The end of nuclear winter and tens of percent growth: how China is growing its pharma giants

China has entered the race in the market of weight loss drugs: several companies from China have presented their products that may become competitors to Ozempic, Mounjaro and other hits from Novo Nordisk and Eli Lilly. The first of these received regulatory approval in June. In general, Chinese biotech has survived the prolonged "nuclear winter" and is now actively developing. What should an investor know about it?

In 2026, Danish company Novo Nordisk's patent for semaglutide, the active ingredient in Ozempic, will expire in China. This means that one of the world's largest markets is opening up to local developers of analogs and generics. 

Hangzhou Jiuyuan Gene Engineering has already created a biosimilar of Ozempic - the first in China - and has applied for approval of the drug, called Jiyoutai. The company announced the news in early April. Since then, its shares have risen more than 44% on the Hong Kong stock exchange and nearly 50% since the beginning of the year.

The development of a breakthrough drug that investors can capitalize on as much as Eli Lilly or Novo Nordisk stock once did is underway all over the world, but the toughest and most competitive battle for the market is unfolding in China: in February, nearly 100 new drugs to treat type 2 diabetes and overweight were being tested worldwide, with about 60 of them in China. 

Nomura Bank predicted last year that Chinese companies could capture 20% of the Chinese market for GLP-1-based drugs by 2033. At the same time, the local market for such drugs could grow by an impressive 23% per year and reach $11.4 billion in 2033. 

This growth is due, in part, to the local context: according to the International Diabetes Federation, in 2024, China will account for more than 25% of all diabetes patients in the world - the highest proportion of any country. 

Researchers from the China studies think tank MERICS say, "Chinese weight-loss drugs will first capture the domestic market, which is projected to reach $10 billion by 2033. As early as the 2030s, they will begin to compete in a global market that could exceed $100 billion." 

Jiyoutai is not the only drug that could become a competitor to world-renowned obesity and diabetes drugs from Novo and US-based Eli Lilly. Chinese companies in the last month have unveiled several developments in the final  stages of testing.

On July 15, Jiangsu Hengrui Pharmaceuticals and its U.S. partner reported that their obesity drug (still going by the name HRS9531-301 in documents) has successfully completed the final phase of clinical trials in China. Patients' average weight loss was up to 17.7% over 48 weeks (at the 6 mg dose). Including those who took a placebo, the net weight loss was 16.3%, a rate comparable to the results of Eli Lilly's Zepbound drug in the Chinese trials, Bloomberg writes. Hengrui shares have already added 30% since its IPO in May this year. 

The substance ecnoglutide is the main development of scientists from Sciwind Biosciences in Hangzhou. Its main advantages over competitors from market leaders Novo Nordisk and Eli Lilly are fewer side effects and a longer duration of action. In the short term, the drug showed low weight gain: after stopping the drug, the subjects gained only about 1% of the lost kilograms in seven weeks. Positive results of clinical trials of econoglutide are published by the most authoritative international scientific journals. 

"It's good that there will be competition in the market. Otherwise, the situation was very annoying. Many patients just couldn't access these (weight loss) drugs," says endocrinologist Tricia Tan of Imperial College London. She was also involved in reviewing a publication about ecnogluditis for the Lancet. 

Sciwind Biosciences is a non-public company. Among those who have funded it is  IDG Fund, which was an early key investor in Xiaomi. The company's head of research, Xinle Wu, is a former employee of Eli Lilly subsidiary Lilly China.  

Lei Qian - Innovent Biologics' chief R&D officer - previously worked at Eli Lilly's China division, and now his team has unveiled its exclusive development, Mazdutide. And it is the first Chinese drug to receive approval from China's National Medicines Administration (NMPA). The company is testing the drug and plans to sell it under an exclusive license agreement with US-based Eli Lilly. The company's Shares on the Hong Kong exchange have risen in value by more than 110% over the year. 

Chinese companies are not only engaged in the production of generics and inexpensive copies of Western drugs. They are also involved in the production of unique developments for the treatment of cancer or autoimmune diseases.

On September 8, 2024, US-based Summit Therapeutics published data proving that their drug helps fight lung cancer as effectively as its long-standing, more expensive US counterpart, Keytruda. This point, in the apt words of WSJ journalists, was a "DeepSeek moment" for the US pharma industry.

The day after  the news, the company's stock jumped more than 60% in half a day, extending its total gains over the past 12 months to about 1,200%.  The company's stock is now up more than 60% in half a day, increasing its total gains over the past 12 months to about 1,200%;

It would seem, what do Chinese scientists have to do with this? It's simple: two years before this Summit licensed the drug from then little-known Chinese biotech company Akeso. 

Today, Akeso has more than 50 drugs under development in areas such as oncology, autoimmune diseases and metabolic diseases;

Since 2020, Akeso shares can be bought on the Hong Kong Stock Exchange. Since going public, the company has appreciated more than eightfold.

This is not the only example - China's Duality Biotherapeutics is engaged in the development and creation of drugs for autoimmune diseases and next-generation drugs that target cancer cells with little or no effect on healthy cells. It is currently conducting clinical trials of a drug against large cancerous tumors in partnership with the U.S. Avenzo Therapeutics. Since its IPO in April this year, its securities have risen by 60%. 

In 2015, the Chinese government eased access to clinical trials and brought them in line with global standards; in a couple of years, additional hires have sorted out 20,000 new drug applications, tells the backstory of Chinese biopharma success The Economist. 

In addition, investment in biotech was on the rise in the early 2020s. In 2023, government subsidies to the industry alone exceeded $25 billion, an all-time record for the local market.

After local drug testing and manufacturing standards became comparable to those in Europe and the U.S., U.S. companies paid $8.1 billion in advances for Chinese drugs between 2020 and 2024, according to DealForma Database. By comparison, the total for the previous five years was only $536 million. According to GlobalData data available from Reuters, in the first six months of 2025, U.S. pharma makers entered into 14 drug licensing agreements from Chinese companies with a potential value of $18.3 billion. A year earlier, there were only two such deals.

According to WHO, in 2024, China was second only to the US in the number of clinical trials conducted per year. This year, according to Global Data, it's already in first. China passed the European Union on this indicator as early as 2023.

The cost of clinical trials in the country is about 30-40% lower than in the U.S., and it is also easier to recruit the number of patients needed for trials. It's cheaper to innovate in China, thanks to lower wages and production costs, a large number of researchers and cheap clinical trials, write the Financial Times. As Jialing Zhang, head of healthcare research on China at Nomura, notes, leading Chinese biotech companies have already turned a profit this year. Usually, because of the long development cycle, such companies spend years "burning through" money before they start making money.

"It's not exaggerating to say that China could overtake the U.S. in terms of the number of new drugs that are put into development in the coming years," said Daniel Chanslor, vice president of analytics at Norstella, to Bloomberg.

The main problem for Chinese biotech companies is that although they have learned how to conduct quality research, they often lack the money to go public, as well as the ability to sell. 

Without it, most companies either fail or sell development to big players, says Hope Medicine co-founder Sam Lu. China, he says, is "probably the last market where the transition from biotech to biopharma is still possible. In the US, that opportunity has pretty much closed." It's about the opportunity to grow from a company that simply develops drugs to one that owns its own infrastructure for mass production and sales.

"For generics, regional representatives promoting several drugs at once are enough. But innovative drugs require large-scale national launches involving specialized teams," explains Lu. 

According to him, there are no examples of Chinese companies adopting the "buy and scale" model in relation to innovative drugs. "Even if they get their hands on a first-class product, traditional players may not be able to handle its launch - they simply don't know anything other than established promotion schemes," he believes.

"China is still looking for its model," he adds.

The problem is also the state of the Chinese market: international investors recognize China's technical potential, but quality assets are often sold at a so-called "China discount" due to external risks and investor caution,  writes Selena Guo on the China Policy blog. 

There's also the Trump factor. Earlier, he announced that he could impose up to 200% duties on pharmaceutical products as early as August 1.

The Hang Seng Biotech Index, which reflects the performance of the 50 largest biotech companies listed in Hong Kong, has gained more than 80% since the beginning of the year (through July 17). In comparison, the benchmark index  Hang Seng has added just over 20% over the same time.

The rise marks the end of a protracted bear market in China's biotech industry that began as early as 2021, wrote the Financial Times. "We've had a real nuclear winter in Chinese biotech financing, but now it's quickly coming back to life," Shannon Zheng, a family office investor and co-founder of Beijing-based biotech company Likang Life Sciences, told the FT. 

Alvin Chow, co-founder and CEO of Singapore-based investment platform Dr Wealth in his blog writes that billion-dollar deals by Western pharma giants with Chinese biotech companies have triggered a rally in biotech companies trading in Hong Kong. 

Some of them have risen in price by more than 200% since the beginning of the year. Among them are Antengene Corp, HBM Holdings and RemeGen. But for most investors, choosing individual successful biotech companies is not an easy task: the sector is characterized by high volatility, he warns;

Despite the obvious variety of options and the seemingly bright prospects of the Chinese pharmaceutical market, investors should be very cautious about investing in this business, Nikolay Bespalov, development director of analytical company RNC Pharma, told Oninvest: "Without a serious immersion in the industry specifics, it will be quite difficult to develop a sensible investment strategy. Even for specialists with specialized education, this level of involvement is not always available, not to mention investors who are only interested in financial reports," he believes;

This article was AI-translated and verified by a human editor