Buy platforms, sell pipelines: Unpacking the innovation logic of China Biopharma

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Zhongsheng’s innovative drug development has taken a different path.

On March 26, China Biopharma (01177.HK) released its FY2025 results: revenue of 31.83 billion yuan, up 10.3% year-on-year. Adjusted net profit attributable to shareholders was 4.54 billion yuan, up a substantial 31.4%. Double-digit growth for four consecutive reporting periods, with the growth rate among the highest for large domestic Pharma companies.

But the numbers are only on the surface. What the market should really pay attention to is that Zhongsheng is taking a growth path that’s completely different from other large domestic pharma companies.

In the past year or so, Zhongsheng accomplished three major things.

In July 2025, acquired Lisen Pharma outright for US$950 million, gaining a global-leading ADC technology platform, Claudin 18.2 ADC, CCR8 monoclonal antibody and multiple potential FIC assets.

In January 2026, acquired Hejia for RMB 1.2 billion, obtaining the world’s first clinically validated "one shot per year" ultra-long-acting siRNA delivery platform, instantly entering the trillion-dollar chronic disease track.

In February 2026, entered into a US$1.53 billion global licensing deal with Sanofi for rovacistitinib, setting the record for the largest licensing deal in China’s transplant sector.

Acquiring platforms while out-licensing pipelines.

Quickly supplement core technology platforms and pipeline depth via M&A, then use BD to push self-developed innovations to global markets—this "M&A + BD" dual approach is virtually unmatched among large domestic pharma companies.

Chairman Xie Qirun was blunt at the earnings meeting: "External licensing will be the most core performance target for our BD in the future."

The meaning is clear: Zhongsheng’s international revenue will start to be a visible number in the accounts from 2026 onward.

Innovative product revenue surpassed 15 billion

Let’s start with fundamentals.

In the full year 2025, Zhongsheng’s innovative product revenue reached 15.22 billion yuan, up 26.2% year-on-year, and the share of total revenue rose to 47.8%—just a step away from 50%.

In the past three years (2023–2025), the company got approval for 16 innovative products, including 7 nationally classified as Type 1 innovative drugs. The intensive approvals and resulting scaling effect are the core drivers behind sustained double-digit performance growth.

Notably, gross margin reached 82.1% in 2025, up 0.6 percentage points year-on-year.

Under the normalized centralized procurement and continuous price negotiations by medical insurance gross margin can still rise, indicating the increased share of innovative products is indeed improving the company’s profit structure.

The sales & management expense ratio dropped from 42.1% to 41.3%, and per capita output rose from 1.5 million yuan in 2019 to 3 million yuan.

CEO Xie Chengrun revealed a key detail at the earnings meeting: Even excluding the impact of Sinovac dividends, core net profit growth for 2025 was still 15%, and this figure does not yet include any license-out income contribution.

In other words, when Sanofi’s US$135 million upfront payment and future milestone payments hit the accounts, Zhongsheng’s profit growth will have extra upside.

Another easily overlooked figure is cash reserves.

By the end of 2025, the company’s net cash (including financial management) reached 16.9 billion yuan. After completing large-scale acquisitions, cash on hand increased instead of decreasing, providing a substantial financial cushion—which means further ammunition for future M&A or license-in.

The dual approach: buy in, sell out

Zhongsheng’s M&A logic is clear: Go for platforms, not just pipelines.

Acquiring Lisen Pharma brought antibody discovery and ADC technology platforms. Lisen’s two core assets have been licensed to AstraZeneca and Merck, with total transaction value close to US$4 billion.

Lisen founder Qin Ying now serves as Zhongsheng Group’s chief scientist for oncology, overseeing early-stage oncology macromolecule projects. Integration of the acquisition is complete, and the core team has merged into Zhongsheng.

Acquiring Hejia delivered the siRNA delivery platform.

This platform’s biggest highlight is ultra-long-acting dosing. Its Lp(a) siRNA product Kylo-11, Phase I data shows that a single low dose reduces Lp(a) by over 90%; mid-high doses maintain effect for over a year. Globally, no approved drug specifically targets Lp(a), so the track is wide open.

Chairman Xie Qirun emphasized the platform’s extensibility at the earnings meeting: "Small nucleic acid platforms can now deliver not just intrahepatic but also extrahepatic drugs. It can cover metabolic, cardiovascular, liver, kidney, respiratory—even CNS. High safety window, low dosing frequency—future potential is huge."

The Sanofi collaboration marks the official opening of the "sell out" approach.

Rovacistitinib is the world’s first approved JAK/ROCK dual inhibitor. Upfront payment of US$135 million, total deal value up to US$1.53 billion, plus double-digit sales royalties.

This deal proves Zhongsheng’s ability to license a self-developed FIC product at competitive pricing to a global Top 10 MNC.

CEO Xie Chengrun also clarified at the earnings meeting: Due to accounting standards and transaction timing, the US$300 million milestone payment Lisen received from Merck was not included in the 2025 consolidated statements, but the cash has been fully received.

Going forward, all Lisen cooperation payments will be 100% recognized on the listed company’s accounts, meaning from 2026, BD income will officially become an independent growth source in the reporting.

Pipeline on the eve of explosion

Xie Qirun gave specific pipeline outlooks at the earnings meeting: From 2026 to 2028, nearly 20 Type 1 innovative drugs are expected to be approved. By year-end 2028, total innovative products launched will approach 40.

Structurally, the oncology portfolio is most exciting.

Claudin 18.2 ADC (LM-302) Phase III in third-line gastric cancer has completed full enrollment—the world’s first Claudin 18.2 ADC to complete registrational enrollment. CCR8 antibody (LM-108) Phase III for second-line gastric cancer is ongoing, and this year’s ESMO will read out Phase II for first-line gastric and pancreatic cancers.

Both products were acquired with Lisen and are globally FIC potentials, key reserves for next BD globalization moves.

Qin Ying also highlighted the EGFR/c-Met bispecific antibody at the earnings briefing: Phase I shows 64.7% ORR in third-gen EGFR-resistant patients, 6-month PFS at 79%, Grade 3+ adverse event rate at 52.6%, far below competitors (87%). Data will be officially released at this month’s European Lung Cancer Conference, with plans to start Phase III within the year.

Chronic disease portfolio is also accelerating.

Besides the aforementioned Kylo-11 (Lp(a) siRNA), APOC3 siRNA is planned for Phase II in the second half of the year; PCSK9 dual-target siRNA is expected to start clinical trials this year.

In weight-loss, there is a diversified matrix: oral (GLP-1 small molecule, THR-β) + injectable (GIP/GLP-1 bispecific, ActRIIA/B, INHBE siRNA).

Xie Qirun used a vivid description: "From route of administration to dosing frequency, muscle retention, weight-loss effect, and safety—we’re comprehensively improving the weight-loss experience."

In respiratory and autoimmune, three products are in Phase III: PDE3/4 inhibitor (COPD), TSLP antibody (asthma), ROCK2 inhibitor (pulmonary fibrosis). TYK2 inhibitor’s phase II psoriasis data will be released at EADV this year, and Xie Qirun claims its efficacy "significantly exceeds other TYK2/JAK inhibitors, even comparable to biologics."

Xie Qirun summed the 2026 rhythm at the end of the earnings call: January, Hejia acquisition; February, Sanofi deal; March, annual results. Every month, there’s something new. She said, "We hope to have good news to share with everyone each month going forward."

Xie Qirun also announced at the earnings call that Zhongsheng’s stock short name has officially changed from Sino Biopharm to SBP Group. This marks a new starting point, focusing more tightly on innovation and internationalization strategies.

To really focus on innovation, China’s market alone is obviously not enough. Zhongsheng’s chosen path is clear: Use M&A to build pipeline and platform depth; use BD to push innovative products globally.

Whether this path is viable, the BD landing pace in 2026 and 2027 will be the most critical validation window.

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