Summary of Key Points
This news article focuses on the second episode of "2026 Value and Investment," which discusses the profound transformation of China's biopharmaceutical industry from a follower to a leader. The guests addressed three core issues: the underlying logic behind the rising global prominence of Chinese pharmaceutical companies, how AI technology can break the "double ten law" (ten-year research and development cycle, one billion dollars in costs, and less than 10% success rate), the path choices for commercialization and international expansion, as well as investment opportunities in the capital market. The overall conclusion is that China's biopharmaceutical industry is gaining momentum through technological breakthroughs, AI empowerment, and international expansion, and has the potential to develop global competitiveness.
I. Global Positioning: From Participant to Leader
China's biopharmaceutical sector is no longer a follower but has become a leader in several subfields. For example, China accounts for half of the world's research and development efforts in gene and cell therapy, and major foreign pharmaceutical companies are increasingly willing to collaborate (Chengdu Leadgen receives 80% of its revenue from overseas, with 17 of the top 20 global pharmaceutical companies as its clients).
There are two main reasons for this:
1. Policy Alignment: Domestic regulatory agencies (such as the drug regulatory authorities) have aligned their rules with international standards (FDA, EMA), ensuring that Chinese companies' product data and quality are internationally recognized.
2. Talent Accumulation: Over the past 20 years, a combination of talent recruitment from abroad and local training, along with support for technology transfer policies, has led to the development of numerous new technologies and research projects.
Future Trends: Starting in 2027, high-quality Chinese drugs will be commercialized overseas. The valuation of these companies will shift from focusing on research pipelines to their ability to deliver actual results. Cooperation models will evolve from selling licenses to joint development, with profit-sharing ratios potentially increasing from around 10% to over 50%. Additionally, the "14th Five-Year Plan" has elevated biopharmaceuticals to the status of an emerging pillar industry, and there is a possibility of the emergence of large-scale pharmaceutical companies capable of competing globally. The domestic production of high-purity materials such as fillers will not be affected by healthcare cost controls and has export potential.
II. AI as a "Fast Variable": Breaking the "Double Ten Law"
Biopharmaceuticals are typically considered a slow-moving industry, but AI is changing this situation:
- HeYuan Biology: Uses AI agents to streamline the entire process (from document translation to research and development), improving operational efficiency.
- Chengdu Leadgen: Combines AI with DNA-encoded compound libraries to scale small molecule screening to the trillions, increasing the success rate for difficult-to-treat targets from less than 10% to 80%.
Challenges Faced by AI: Selecting the right application areas, ensuring that AI models match real experimental data, and addressing the shortage of high-quality data. However, the industry trend is clear: CRO companies are using AI to attract clients, while large pharmaceutical companies are both using external models and developing their own AI tools. Investors are also showing interest; AI-related companies listed on the Hong Kong stock market have received over 6.5 billion in collaborations in the first half of the year, making it a promising direction for investment.
III. Commercialization and International Expansion: Realizing Value on a Slow Track
Commercialization is crucial for a company's long-term value. Different companies adopt different strategies:
- HeYuan Biology: Acts as a CDMO (contract manufacturing organization), initially accepting orders with low margins to gain market share, then making profits once the client's pipeline enters clinical trials or commercialization.
- Chengdu Leadgen: Uses a three-pronged approach of platform services, project transfers, and new drug royalties to offset the uncertainties associated with research and development. For example, a molecule sold five years ago is now in clinical trials, generating milestone fees this year.
International Expansion Strategies: To counter geopolitical factors, HeYuan Biology has shifted its focus from production to early-stage research services in the United States and is also expanding into the Belt and Road regions. Chengdu Leadgen builds trust overseas through technical quality and intellectual property protection (exclusive target/molecule structures), with overseas revenue accounting for over 80% of its total income.
Three Key Factors for Assessing Commercialization Capability: Internal management/cost control, partner execution, and product quality along with continuous innovation capabilities.
IV. From a Capital Perspective: How Can Ordinary Investors Invest? Where Are the Opportunities?
Biopharmaceuticals are highly volatile, so it is best for ordinary investors to diversify their risks through funds or ETFs. Liang Xing categorizes pharmaceutical companies into three types:
1. Pipeline-Driven: These companies have solid fundamentals but were previously undervalued due to short-term capital flows and still have potential for long-term growth.
2. Cash Flow-Driven: CXO (contract research organizations) are temporarily affected by geopolitical tensions, but leading companies are addressing these issues through share repurchases and global expansion, maintaining strong fundamentals.
3. Platform-Based: Medical services benefit from the aging population and improving commercial insurance trends, making them a worthwhile investment opportunity in the long term.
Opportunities in AI and Pharmaceuticals: Biotech companies that can quickly advance academic research to clinical trials (IND) are more likely to attract capital.
Conclusion
China's biopharmaceutical industry is undergoing a qualitative shift from a follower to a leader. AI, commercialization, international expansion, and policy support are the driving forces behind this transformation. Although it is a slow-moving sector, these "fast variables" are accelerating its development, and there is potential for the emergence of globally competitive companies in the future. For ordinary investors, diversifying investments through funds or ETFs is a more cautious and strategic approach to capitalize on these long-term opportunities.