Editor's Note
Over the past 10 years of China's innovative drug industry, Biotech has undeniably been the protagonist. The world has witnessed the birth of several great Biotech companies, with an increasing number of firms across different fields finding their niche and forging their own paths.
The second instalment of our China’s Innovative Drugs: A New Decade, A New Journey series focuses on the theme of the development trajectory of the sector. From a global perspective on industry ecosystem shifts, we highlight the unique stories of Chinese Biotech companies, exploring how they make critical decisions amid broader industry trends and their own microenvironments — and what factors shape their trajectories. More importantly, we aim to place these companies within the historical context of the industry, uncovering the underlying industrial and historical logic behind their growth.
Perhaps no other industry is as deeply haunted by the anxiety of time as innovative drug development. If the lifespan of an internet product is measured in months, then biotech operates at the other extreme — where progress is measured in years, even decades. A decade in "biopharma time" means that protracted R&D cycles and industry phases inevitably define the Biotech narrative.
China’s first decade in innovative drugs has also coincided with the industry’s first major boom-and-bust cycle. Three years ago, most investors in this sector had never experienced a capital winter; some knew nothing but bull markets. Today, they’ve weathered market reversals, celebrated successful exits, and endured failed investments.
Founders, meanwhile, have learned firsthand the power of policy shifts, the volatility of capital markets, and how US-China relations can become a decisive factor for an entire industry. Through rounds of financing and partnership negotiations, they’ve come to truly understand the secrets and hardships of biotech entrepreneurship. Some Chinese Biotech founders can now say they’ve survived their first major industry downturn.
The Survivors All Share Similar Traits
At 53 Edison Road in Zhangjiang stands a beautiful European-style office building, fronted by a vast green lawn. At first glance, it resembles a private garden villa more than the headquarters of a Biotech company.
The company headquartered here — MicuRx Pharmaceuticals, Inc. — is far from a star in China’s innovative drug arena. For one, its focus on antibiotics for drug-resistant bacteria is a "niche field", as understated as its slogan: "Better Science, Better Medicine". Secondly, founder Dr. Yuan Zhengyu never pursued a high-profile growth model — no land acquisitions, no factories, no sprawling pipelines. For years, MicuRx’s team never exceeded 50 people.
In August 2022, MicuRx went public on the Shanghai Stock Exchange (SSE)’s technology-focused STAR Market, 15 years after Yuan returned to China to start the company. A year earlier, in June 2021, its first novel drug, contezolid (MRX-I), was approved.
100 kilometres away, in Building C19 of Suzhou BioBAY, another Biotech with a similar trajectory is based. CGeneTech, founded in 2010, didn’t launch its first successful product until 2024 — the DPP-4 inhibitor class diabetes drug sentagliptin. From July 2012 onward, for 12 long years, sentagliptin remained the company’s core pipeline.
Both firms now face uncharted territory: commercialisation. In China, securing access to the National Reimbursement Drug List (NRDL) is essential, yet many founders are navigating this for the first time.
Contezolid joined China’s reimbursement list just six months post-approval in January 2022. Priced at half the daily cost of its 20-year-old comparator linezolid, the discount exceeded Yuan’s expectations but stayed within acceptable bounds. He acknowledges that even globally competitive drugs like contezolid struggle to recoup R&D costs under China’s current reimbursement system. MicuRx is now pursuing overseas approvals, with Phase III trials underway in the US and Europe. Its STAR Market IPO raised CNY 1 billion, largely funnelled into global Phase III studies. Yuan targets 2026 for trial completion, meaning heavy R&D spending will continue.
Post-IPO, Yuan’s fundraising pressures have shifted from private to public markets, where regulatory constraints complicate capital raises. Like many peers, he hopes to “curve around” these hurdles by spinning off early-stage projects for private funding.
CGeneTech plans to enter this year’s reimbursement negotiations for sentagliptin. Founder Qiang Yu is confident about cost recovery but recognises commercial success alone doesn’t guarantee sustainability.
Over recent years, equity financing has consumed Yu’s efforts. His team crisscrossed China, chasing local government investment funds — a lifeline for Biotechs amid the capital drought. “Being early means we’ve endured long enough to stand out with an approved drug”, Yu reflects. In September 2024, CGeneTech closed a CNY 100+ million Series C, later than planned but securing its footing.
Both firms can afford cautious optimism — not just for their commercialised products, but for pioneering paths that many peers failed to tread.
Yuan’s 1993–2005 US entrepreneurship exposed him to a full biotech cycle. Key lessons? Resist temptation and spend prudently. “Investors are shrewd; we always raise less than desired. Shortfalls can be offset by grants or partnerships — the mantra is expand sources, reduce expenditure. Burn too fast, and you’ll snap before the next milestone”, he says.
MicuRx’s 2007 Series A (CNY 10 million from Morningside Ventures) funded five years of Phase I work. A timely USD 25 million Series B in 2013 from Bioveda Capital propelled Phase II, followed by USD 55 million in 2016 for Phase III. Every dollar was meticulously allocated to R&D.
CGeneTech adopted similar discipline. “Raise some, spend some”, Yu summarises. He recalls cobbling together CNY 10 million in 2012 — combining angel funding from Oriza Holdings with proceeds from selling a clinical-stage asset — to advance sentagliptin after promising preclinical data.
Their decade-long odysseys to market underscore realities often obscured by the frenzies of the STAR Market and Hong Kong Stock Exchange (HKEX)'s Chapter 18A rules for biotech companies: startups operate with scarce resources under relentless funding pressures.
Across Shanghai and Suzhou — China’s biotech epicentres — similar sagas unfold. Last year PegBio pursued its second HKEX IPO attempt, while Ascentage Pharma listed in the US after going public in Hong Kong. Whether through IPOs, partnerships or sheer grit, founders know the true test lies ahead. Survival demands science, strategy, luck, resilience and adaptability.
Countless others vanished silently in the downturn. While failure is commonplace, it remains taboo — a stigma unbroken since the collapse of Stemirna Therapeutics.
As Tolstoy might say: all thriving companies resemble one another; each failed firm falls in its own way.
Pragmatists Sense the Winds Change First
In lean times, only the nimblest adapt.
When Jason Yang became CStone Pharmaceuticals’s CEO in August 2022, the company resembled a fledgling Biopharma — four commercialised products, 300+ commercial staff, a Suzhou production site and full-chain capabilities. Yet like peers, its valuation had halved in the capital winter.
Yang acted swiftly. Facing daily losses from idling facilities, he shuttered the Suzhou plant — a prescient move later emulated by others. Next, he prioritised assets: retaining avapritinib and pralsetinib for local production (critical to cost control) while partnering domestically with Eli Lilly and Hengrui for commercialisation. The deals brought vital upfront payments. For ivosidenib, CStone sold Greater China rights to Servier for USD 50 million.
Meanwhile, globalisation became a lifeline. The July 2024 EU approval of sugemalimab for NSCLC marked CStone’s discharge from the ICU. “Merely surviving isn’t enough — you need sustainable growth”, Yang notes.
The payoff came in 2024: CStone’s first profitable half-year, slashing 2022’s CNY 902.7 million loss to CNY 367 million in 2023. With cost controls, pipeline BD and revenue streams, Yang eyes stable profitability post-2025.
Similarly, Harbour BioMed pivoted early. Despite 2023–2024 profits, its transformation began in November 2022 with the spin-off of NovaRock Biotherapeutics to monetise its Harbour Mice platform. Partnerships with AstraZeneca (AZ), Pfizer and AbbVie followed, including a March 2024 AZ deal worth up to USD 4.575 billion.
Harbour now projects USD 50 to 80 million milestone income by 2026, with cash reserves swelling to USD 400 to 500 million. CEO Jingsong Wang calls this “3.0 evolution” — from platform to profitable global biopharma.
CStone and Harbour symbolise the end of China’s 2018–2021 “burn-rate era”. Their progress invited a dilemma in the industry: keep burning or pursue sustainability? By 2024, firms like Abbisko, Biokin and Alphamab Oncology had joined the profit club.
Newer players like Pediatrix Therapeutics (founded 2021) aim for breakeven by 2026 — three years post-launch. Founder Cheng Zhang calls profitability “safety”, a rarity among Chinese Biotechs.
Goldman Sachs predicts a 2025–2026 breakeven wave, marking a clear inflection point.
Yang reframes CStone’s identity: “We’re no longer a Biotech chasing Biopharma status, but a commercially driven innovator”. Harbour, meanwhile, blends platform, R&D and partnerships into a hybrid model.
Has the Biopharma dream died? Not quite — but pragmatism grounds ambition.
Other paths emerged in 2023–2024, showcasing adaptability: Gracell Biotechnologies and Biotheus were acquired overseas; Inmagene Biopharmaceuticals and Cullgen Inc. went public via reverse mergers.
Inmagene’s founder Jonathan Wang, a 30-year biotech veteran, navigated a complex NASDAQ listing amid scarce targets and tight timelines. “The deal required balancing SEC compliance, reverse merger execution and USD 75 million PIPE financing — all within two months”, says Vertex Holdings partner Tianran Liu, highlighting Wang’s cross-border acumen.
For Biotheus, selling 100% to a foreign buyer meant tough choices. “A full cash exit beats ceremonial bell-ringing”, says HighLight Capital’s Xing He, who guided the firm from 2018 inception to 2024 acquisition.
These cases prove Chinese Biotechs can land high-value licensing deals, reverse mergers and buyouts — expanding exit options. “As the market learns, flexibility will grow”, He adds.
Amid shifting tides, pragmatists seize the spotlight. Seasoned founders, compromise-minded investors and rapid consensus-building propel some Biotechs onto history’s stage.
Missed and Caught “Era Trains”
Over the decade, invisible hands steered Biotech trajectories — especially for early movers.
In Suzhou’s BioBAY, Transcenta epitomises the crunch facing late-stage Biotechs. Its anti-CLDN18.2 mAb osemitamab has consumed USD 100+ million, with global Phase III costs potentially doubling that.
Founder Xueming Qian takes heart from 2024 ASCO data showing osemitamab’s best-in-class potential in gastric cancer. The trial’s US patient enrolment adheres to Food and Drug Administration (FDA) advice Qian sought in 2018: robust Chinese data, solid CMC and 15% US representation. With CDx and CMC investments pushing costs to USD 100 million, Qian now seeks Phase III partners and novel financing like Suzhou’s asset-backed loans (requiring Phase III-ready, globally competitive candidates).
Transcenta’s journey mirrors industry waves. Launched in 2012 as a service provider, it turned innovator post-2015’s “China Biotech Boom”, merging with Janssen Biotech, Inc. in 2018 to bolster CMC. But the expansion proved unsustainable.
Qian cites PD-L1 as a misstep — boarding the train too late. Similarly, its 2021 HKEX listing caught the 18A tailwind but left financing challenges.
“Era trains” like PD-1, 18A and platform frenzies tempted many. The fear? Missing out. Yet overexpansion after fundraising frequently spells disaster.
Today, Transcenta bets on osemitamab and osteoporosis candidate blosozumab. Qian’s takeaway: “Supporting three blockbuster pipelines is unrealistic; one is reckless. Value lies in one or two core assets”.
Risks loom everywhere: clinical setbacks, financial overreach, partnership constraints. Geopolitics adds unpredictability. Founders must distribute risks across a decade, make bold calls and pivot when windows close.
As Goldman notes, Chinese Biotechs now diverge: some pivot to profitability; others, like Transcenta, stay nimble, leveraging global partnerships.
Commercialisation’s Existential Test Arrives Sooner, Harder
Drug development risks span targets, mechanisms, molecules and markets. Underestimating any can prove fatal.
For PD-1, market risk was paramount. Pediatrix’s Cheng Zhang, a commercialisation veteran at MSD and Simcere UK , calls it a cautionary tale. “By 2021–2022, insiders questioned why PD-1’s market underperformed projections. The answer wasn’t just competition — it was flawed generic drugs logic applied to innovative drugs”.
The US model — where top-three drugs claim 80–90% share — now guides China. Investors shun fourth/fifth entrants, focusing on global top-three potential.
PD-1’s implosion also exposed reimbursement limits. “When everyone chases CNY 3 trillion in National Medical Insurance funds, it’s zero-sum”, Zhang notes.
Equally pivotal was Innovent’s sintilimab US rejection — a wake-up call on over-relying on Chinese data for global approvals. PD-1’s legacy? Two truths: China’s market is just 5% of global (vs US’s 50%), and US-China tensions are unavoidable.
Commercialisation’s test came faster than anticipated. If generics logic held for 10+ years, why did innovative drugs’ reckoning arrive in three?
The reason is because everything accelerated. Historically, biotech cycles spanned 6 to 8 years. Now, platform-to-product validation happens quicker — mirroring AI’s compressed timelines.
Drug lifecycles also shrank from 15 years to 5 to 7, demanding faster ROI. “You must breakeven by year 2, profit by year 3”, Zhang says. This demands new commercial models — a gap he aims to fill with Pediatrix’s clinician-centric approach.
In this era, answering commercialisation’s existential questions — how to grow, how to sustain — will define Chinese Biotechs’ next decade.
A Decade Adrift: Where’s the Shore?
Each Biotech’s story reflects China’s innovative drug evolution.
MicuRx’s 443-day IND approval in 2014 contrasts with today’s 60-day tacit approvals. Yuan credits China’s cost advantage for his 2007 return but never envisioned local commercialisation pre-reform. “Back then, we planned to derisk here, then license to the US. China’s progress made our path possible”.
CGeneTech’s “skip Phase II” breakthrough — leveraging quantitative pharmacology — showcases regulatory progress. Yu calls it unthinkable prior to the reforms.
Their trajectories reflect China’s catch-up decade, where industrial policy compressed timelines. But as Japan’s auto/electronics sectors showed, policy’s utility wanes when industries reach parity.
True innovation requires more than top-down mandates — it needs patience, cultural shifts and grassroots resilience.
For founders, milestones like IPOs aren’t endpoints but credibility boosters for the long haul. As Vertex Pharmaceuticals’ founder Joshua Boger observed: “Biotech attracts idealists — no rational person would choose this grind”.
The road ahead remains uncharted. For China’s Biotechs, the marathon continues — with neither shortcuts nor finish lines in sight.
Acknowledgements
Zhengyu Yuan (MicuRx), Qiang Yu (CGeneTech), Jason Yang (CStone), Xueming Qian (Transcenta), Cheng Zhang (Pediatrix), Jingsong Wang (Harbour BioMed), Tianran Liu (Vertex Holdings), Xing He (HighLight Capital).