On September 29, Hengrui Medicine announced a licensing agreement with Novo Nordisk, granting the latter exclusive rights to develop, manufacture, and commercialize its investigational once-weekly oral GLP-1/GIP dual receptor agonist HRS-1596 outside Greater China.

 

The total potential transaction value is up to $2.6 billion, including a $300 million upfront payment and payments upon achieving relevant development, regulatory, and commercialization milestones. In addition, Hengrui will be eligible to receive sales royalties based on HRS-1596's net sales in the licensed territory.

 

HRS-1596 is currently still in the preclinical R&D stage. Just days earlier, on September 21, Hengrui Medicine announced that it had received a clinical trial approval for HRS-1596. To date, cumulative R&D investment in this project is approximately RMB 18.4 million (unaudited).

 

In other words, Hengrui leveraged less than RMB 20 million in R&D investment into a deal with a $300 million (approximately RMB 2.01 billion) upfront payment.

 

Over the past two years, Hengrui has become increasingly adept at converting early-stage pipelines into BD assets: handling discovery and early development itself, then licensing overseas clinical development, registration, and commercialization to overseas companies, while retaining China market rights and subsequent returns.

 

Hengrui Medicine has long been regarded as the Chinese company most likely to become the next Big Pharma. But interestingly, from a certain perspective, Hengrui is looking more and more like a Biotech.

 

Chapter 1: Small Cost Leveraging a Big Deal

 

Hengrui's布局 in GLP-1 actually began quite early. In 2016, the clinical application for Hengrui's oral GLP-1 analog SHR-2042 was already accepted for type 2 diabetes and obesity, but this project was not subsequently developed.

 

Hengrui's weight-loss pipeline re-entered the public eye in 2023.

 

That year, at the 83rd Scientific Sessions of the American Diabetes Association, Hengrui presented Phase I clinical data for its core asset HRS-9531 (retatrutide), showing good tolerability and positive weight-loss and glucose-lowering effects.

 

But by this time, the global weight-loss drug market had already formed a "duopoly" between Eli Lilly and Novo Nordisk.

 

If it continued along the traditional Big Pharma path, Hengrui would need to invest substantial funds to complete global multi-center clinical trials and further build overseas registration and commercialization systems.

 

Hengrui took a different approach.

 

In May 2024, Hengrui packaged its oral small-molecule GLP-1 receptor agonist HRS-7535, GLP-1/GIP dual-target agonist HRS-9531, and GLP-1/GIP/GCG triple-target receptor agonist HRS-4729 and licensed them to Hercules (later renamed Kailera). The latter obtained exclusive global development, manufacturing, and commercialization rights outside Greater China.

 

Hengrui received a $110 million upfront payment and near-term milestone payments, with total potential transaction value of approximately $6 billion, while also holding a 19.9% equity stake in Kailera. This deal directly ignited the NewCo model and became a benchmark case for Hengrui's overseas expansion in recent years.

 

According to disclosures, cumulative R&D investment for the above combination pipeline at the time of licensing was only RMB 156 million, achieving a breakthrough of small cost leveraging enormous commercial value.

 

In April 2026, Kailera successfully listed on Nasdaq, raising $625 million. Although Hengrui's equity stake was diluted after the IPO, based on the first-day closing price, this stake was worth approximately $300 million.

 

Hengrui's 2026 half-year report shows that fair value change gains from this equity alone reached RMB 821 million, fully validating the success of this transaction.

 

The core advantages of this business model are clear: complete pipeline布局 at relatively low early-stage R&D cost, quickly recoup cash and avoid high overseas R&D and commercialization risks through overseas licensing, while firmly retaining core Greater China rights and continuing to cultivate the domestic market.

 

The sustainability of this model is mainly attributable to Hengrui's precisely differentiated pipeline布局.

 

Core asset HRS-9531 covers GLP-1/GIP dual targets, with both injectable and oral formulations; HRS-7535 is an oral GLP-1 receptor agonist; HRS-4729 is positioned in next-generation triple-target technology, locking in future competitive advantages; and HRS-1596, licensed to Novo Nordisk this time, precisely targets the blank track of long-acting oral weekly formulations. For Novo Nordisk, which urgently needs to consolidate its oral GLP-1 technical barriers and iterate next-generation products, this pipeline has extremely strong collaborative appeal.

 

From single-target to dual-target to triple-target, from oral to injectable, Hengrui has formed a relatively complete product echelon within a single track.

 

Hengrui has not treated the success or failure of any single molecule as the decisive factor for the entire track, but rather uses its pipeline matrix to improve the asset conversion efficiency of individual projects.

 

This is also where it increasingly resembles a Biotech.

 

Chapter 2: BD Becomes a Normalized Business

 

GLP-1 is just one facet. Today's Hengrui has built a complete R&D pipeline matrix covering oncology, metabolism, cardiovascular, autoimmune, and other fields. As of the end of July this year, Hengrui Medicine has more than 100 self-developed innovative products in R&D and more than 400 clinical trials underway.

 

According to Citeline's 2026 Annual Review of Pharmaceutical R&D, Hengrui ranks 7th globally in total pipeline scale, and is the only Chinese pharmaceutical company in the global top ten.

 

In terms of pipeline stages, preclinical, Phase I, and Phase II projects account for a large proportion of Hengrui's out-licensed and in-development projects. At the 2026 JPM conference, Hengrui stated that its goal is to advance approximately 20 new molecular entities into clinical development each year.

 

Behind such a scale of pipeline is sustained R&D investment.

 

In the first half of 2026, Hengrui's R&D investment reached RMB 4.605 billion, up 18.96% year-over-year, accounting for 29.8% of revenue; full-year 2025 R&D investment was RMB 8.724 billion, accounting for 27.58% of revenue.

 

In other words, what Hengrui possesses now is not just a few star projects that can be traded, but an R&D system capable of continuously generating early-stage assets.

 

The question follows: how do these assets enter the global market? Hengrui's answer is "borrowing a boat to go to sea."

 

Over the past three years, Hengrui's BD has formed an increasingly clear transaction network.

 

In 2023, Hengrui licensed its TSLP monoclonal antibody SHR-1905 to U.S.-based One Bio (later renamed Aiolos Bio, acquired by GSK), and licensed its EZH2 inhibitor SHR-2554 to Treeline.

 

In 2025, the Lp(a) inhibitor HRS-5346 was licensed to Merck; followed by a collaboration with GSK covering 11 clinical-stage respiratory innovative drugs and multiple preclinical-stage candidates, with total potential value of approximately $12 billion; that same year, HRS-1893 was licensed to Braveheart Bio.

 

In May 2026, Hengrui reached a global strategic collaboration with BMS to jointly advance 13 early-stage programs covering oncology, hematology, and immunology, with total potential transaction value of approximately $15.2 billion.

 

From single-product licensing to multi-project collaboration to joint development of early-stage assets with global MNCs, Hengrui's BD has gradually transformed from occasional transactions into a normalized business.

 

In the first half of 2026, Hengrui recognized RMB 1.422 billion in out-licensing collaboration revenue. The company also explicitly defined BD as a "normalized business and new growth engine" in its announcements.

 

The underlying logic is actually quite clear: R&D generates pipelines, pipelines generate BD, BD brings cash, global development resources, and overseas experience, which in turn feed the next round of R&D.

 

This is a very typical Biotech-style asset cycle.

 

But the biggest difference between Hengrui and ordinary biotechs lies precisely here — it has a sufficiently large R&D platform to continuously manufacture the next round of tradable assets, while also having China market commercialization capability as its foundation.

 

Chapter 3: Another Growth Path for China's Big Pharma

 

Using early-stage assets to leverage large licensing deals is no longer just Hengrui's approach.

 

Several of Haisco's deals this year also reflect this trend.

 

In June this year, Haisco announced a collaboration with Eli Lilly, under which Haisco is entitled to receive up to $87 million in upfront and near-term payments, up to $2.967 billion in subsequent milestone payments, and tiered sales royalties based on future net sales of the product.

 

On June 23, Haisco signed an exclusive licensing agreement with U.S.-based Nuvectis Pharma covering two innovative drugs, HSK39297 and HSK42360, receiving $40 million in upfront and near-term milestone payments, up to $1.421 billion in additional milestone payments, and sales royalties.

 

In August, Haisco announced a global exclusive licensing agreement with U.S.-based Sentivera Therapeutics, exclusively licensing the rights outside Greater China for one of its self-developed autoimmune innovative drug assets to Sentivera, with total potential transaction value exceeding $1.5 billion.

 

On September 28, Shanghai Sparx Pharma reached a global exclusive licensing agreement with Merck, licensing a preclinical oral KRAS G12D (ON) inhibitor SPR2015 to Merck for a $400 million upfront payment, with total potential value of up to $2.13 billion.

 

A company founded at the end of 2024, with a product still in the preclinical stage, was able to secure a $400 million upfront payment.

 

This can no longer be simply understood as an occasional opportunity for individual companies.

 

Over the past few years, the large volume of early-stage R&D assets accumulated by China's innovative drug industry is entering the procurement视野 of global MNCs.

 

According to PharmCube statistics, in 2025, China's innovative drug BD outbound licensing transactions totaled 157 deals, with total value of $135.655 billion and upfront payments of $7 billion — both transaction volume and total value hitting historic highs. NMPA data shows that in the first half of 2026, China's innovative drug BD transactions continued high growth, with total out-licensing value of approximately $110 billion.

 

At the same time, buyers' procurement logic is also changing.

 

In the past, MNCs preferred to license products at stages where clinical data were relatively mature, or even close to launch; now, more and more transactions are moving forward to early clinical or even preclinical stages. Behind this is, on one hand, the improvement of China's innovative drug R&D efficiency, and on the other, the persistent pipeline replenishment needs of MNCs.

 

As a result, a new industrial division of labor is emerging: Chinese pharmaceutical companies are responsible for more efficiently discovering and validating molecules, while MNCs use their global clinical, regulatory, and commercialization systems to push some of these assets to the global market.

 

But new questions arise. If Chinese pharmaceutical companies become increasingly adept at playing the role of "seller," selling early-stage assets batch by batch, will China still produce a true Big Pharma?

 

Michael Rome, Managing Director at Foresite Capital, said that Chinese companies like Hengrui have actually already met some of the conditions for becoming Big Pharma, and Hengrui is not the only outstanding Chinese pharmaceutical company — companies like Salubris and Haisco are also worth watching. "I think these companies will absolutely rise to become global enterprises. They have world-class R&D organizations, and their scientific standards are impressive."

 

Chinese pharmaceutical companies have already formed R&D pipelines of a certain scale, while also possessing relatively high clinical development efficiency and a relatively complete industrial chain. After China joined ICH, global multi-center clinical trials, regulatory communication, and R&D standards have further aligned, lowering the cognitive threshold for overseas partners regarding Chinese R&D assets.

 

More importantly, Chinese pharmaceutical companies are expanding from oncology into more therapeutic areas including metabolism, immunology, and the nervous system.

 

Large European and American pharmaceutical companies have, through decades or even centuries of accumulation, formed complete global commercialization systems, sales networks, and brand influence. But the industry environment Chinese innovative drug companies face today is completely different from that of these MNCs in their early days.

 

This means Chinese pharmaceutical companies may not completely replicate the growth path of traditional Big Pharma.

 

A more realistic path may be to first enter global markets through "innovative R&D + global collaboration," then gradually build their own overseas clinical, regulatory, and commercialization capabilities through a small number of core products.

 

In other words, what Chinese companies including Hengrui are doing now is not choosing between "Biotech" and "Big Pharma," but rather trying to use Biotech methods to improve asset turnover and R&D efficiency, and then using the capital, data, and global collaboration experience gained from BD to gradually fill in the capabilities required of a Big Pharma.

 

— In Conclusion —

 

"Hengruis" looking more and more like Biotechs does not mean they are moving away from Big Pharma.

 

On the contrary, China's "potential Big Pharmas" are trying to use a lighter approach to obtain the capital, pipelines, and experience needed for globalization.

 

But what ultimately determines whether they can go further is still not the amounts on the BD ledger, but whether they can move from "continuously selling assets" to "continuously making global products."

 

This may also be a threshold that China's innovative drugs must cross to move from being an R&D supplier to becoming a global pharmaceutical company.