2025 MNC Introduction Transaction Decoding: The Year of "Value Awakening" for China's Innovative Pharmaceuticals

Ask AI · How Patent Cliff Drives MNCs to Pay Premiums for Chinese Innovative Drugs

By 2025, transaction data shows that the top 20 global multinational pharmaceutical companies (MNCs) will have an average total deal value of $2.756 billion and an average upfront payment of $236 million for licensing innovative drugs and technology platforms from China. In comparison, during the same period, these MNCs will have an average total deal value of only $1.289 billion and an upfront payment of $153 million for projects from other regions worldwide.

Based on this, it is estimated that MNCs pay approximately 114% more in total deal value and about 54% more upfront payments for Chinese innovative drugs than for those from other regions globally.

This data indicates that the intrinsic value of Chinese innovative drugs is being re-evaluated and re-priced by the international market, with their global competitiveness and asset scarcity becoming increasingly evident.

01 The Supply-Demand Vacuum Under Patent Cliff

The primary driver for MNCs to pay high premiums for innovative assets is the imminent patent cliff.

From 2025 to 2030, the global pharmaceutical industry will face a new wave of large-scale patent expirations. According to GeneOnline, the total sales of drugs expiring during this period will reach approximately $236 billion, with nearly 70 blockbuster drugs facing generic or biosimilar competition. Unlike the 2008 patent cliff, this wave features a larger proportion of biologics, making the market erosion pattern more complex.

A November 2025 report by GEN also states that, between 2026 and 2029, the expiration of patents for just 20 blockbuster drugs is expected to result in a loss of approximately $176.44 billion in annual sales for original manufacturers. Merck, BMS, and Pfizer are identified as the most affected major pharmaceutical companies.

Figure 1: 20 “Blockbuster” Drugs Facing Patent Cliff in 2026-2029

Source: GEN

For MNCs, this represents a critical gap that must be filled. There are only two ways to do so: rely on their own R&D pipelines or acquire external assets. Over the past decade, internal R&D returns for large pharma have continued to decline, while external acquisitions have increased year by year. As all multinational companies compete fiercely for assets, high-quality targets have become scarce, driving up prices.

At this juncture, Chinese innovative drugs have entered the attention of MNCs.

China’s R&D pipelines in cutting-edge fields such as ADCs, bispecific antibodies, cell therapies, PROTACs, and small nucleic acids are now among the world’s leading. More importantly, China offers the dual advantages of low cost and high efficiency. Liu Bowei, head of Healthcare Investment Banking at JPMorgan Asia-Pacific, shared a compelling case: a CFO of a large MNC admitted that if they could source the same pipeline in China at only 30-40% of US costs—and potentially achieve better results—they would definitely choose China.

The ultimate balance of cost and efficacy has made China’s pipelines a huge “innovation arsenal” that MNCs cannot ignore.

The changes on both supply and demand sides converge perfectly in 2025. When demand is willing to pay a premium for scarce assets, and supply can offer truly competitive products, a wave of transactions is only a matter of time.

02 Data-Driven Revaluation of Value

The rise in deal values ultimately depends on data support. In recent years, as clinical data of Chinese innovative drugs has been disclosed, MNCs’ valuation of Chinese assets has gained new reference points.

In 2022, Innovent Biologics licensed AK112 to Summit for a total deal value of up to $5 billion, setting a record for Chinese innovative drug licensing. In 2024, in the HARMONi-2 study, AK112 monotherapy was compared head-to-head with K-drug, showing median progression-free survival (mPFS) of 11.14 months versus 5.82 months, HR=0.51. It became the first drug globally to beat K-drug in a Phase III head-to-head trial.

In 2025, AK112 again made headlines at the ESMO annual meeting. The HARMONi-6 study showed that AK112 combined with chemotherapy as first-line treatment for squamous non-small cell lung cancer (NSCLC) achieved an mPFS of 11.14 months, compared to 6.9 months for the TKI plus chemo group (PFS HR=0.60, p<0.0001), with an absolute difference of 4.24 months. Subgroup analyses showed consistent benefits regardless of PD-L1 expression levels or presence of liver metastases. This marks AK112’s second Phase III head-to-head victory over PD-1 therapies.

In January 2026, Summit confirmed it had submitted a BLA for AK112 to the FDA in Q4 2025. Market attention is also on the potential “second blockbuster” status of AK112, with analysts suggesting Summit may bring in a large MNC with commercialization capabilities to realize its full value.

In the lung cancer field, Kelun-BHT’s sac-TMT (sacituzumab govitecan) has also made waves with solid clinical data. At ESMO 2025, the Phase III OptiTROP-Lung04 trial was selected for the plenary session, becoming the first global Phase III clinical to demonstrate significant OS benefit of ADC in TKI-resistant EGFR-mutant NSCLC. In November 2025, the OptiTROP-Lung05 trial further announced positive results: sac-TMT combined with K-drug as first-line therapy for PD-L1 positive NSCLC achieved the primary endpoint of PFS, making it the first Phase III study to show positive results for PD-(L)1 + ADC in first-line NSCLC.

Figure 2: Structure and Design Highlights of sac-TMT

Source: Kelun-Biotech presentation at JPM 2024

Based on these solid data, Kelun-Biotech had already partnered with Merck in 2022 for over $1 billion, with Merck responsible for global development and commercialization outside Greater China. To date, Merck has led more than ten global Phase III trials across gastric cancer, urothelial carcinoma, and other cancers.

Additionally, BeiGene’s iza-bren (BL-B01D1) also garnered global attention. At ESMO 2025, it presented Phase III results of the first-in-class EGFR×HER3 bispecific ADC for relapsed nasopharyngeal carcinoma: ORR of 54.6% versus 27.0% in chemotherapy; mPFS of 8.38 months versus 4.34 months, with a 56% reduction in risk of progression or death (HR=0.44). Earlier data from WCLC on EGFR-mutant NSCLC showed ORR of 100% and mPFS over 12 months.

Building on this, BeiGene reached a partnership with BMS at the end of 2023 valued up to $8.4 billion, setting a record for domestic ADC exports. In October 2025, the milestone of the IZABRIGHT-Breast 01 trial was achieved, triggering an initial near-term payment of $250 million under the collaboration— the largest single milestone payment for a domestic ADC asset in overseas licensing.

All these cases point to a clear fact: when Chinese innovative drugs produce data capable of changing clinical practice, MNCs are willing to pay a “global premium.” The core value shifts from the cost advantage of “Made in China” to the clinical breakthroughs driven by “Chinese innovation.”

03 From Product Licensing to Platform Export

Another notable trend is that MNCs’ positioning of China is evolving from simply purchasing products to acquiring platforms and timing advantages.

Table 1: Top 20 Global MNCs Licensing Chinese Innovative Drugs and Pipelines (Partial)

Note: Data as of Jan 1, 2025 – Dec 27, 2025

Sources: Yaoyao Data, public information

Deals between companies like Innovent, Nanjing Nanjing Biotech, Jing Tai Tech, and BeiGene with Pfizer, Eli Lilly, Merck KGaA, etc., show that MNCs are not just acquiring a mature product already in Phase III, but rather a continuous output platform or early pipeline incubated from that platform.

For MNCs, the value of a platform lies in its replicability. A validated ADC, bispecific antibody, or AI drug discovery platform means the ability to generate new molecules continuously over the coming years. This strategic reserve’s value far exceeds that of a single drug.

Meanwhile, cases like Innovent’s collaborations with Takeda, CSPC with AZ, and Sanyou with Pfizer demonstrate that MNCs are focusing on late-stage pipelines close to market. For MNCs facing patent cliffs, acquiring such assets can save years of R&D and accelerate market entry. The value of “time” is directly reflected in transaction prices.

Beyond platform and timing collaborations, a rising trend is the emergence of Co-Co (co-development and shared profits) models.

For example, the October 21, 2025, deal between Innovent and Takeda involves some products under a typical Co-Co model, sharing costs at a 40/60 ratio and profits. Innovent gains short-term cash flow and equity investment support, while accumulating core capabilities in R&D, registration, and commercialization through global collaboration.

This model allows MNCs to develop and commercialize overseas markets while Chinese companies retain domestic rights and participate deeply in global development. Its emergence indicates that leading Chinese pharma companies now have stronger negotiation power, securing more favorable cooperation structures, and that MNCs recognize their clinical and commercialization capabilities, willing to establish longer-term, deeper partnerships.

04 Conclusion

Currently, the value of Chinese innovative drugs is being systematically re-evaluated based on pipeline data, clinical results, and platform capabilities. MNCs are willing to pay higher premiums because they see verifiable clinical value and the platform’s ability to sustain ongoing innovation. This shift in value perception underpins deep adjustments in transaction structures and marks China’s pharmaceutical innovation moving from a focus on product exports to a broader system capability export.