Chinese Biotechs Report Strong H1 Profits Fueled by Overseas Licensing Deals

A majority of China's publicly-listed innovative pharmaceutical companies reported significant profit growth in the first half of the year, buoyed by a surge in high-value overseas licensing deals and favorable domestic policies. The strong performance signals that years of investment in research and development are beginning to yield substantial financial returns for the sector's leaders.

Mid-Year Financials Reveal Diverging Fortunes

An analysis of mid-year reports from 78 innovative drug companies listed on China's A-share market shows a sector with strong momentum, though performance was not uniform. According to data from Wind, cited by Times Weekly, 43 of the 78 firms saw their net profit attributable to shareholders increase.

Key performance indicators for the first half of the year include:

• 43 companies (55%) reported net profit growth, while 35 saw a decline.
• 45 companies (58%) achieved revenue growth.
• RemeGen (688331.SH) and Joinn Laboratories (603127.SH) were the top performers, reporting staggering net profit growth of 1,137% and 1,127%, respectively.

In contrast, some firms faced significant headwinds. SinoCellTech (688520.SH) and Porton Pharma Solutions (300363.SZ) both reported net profit declines of over 900%. SinoCellTech cited impacts from healthcare cost controls and product price reductions, while Porton pointed to an asset impairment charge related to a terminated investment project.

Outbound Deals a Primary Growth Engine

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A boom in business development (BD), specifically out-licensing agreements with global pharmaceutical giants, has become a crucial driver of revenue and profitability. According to a CCTV News report, Chinese drugmakers signed 81 outbound licensing deals in the first half of the year, with a total potential value of approximately $110 billion.

Several companies with standout results attributed their success directly to these international partnerships. RemeGen's earnings were boosted by growing sales of its core products and substantial technical licensing income from an exclusive agreement with AbbVie for its drug candidate RC148. Similarly, Haisco Pharmaceutical (002653.SZ) credited its revenue growth to new overseas licensing projects, including four separate deals with AirNexis, AbbVie, Eli Lilly, and Nuvectis, with a combined value of up to $6 billion.

Policy Support and Market Outlook

The sector's positive trajectory is also underpinned by a series of supportive government policies. Chinese regulators have been working to accelerate review and approval timelines for innovative drugs, reform pricing mechanisms, and expand insurance coverage to improve market access and ensure commercial viability for new treatments.

According to Du Chen, a veteran pharmaceutical industry manager interviewed by Times Weekly, the current growth is not just a short-term trend but a "phased achievement" resulting from three decades of accumulated experience, capital, and talent. He noted that while challenges such as uncertainty in U.S. market access remain, the combination of domestic policy support and strong international demand for Chinese innovation provides a solid foundation for continued growth.