The innovation foundation of Chinese biopharmaceuticals was laid as early as the 1980s.

The initial goal of national level scientific research projects represented by the "863 Program" was not to achieve original breakthroughs on a global scale, but to solve a more fundamental problem: can China independently complete complex biopharmaceutical research and production?

The focus of this stage is on the construction of manufacturing processes, engineering capabilities, and large-scale production systems. As a result, China has rapidly grown into one of the world's largest suppliers of generic drugs and active pharmaceutical ingredients.

However, the impact is also spreading, providing a key foundation for subsequent innovation: engineering capabilities and industrial execution capabilities. In the field of biomedicine, many cutting-edge technologies are difficult to implement not because of science itself, but because of engineering and scaling up issues.

The real shift occurred in the 2010s, particularly after 2015.

As the generic drug system gradually matures, the focus of national policies begins to shift from "capacity supplementation" to "originality orientation". This change is reflected on multiple levels: biomedicine has been clearly listed as a strategic emerging industry; The innovative drug evaluation system has been restructured; Regulatory logic is beginning to align with international standards; The capital market is gradually being guided towards innovation services.

The shift is most directly reflected in the quantity of research and development activities.

According to PitchBook data, the number of IND applications related to "innovative drugs" in China was 688 in 2019, and by 2023, this number has increased to 2298, more than tripling in four years. In a highly failure oriented industry, true breakthroughs only have statistical significance when enough projects are allowed to enter the 'trial and error pool'.

More importantly, this growth is not simply 'project inflation'.

With the improvement of regulatory standards, low-quality projects are gradually being phased out, and the scientific foundation and engineering feasibility of assets that can enter the IND stage are constantly improving. This means that China's innovation activities are shifting from the stage of "quantity expansion" to the stage of "quality screening".

For global innovative drug research and development, clinical trials are not only a process for verifying safety and effectiveness, but also a critical node in determining when a project will be repriced by global capital.

Especially in the first human trial (FIH) stage, small differences in time, cost, and certainty can be amplified into structural advantages.

In the report, PitchBook cited industry consensus that China can initiate FIH clinical trials on average 12 to 18 months earlier than the United States. This is not only about "faster review" or "lower cost", but more importantly, it changes the way innovation assets enter the global value system.

Under the traditional European and American models, FIH often progresses slowly due to long regulatory cycles and high patient enrollment costs. A large number of early projects have "stalled" here, and even terminated due to resource depletion. Only a very small number of projects can pass this level and enter the global trading perspective.

And China's clinical system has reconstructed this risk distribution.

Large tertiary hospitals have concentrated research, clinical, and patient resources, resulting in a significant reduction in the cost of initiating and coordinating trials. The patient base is huge, and enrollment speed is no longer a bottleneck. The review process is becoming increasingly clear and the pace is becoming predictable.

The result of the combination of the aforementioned factors is not only to complete the experiment faster, but also to release uncertainty earlier. Once a project completes FIH in China, its safety and initial effectiveness have been verified, and the failure probability curve of the project jumps accordingly - which directly affects the global pricing of assets.

PitchBook's report emphasizes that an increasing number of projects, after completing early validation in China, are directly entering cross-border licensing or global joint development. China is becoming the "risk front processor" of the global innovation system. The hypothesis that originally required years of verification in Europe and America has been screened in China ahead of schedule.

The significance of this change for multinational pharmaceutical companies is particularly profound.

Against the backdrop of continuously rising R&D costs and high failure rates, any mechanism that can predict the success or failure of a project in advance will be quickly incorporated into global R&D portfolio management. The efficiency of China's clinical system has made it no longer just a "place of execution", but an important input for global innovation decision-making.

If clinical efficiency determines how fast innovation can run, then technical complexity determines how far it can go.

PitchBook stated that since 2021, the number of FIH projects in the fields of multispecific antibodies, ADCs, and CGT in China has approached or even surpassed major European and American markets in some years. This phenomenon would have been almost unimaginable ten years ago.

The real challenge of complex modes is not only scientific, but also a comprehensive test of engineering capabilities, manufacturing systems, and failure tolerance. Taking ADC as an example, it is not a simple combination of antibodies and toxins, but a complete system engineering involving target selection, linker stability, drug loading ratio control, and consistency in large-scale production. Any mistake in any link could result in a complete loss.

Therefore, in many mature markets, such high-risk explorations are often only concentrated within a few giants. The uniqueness of China lies in the fact that a large number of medium-sized and even start-up biotech companies are participating in this practice.

Behind this phenomenon is a change in innovative organizational methods. Chinese biopharmaceutical companies generally have strong engineering capabilities and can quickly iterate processes and production workflows at relatively low marginal costs. This compresses the cost of "failing once" and allows for repeated trial and error on the same technology platform.

The success of Kangfang Biotechnology's ivonescimab lies not only in its clinical superiority over star competitors, but also in its validation of a new pathway - achieving breakthroughs through mechanism superposition and engineering optimization in highly crowded target areas.

In the CGT field, the approval of BBM-H901 by Faith Medicine also carries symbolic significance. This project is not a single breakthrough, but is built on the long-term accumulation of AAV technology. It proves that Chinese companies have been able to complete a closed-loop process from research and development to regulatory approval in highly complex treatment models.

PitchBook states that the intensive emergence of complex modality projects in China is not accidental, but highly related to their clinical efficiency, engineering capabilities, and capital allocation methods. In other words, China did not "bet on the right direction" during a certain technological window period, but began to systematically unleash its innovation potential after multiple structural conditions matured.

From a more macro perspective, this ability means that China's innovation is no longer limited to "catching up with existing paths", but has begun to enter a stage of "parallel exploration of multiple high-risk directions". This exploration density is the true source of long-term innovation capability.

In the past two years, "AI pharmaceuticals" has become a frequently mentioned but heavily misunderstood concept in discussions about Chinese biopharmaceuticals.

A large number of public discussions have focused on shallow descriptions such as "computing power advantage," "engineer dividend," and "being able to find molecules faster," but have overlooked a more core issue: what AI truly changes is not the individual R&D process, but the form of the entire innovation function.

PitchBook does not treat AI drug development as a separate track, but embeds it into the analysis of the "new asset birth mechanism". This sends an important signal: the role of AI in Chinese biomedicine is not to replace scientists, but to change "what kind of innovative activities can be replicated on a large scale".

The patent data cited in the report provides highly explanatory insights.

From 2014 to 2023, the number of generative AI patents submitted by Chinese institutions is about six times that of the United States, with a significant proportion directly related to molecular design, protein structure prediction, and drug target interaction modeling.

More importantly, Chinese AI drug research and development companies generally adopt a highly coupled structure of "algorithm+wet experiment" in terms of organizational form. This is clearly different from the model of algorithm platforms as the core and external cooperation in Europe and America.

Jingtai Technology is a typical representative. The company does not rely solely on computational simulations to generate candidate molecules, but instead utilizes automated synthesis, crystallographic validation, and rapid feedback mechanisms to feed experimental data back into model training in real-time, thus forming a closed loop.

The significance of this model lies not in a single successful molecule, but in the structural reduction of the cost of failure.

For traditional R&D paradigms, a flawed assumption often means wasting months or even years of time. In highly engineered and automated systems, failure is transformed into "tolerable high-frequency events". Once the cost of failure is compressed, the risk appetite of the R&D organization will change, allowing for the exploration of more non consensus targets and mechanisms.

PitchBook stated that Chinese AI drug development companies are more inclined to tackle "difficult problems" from the early stages, rather than first verifying indications that are easy to commercialize. This echoes China's centralized layout in complex modalities such as ADC and dual impedance.

In other words, AI has not led Chinese innovation towards shortcuts, but rather made it more capable of withstanding systematic trial and error on difficult paths.

The true impact of this model is reflected in the long-term increase in the rate of innovation asset generation. Once the engineering innovation capability is validated and solidified, China's relative advantage in the early stages of innovation will no longer rely on a single technology window, but will become a structural existence.

Just looking at the total financing curve, China's biopharmaceutical industry has indeed experienced a capital outflow in the past three years.

According to PitchBook's data, after reaching its peak in 2021, the number and amount of VC transactions in China's biopharmaceutical industry have significantly declined. 2024 is considered a temporary low point, and a mild recovery will begin in 2025.

But if this is simply understood as' lack of capital confidence ', it misses a more important signal. What has changed is not the presence or absence of capital, but a fundamental shift in the fault-tolerant logic and risk allocation methods of capital.

During the previous capital peak, a large amount of funds flowed into "fast following" projects such as me too, me better, small molecule improvement, and single target replication. The common characteristics of such projects are that the technology is not difficult, the path is clear, but the global differentiation is limited. With the restructuring of the valuation system in the secondary market, such projects were the first to fall out of favor.

PitchBook's report shows that by 2025, advanced and emerging technology modalities (including ADC, dual impedance CGT、 Nucleic acid drugs have accounted for nearly half of the VC investment transaction volume, while the financing proportion of traditional small molecule projects continues to decline. This indicates that capital is actively raising the upper limit of single project risk.

At the same time, there have been significant changes in the capital source structure of China's biopharmaceutical industry.

International VC activity has declined, with local capital becoming dominant. This is often interpreted as the 'withdrawal of foreign investment', but in the long run, it actually enhances the stability of the innovation system. Local capital has a better understanding of policy environment, clinical resources, and industry cycles, and is also more accepting of long-term returns.

It is worth noting that although the total number of financing events has decreased, the average quality of individual transactions is improving, and more funds are concentrated in a few companies with platform potential. This means that China's biopharmaceutical industry is entering a stage of "centralized innovation" from "widespread innovation".

From the perspective of industrial evolution, this process does not mean a weakening of innovation vitality, but rather the screening mechanism begins to truly play a role. When capital no longer provides living space for all projects, R&D organizations are forced to make trade-offs at an earlier stage in order to improve overall resource utilization efficiency.

Among all the indicators for measuring innovation quality, cross-border authorization transactions may be the most convincing one.

The reason is simple: multinational pharmaceutical companies do not make high long-term commitments based on narratives or emotions, they only pay for assets that can change the risk structure of their research and development portfolios.

PitchBook observed that in 2025, China's foreign authorization transactions will reach a new high in both quantity and amount, with antibody and ADC projects dominating, and significant growth in fields such as metabolic diseases and nucleic acid drugs. More noteworthy are the changes in the transaction phase - a large number of authorizations occur in preclinical or Phase I.

This phenomenon indicates that multinational pharmaceutical companies are seeing China as an important source of early risk mitigation, rather than just a target for later pipeline supplementation. In the traditional model, multinational pharmaceutical companies tend to introduce after the completion of critical validation of the project; And now, they are willing to intervene at a stage where uncertainty is still high.

The transaction between Kangfang Biotechnology and Summit is a symbolic case.

Ivonescimab has achieved breakthroughs in the most competitive PD-1 field globally through differentiation mechanisms, and its success is not only reflected in clinical outcomes, but also in its transaction structure - for the first time, a Chinese company has gained greater initiative in this field.

Deeper changes are reflected at the organizational level. The PitchBook report mentions that an increasing number of overseas companies are establishing specialized entities around Chinese assets or directly setting up early-stage research and development centers in China. This means that China is no longer just "exporting assets", but is beginning to be embedded into the global innovation organizational structure.

Once this embedding occurs, the role of Chinese innovation will no longer rely on individual successful cases, but will become an indispensable part of the global R&D system. The stability of this change is much higher than any single technological window.