Summary of Key Points
In 2026, there has been a fundamental shift in the cooperation model between Chinese biopharmaceutical companies (Biopharma) and multinational pharmaceutical companies (MNCs): from selling mature drugs (those that have reached Phase II/III trials) to offering their early-stage research and development capabilities. Chinese firms are responsible for the preclinical to Phase I development, while MNCs take over the subsequent global commercialization. This trend of “CROization” (acting as external R&D contractors) is driven by China’s speed and cost advantages in research and development. However, it also presents a critical choice for these Chinese companies: should they content themselves with being mere “early-stage R&D workshops” for MNCs, similar to the manufacturing role of Foxconn in the tech industry, or use this opportunity to address their shortcomings and become true global players?
Detailed Analysis
#### 1. A Major Shift in Cooperation Model: From Selling Finished Drugs to Offering R&D Capabilities
In the past, cooperation between Chinese and MNCs involved the sale of fully developed drugs. Chinese companies would develop drugs to a point where reliable data (from Phase II/III trials) were available, then sell the global rights to MNCs and part with them.
Now, the situation is completely different:
- Hengrui signed a deal worth $15.2 billion with BMS; all 13 projects are still in the early stages and have not entered clinical trials, with Hengrui responsible for accelerating the validation process.
- Innovent partnered with Pfizer for $10.5 billion on 12 early-stage projects, with Innovent leading them to Phase I.
- Shijiazhuang Yiling Pharmaceutical collaborated with AstraZeneca for $18.5 billion, providing not only drugs but also extended-release technologies and AI discovery platforms. MNCs are acquiring more than just individual products—they are getting an entire “system” of R&D capabilities.
In essence, MNCs are treating Chinese companies as their own early-stage R&D departments, securing access to China’s efficient research and development efforts.
#### 2. Why Are MNCs Willing to Pay So Much?
MNCs are investing heavily in China because of the speed, cost-effectiveness, and volume of R&D activities there:
- Speed: China can complete the process from early discovery to clinical trial application 50%-70% faster than other regions, allowing for quicker patient recruitment (e.g., metabolic disease trials take 1.8 days compared to 16.6 days globally), which reduces waste and enables earlier identification of drug efficacy.
- Cost Savings: The cost of recruiting participants for cancer trials in China is one-third to one-fourth of that in the U.S., saving significant expenses.
- Volume: In 2025, 2,703 new drugs were approved for clinical trials in China, representing nearly 30% of all global early-stage innovations—MNCs cannot afford to miss out on such a large pool of potential candidates.
#### 3. Why Are Chinese Companies Participating?
In the current capital downturn, this cooperation represents a stable source of revenue:
- Predictable Income: By working with MNCs, Chinese companies receive upfront payments and milestone bonuses, as well as a share of sales profits.
- Risk Reduction: They avoid bearing the costs of early-stage failures on their own.
- Global Expansion: They can leverage MNCs’ global distribution networks to market their drugs worldwide. For example, Hengrui not only develops its own projects but also assists BMS with the early development of its internal pipelines, providing a steady source of income.
#### 4. At the Crossroads: Becoming a “Pharmaceutical Foxconn” or a Global Player?
The current model resembles that of Foxconn, where Chinese companies provide manufacturing services while MNCs retain most of the profits from global sales. However, Chinese firms possess valuable intellectual property (IP). If they can learn from MNCs in areas such as overseas clinical trials, regulatory compliance, and commercialization, they can overcome their weaknesses and transform from mere R&D providers into full-scale global players.
If they continue to focus solely on early-stage development, they will remain at the lower end of the value chain. This is a critical decision that Chinese biopharmaceutical companies must make.
This wave of business partnerships is not just about numerical growth but a reorganization of the global new drug R&D landscape. Whether Chinese companies can transition from being mere contractors to leaders in the pharmaceutical industry will determine their future position in the global market.