In 2024, China’s healthcare system reform deepened, with “innovative drugs” entering the government work report for the first time. The internationalization of domestic pharmaceutical companies accelerated, and China’s biopharmaceutical sector entered a pivotal phase of innovation-driven, high-quality development. Looking ahead to 2025, the pharmaceutical industry is expected to continue thriving, supported by an aging population, rising healthcare demands, and ongoing policy initiatives. Key sectors such as innovative drugs, overseas expansion, CXO services, and medical services remain promising.
Accelerating International Expansion and Rising Export Cycles
In 2024, despite a cooling investment climate and slowing IPOs in China’s biopharma sector, local companies have been actively exploring international markets. More than 30 innovative drugs were launched overseas, including from companies like Hansoh Pharmaceutical and Asymchem. Alongside innovative drugs, exports of active pharmaceutical ingredients (APIs), high-end formulations, and medical devices are becoming increasingly important.
- “Patent Cliff” and Emerging Opportunities for API Companies
Between 2024-2028, patents for blockbuster drugs worth over $1.92 billion will expire globally. This presents significant opportunities for Chinese API companies, particularly in the generic drug market. As patents for key medications such as Apixaban and Dabigatran expire, domestic firms are well-positioned to capitalize on these opportunities.
- Surge in Exports of High-End Formulations and Injectables
As the U.S. continues to face drug shortages, Chinese companies are ramping up their injectable drug exports. Leading firms like Fosun Pharma and Hengrui have significantly increased their numbers of injectable drugs approved by the FDA. The demand for injectable drugs in high-regulation markets, such as the U.S., remains strong.
- Medical Devices Entering High-End Markets
Chinese medical device manufacturers are increasingly targeting high-end markets, especially in Europe and the U.S., as they seek growth opportunities abroad. Products like high-value consumables, diagnostic devices, and therapeutic equipment have seen growing demand.
CXO: A Turning Point
In 2024, government policies continued to support the CXO sector, particularly in innovation-driven drug discovery. China’s CXO companies are entering a new phase, with leading firms focusing on specialized technologies and global expansion. CDMO services, in particular, are experiencing rapid growth, with Chinese companies able to compete on drug discovery and development.
China’s small-molecule CDMO firms have maintained strong competitiveness, particularly in drug discovery and development. Their ability to innovate and capture new molecular opportunities has made them a key player in the global market. China’s CXO companies are quickly improving in specialized and technical fields, including better capabilities in drug discovery, development, and preclinical studies, positioning them as industry leaders in the coming years.
Chinese companies are positioning themselves to take advantage of global opportunities by expanding into international markets. With a strong focus on drug discovery and technological platforms, they are poised to compete with international counterparts.
Local Innovation Drugs Reach New Heights
In 2024, China’s innovative drug sector reached new milestones, with over 110 new drug approvals. By 2025, the market is expected to reach 1.4 trillion yuan, with a substantial portion coming from innovative drugs. The trend of domestic companies licensing out their drugs is accelerating, with large-scale deals and increasing transaction values.
As of December 2024, over 110 innovative drugs have been approved by NMPA. With 20 new drugs pending approval in 2025, the industry is set for a significant milestone, offering new hope to patients across various disease areas. In recent years, Chinese pharmaceutical companies have been signing large license-out deals for their innovative drugs. These agreements, such as the $2.6 billion deal for Weidi Xituo from Rongchang Biotech, highlight the global recognition of China’s innovative pharmaceutical capabilities.
By 2025, China’s innovative drugs are expected to account for 10-15% of global pharmaceutical revenues. The international market, especially in Europe and the U.S., offers significant growth potential for these products, with a market value at least 2.5 to 5.6 times larger than that of China.
Expanding Opportunities in Healthcare Services
With the expected recovery of the economy in 2025, healthcare services are set to experience strong growth. Sectors like ophthalmology, dentistry, health check-ups, and traditional Chinese medicine are expected to see a significant rise in demand as consumer spending picks up.
With the anticipated recovery of the economy in 2025, the healthcare sector will see increased demand, particularly in areas with strong consumer spending, such as ophthalmology and dental services. Medical services with strong consumer appeal, such as health check-ups and traditional Chinese medicine, are expected to experience growth. These sectors will benefit from improved economic conditions and rising disposable incomes.
As consumer spending rises, domestic healthcare services will see an uptick in performance. This will lead to more opportunities for companies in the sector to expand and innovate.
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