innovative drugs for market release in 2025, compared to 48 the previous year. The National Medical Products Administration (NMPA) has committed to further accelerate the introduction of pharmaceutical innovations throughout 2026. Additionally, in December, the authorities released China’s first commercial insurance catalogue for innovative drugs, marking a shift towards a dual-coverage model that combines basic medical insurance with commercial options. This inclusion of high-value immunotherapies, such as CAR-T and PD-1 therapies, promises to enhance clinical treatment standards and improve returns on research and development investments.
Despite these encouraging trends, challenges remain. The end of a particularly active IPO market in 2025 is set to coincide with the expiry of post-listing lockups, potentially leading to increased selling pressure. Moreover, tighter scrutiny from stock market regulators may emerge, as evidenced by warning letters issued to IPO sponsors over declining application quality and compliance concerns.
As the biopharmaceutical landscape evolves in China, industry players must navigate these complexities while striving to convert research investments into commercial success. The journey ahead may be fraught with challenges, but the momentum established in 2025 offers a promising foundation for future growth.
