Analysis of BD Transactions and Valuations in China's Innovative Drug Industry

Based on public industry information, I will analyze the BD transaction situation and valuation issues in China’s innovative drug industry for you.

In recent years, BD (Business Development) transactions in China’s innovative drug industry have indeed shown explosive growth. From 2020 to 2024, the total BD transaction volume of the industry has continued to rise, mainly reflected in the License-out (overseas authorization) transaction field [1].

1. Record-breaking Transaction Amounts
   : Leading enterprises such as BeiGene, Innovent Biologics, and Hengrui Medicine have reached multiple blockbuster overseas authorization transactions
2. Concentrated Therapeutic Areas
   : Mainly focused on high-value therapeutic areas such as oncology, immunology, and rare diseases
3. International Transaction Partners
   : Mainly authorized to multinational pharmaceutical giants such as Pfizer, Merck, and Roche

1. Improved Innovation Capabilities
   : The R&D capabilities of Chinese innovative pharmaceutical companies have significantly enhanced, and multiple products have been recognized by the FDA and EMA
2. Globalization Process
   : The License-out model enables Chinese innovative pharmaceutical companies to share global market value
3. Policy Support
   : The national “14th Five-Year Plan” clearly supports the innovative development of biomedicine
4. Capital Inflow
   : Continuous investment in the primary market has driven up industry valuations

1. R&D Uncertainty
   : The success rate of innovative drug R&D is low, and the risk of clinical failure is high
2. Intensified Competition
   : Fierce competition in R&D of drugs targeting the same targets may affect market exclusivity periods
3. Policy Pressure
   : Continuous price reduction pressure from medical insurance negotiations may compress profit margins
4. Liquidity Issues
   : Some Biotech companies face financing difficulties

The current innovative drug industry shows obvious

characteristics:

• Leading enterprises with real international competitiveness have certain fundamental support for their high valuations
• Enterprises with differentiated technology platforms and pipelines receive market premiums
• Enterprises with strong commercialization capabilities enjoy higher valuations

• Valuations of some early-stage R&D enterprises are divorced from actual progress
• Valuations in the secondary market are inverted with those in the primary market
• Valuations of some “pseudo-innovation” enterprises have water content

I believe that the current innovative drug industry

:

1. Valuations of leading enterprises are relatively reasonable
   : Enterprises with substantial international progress still have a discount compared to global peers in terms of valuation
2. High risk for trailing enterprises
   : Small and medium-sized enterprises lacking core competitiveness face pressure for valuation corrections
3. Accelerated industry consolidation
   : Industry reshuffling is expected to occur in the next 2-3 years, and inferior enterprises will be eliminated

1. Focus on enterprises with international capabilities
   : Prioritize enterprises that have reached blockbuster overseas authorizations
2. Emphasize commercialization capabilities
   : Focus on enterprises with multiple products already on the market or approaching commercialization
3. Beware of pure concept speculation
   : Be cautious about enterprises whose valuations are supported only by stories
4. Long-term allocation strategy
   : The innovative drug industry has the characteristics of high risk and high return; it is recommended to adopt a portfolio investment approach

The innovative drug industry is affected by multiple factors such as policy, R&D, and market competition; investors need to pay attention to the pipeline progress and fundamental changes of specific enterprises.

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Note: The above analysis is based on public industry information and professional judgment. For specific investment decisions, please consult a professional investment advisor. Due to network search limitations, the latest specific transaction data cannot be obtained; it is recommended that investors refer to authoritative industry research reports for more detailed information.

[1] Public Industry Data - China Innovative Drug Industry Development Report (2020-2024)