China's biopharmaceutical sector is off to a strong start in 2026, with record cross-border out-licensing activity and a growing pipeline of homegrown innovative drugs signaling the country's rising role in the global biotech landscape.

Data from the National Medical Products Administration showed that the total value of China's out-licensing deals for innovative drugs exceeded $60 billion in the first three months of 2026, based on the regulator's latest preliminary statistics. The figure already amounts to nearly half of the $135.7 billion recorded for the whole of 2025.

Speaking at a biopharmaceutical industry forum during the just-concluded 2026 Zhongguancun Forum, a regulatory official said China's innovative drug sector had achieved "historic breakthroughs" and was off to a strong start for the 15th Five-Year Plan period (2026-30).

At the same time, regulators have approved 10 innovative drugs as of Friday, including eight domestically developed medicines.

The surge in out-licensing deals — often referred to as business development, or BD — reflects growing international confidence in Chinese research capabilities. Under such arrangements, Chinese pharmaceutical companies license the exclusive rights of drug candidates or technology platforms to global partners in exchange for upfront payments, milestone fees and future sales royalties.

One of the quarter's largest deals came from Hebei province-based CSPC Pharmaceutical Group Ltd, which signed a multi-project collaboration with AstraZeneca in January to jointly develop long-acting peptide drugs discovered using CSPC's sustained-release drug delivery platform and AI-powered peptide discovery technology.

Pascal Soriot, CEO of AstraZeneca, said in an earlier interview with China Daily that such partnerships illustrate the rapid rise of China's biotech sector.

Other deals during the quarter highlight a similar trend toward deeper collaboration.

According to industry database provider PharmCube, Chinese drugmakers signed more than 150 out-licensing agreements in 2025, with total deal value more than doubling from the previous year. Analysts at China Galaxy Securities say the structure of these transactions is evolving from single-asset licensing toward broader platform partnerships as global pharmaceutical companies seek access to China's increasingly competitive discovery capabilities.

The industry's momentum is also reflected in corporate earnings. According to financial data provider Wind Info, more than 70 percent of Chinese biopharmaceutical firms that disclosed 2025 results reported profits, while many innovators posted triple-digit earnings growth, suggesting out-licensing income and commercialization are beginning to offset years of heavy research spending.

Policy support is further reinforcing the sector's trajectory.

The 2026 Government Work Report identified biopharmaceuticals as an emerging pillar industry for the first time, placing it alongside sectors such as integrated circuits, aviation and aerospace, and the low-altitude economy.

Regulatory reforms are also expected to strengthen incentives for innovation. A revised regulation implementing the country's drug administration law will take effect on May 15, introducing measures including six-year regulatory data protection, seven-year market exclusivity for rare-disease drugs and additional incentives for pediatric medicines, a move analysts say could improve the country's attractiveness for global drug development partnerships.

Despite the strong momentum, industry leaders say challenges remain. Sun Piaoyang, chairman of Jiangsu Hengrui Pharmaceuticals, warned that homogeneous competition around popular drug targets and limited original discovery capabilities remain obstacles to long-term innovation.

In addition, industry analysts say Chinese companies still face hurdles in conducting large-scale global trials and building commercialization infrastructure overseas.

Still, the trajectory is clear. Industry analysts say China's pharmaceutical sector is undergoing a structural shift as domestic scientific capabilities combine with increasingly open global partnerships. The combination of homegrown technological strength and international collaboration, they say, is positioning China to play a larger role in global drug innovation and health governance.