Summary of Key Points
Antibody-drug conjugates (ADCs) are currently the hot commodity in the pharmaceutical industry, with the global market expected to reach $66.2 billion by 2030, and the star drug Enhertu experiencing a 34% quarter-on-quarter growth. However, companies such as Rongchang and Genmab have discontinued their ADC pipelines, raising questions about whether the sources of viable targets for ADC development have been exhausted. The truth is that the easily accessible "surface mines" (popular targets like HER2 and TROP2) have been largely tapped out, leaving only the more challenging "deep mines" that require more advanced technologies to exploit. The industry is undergoing a process of consolidation, and only those companies with core technologies (such as novel payloads and dual antibody structures) will be able to continue to profit from this field.
1. Popular Targets Become a "Red Sea": Why Do People Think the Resources Are Running Out?
The "mines" in ADC development refer to targets on the surface of cancer cells that antibodies can recognize, similar to searching for gold veins in mining. Currently, popular targets are so crowded that it's almost impossible to find new ones:
- HER2 Target: There are 318 clinical trials worldwide, with Chinese companies accounting for 63.6%. At the 2026 ASCO conference, 104 studies were related to HER2, and Enhertu alone accounted for 21 of them—almost half of the total.
- TROP2 Target: With 56 ASCO studies, five or more companies, including Kelun and Hengrui, are competing for the same patient population (breast cancer and non-small cell lung cancer), similar to five teams digging for gold in the same area.
- CLDN18.2 Target: Chinese companies account for 85.7% of global research on this target, leading to a highly competitive landscape.
70% of domestic ADC pipelines are focused on these three targets. It's not that the resources have run out, but rather everyone is competing for them, creating an illusion that no new discoveries can be made.
2. Doubling of Mining Costs: Five Major Challenges Make Development More Difficult
Developing ADCs now faces five major obstacles:
1. Early Entrants Have Occupied the Best Areas: Enhertu has expanded the use of the HER2 target to include both positive and low- or ultra-low-expression cases, covering a larger patient base. It's difficult for later entrants to improve on its achievements.
2. Technological Copycatting: The technologies used to connect antibodies to toxins (linkers) and the toxins themselves are becoming increasingly similar. Seventy percent of companies claim to have "innovative linkers," but often make minor modifications to avoid patents. Popular toxins are either monopolized by companies like Takeda and Seagen or too toxic for use, leaving few viable options.
3. Clinical Trials Compete for Patients: With multiple ADCs competing for the same patient pool, even if phase II trials show promising results, phase III trials often fail (for example, AbbVie's ABT-414).
Multinational pharmaceutical companies now evaluate the risk of failure in phase III trials before investing in pipelines.
4. Declining Revenue from Pipeline Sales: In the first half of 2026, Chinese innovative drugs generated $11 billion in overseas sales, but only 5.4% came in upfront payments. ADC licenses typically involve only a few deals, with buyers willing to pay significantly for novel toxins or dual antibody structures not yet used by Enhertu; uninnovative pipelines struggle to sell.
5. Regulatory and Insurance Barriers: Regulatory agencies require testing the toxicity of toxins and their residues. During insurance negotiations, the price of second-generation ADCs targeting the same target is often reduced based on the first generation's cost—meaning even if new targets are discovered, they may not be profitable.
3. New Mining Opportunities: Changing Approaches to Find New Resources
The industry is shifting to three new areas:
1. Payload Revolution: Companies like Novartis (NMT inhibitor from Myricx) and Gilead (new microtubule payload from Tubulis) are investing heavily in this area. The focus has shifted from which target to use to what kind of toxin to employ, as toxin patents become a key barrier to entry.
2. Dual Antibody ADCs: Companies like BeiGene's EGFR+HER3 and Kangfang's TROP2+Nectin-4 dual antibodies are entering multiple indications, addressing the issue of low expression at single targets by combining two antibodies.
3. Non-Cancer Applications: Nuclear drug-conjugated drugs like Pluvicto have seen 55% growth in revenue, indicating that ADC technology can be applied to autoimmune and infectious diseases, expanding beyond the cancer niche.
4. Industry Consolidation: Who Will Survive?
While there's no "winter" for ADCs, half of the companies are already facing challenges:
- Companies with Limited Resources: Small firms with a single popular target and basic conjugation technologies rely on partnerships (e.g., BD) for funding and may run out of cash if they can't secure large upfront payments from big companies.
- Companies with Core Technologies: Those with proprietary technologies (e.g., Shijiazhuang Yiling's EGFR ADC licensed to AstraZeneca or Kelun Biotech's TROP2 ADC with overseas royalties) can access deeper markets and share in market growth.
Sullivan predicts that the $66.2 billion market will be dominated by companies using novel payloads, dual antibodies, and non-cancer applications, while the growth rate for older targets is likely to slow down significantly.
5. Conclusion: It's Not About Exhausted Resources, but Access to Technologies
ADC technology itself has a long lifespan, but the era of easily developing drugs with simple target combinations is over. Future success will depend on companies that can hire chemists to develop new toxins, ensure linker stability, and secure patents in Europe and America. The resources are still there, but the competition has shifted from having a target to demonstrating how your ADC differs from existing ones (e.g., Enhertu). Those unable to meet these criteria will lose their competitive edge.
This analysis uses the metaphor of mining to explain the ADC industry, making complex technical terms accessible to a broader audience and highlighting both the current situation and future trends. It provides a clear understanding of the industry's fluctuations and the underlying business logic for readers without a financial or pharmaceutical background.