Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **China Healthcare** sector, particularly the implications of US-China drug out-licensing and potential regulatory changes affecting the biotech and pharmaceutical industries in China [1][2]. Core Insights and Arguments 1. **US Administration's Proposed Restrictions**: The Trump administration is reportedly considering stricter scrutiny on licensing drugs from China, which may include mandatory reviews by the Committee on Foreign Investment in the United States (CFIUS) and higher regulatory barriers for clinical data [2][3]. 2. **Impact on China Biotech Sector**: The proposed executive order (EO) could introduce headline risks and increase share price volatility for companies in the China biotech/pharma sector, especially if large US pharmaceutical companies lobby against these changes [2][3]. 3. **Out-Licensing Trends**: The trend of out-licensing in China has been driven by a unique offering from Chinese biotech firms and a growing demand from global pharma, particularly as major patent cliffs approach in 2027/2028 [2][3]. 4. **Deal-Making Dynamics**: If the EO is implemented, it may slow the pace of deal-making with US partners and shift focus towards non-US partners, potentially limiting the pool of buyers for Chinese biotech assets [3][7]. 5. **Geographic Breakdown of Deals**: In 2023, US partners accounted for 52% of the total deal value and 43% of the deal count in China out-licensing, with EU partners following closely [9][7]. 6. **Selective Licensing**: The EO could lead to more selective licensing of assets, particularly for innovative drugs that may define next-generation treatment paradigms [8][10]. 7. **Potential for Deal Acceleration**: Companies may seek to accelerate deals that are already under discussion in anticipation of heightened geopolitical tensions affecting US-China pharma deals [8][10]. Additional Important Insights 1. **Categories of Companies Affected**: Companies can be categorized based on their global presence and partnerships: - Established global presence (e.g., ONC, LEGN) may face limited impact. - Companies with strong existing global partners (e.g., Kelun Biotech, 3SBio) are expected to be less affected if they have already licensed assets. - Companies with high expectations for business development but not yet closed deals may need to accelerate closures before restrictions take effect [11][13]. 2. **Long-Term Valuation Factors**: The long-term strength of company valuations will depend on the quality of clinical data, execution capabilities, and financial positions [13]. 3. **Market Resilience**: Despite potential short-term challenges, the best-performing companies in the China CDMO sector have shown resilience and the ability to navigate geopolitical uncertainties, which may help restore investor confidence over time [19][20]. This summary encapsulates the critical points discussed in the conference call, highlighting the potential risks and opportunities within the China healthcare sector amidst evolving regulatory landscapes.

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Global Healthcare** industry, particularly the integration of **AI/ML technologies** within various healthcare sectors, including medical devices, healthcare services, therapeutics, and diagnostics [2][11][22]. Core Insights and Arguments 1. **AI Use Cases in Healthcare**: - AI is being utilized for better drug/product design, increased labor efficiency, and process automation within healthcare systems [2][3]. - The potential for AI to transform drug/device development is significant, with expectations of cost-efficient drug discovery and improved clinical trial execution [3][5]. 2. **Labor Shortages and Operational Efficiency**: - A projected global healthcare worker shortage of over **10 million** by **2030** highlights the need for technologies that enhance operational efficiencies [4]. - AI technologies could help mitigate physician burnout, which affects approximately **1.76 million** workers [4]. 3. **Impact on Diagnosis and Treatment Rates**: - AI innovations in diagnostics could lead to earlier and more accurate diagnoses, potentially increasing treatment rates, especially in populations with historically low screening rates [5]. 4. **Investment Trends**: - AI/ML investments are growing within healthcare, with **25%** of global VC capital in healthcare allocated to AI/ML in **1H25**, up from a **15%** average in previous periods [12][16]. - In the US, AI/ML deals in healthcare saw a **16% YoY** increase, despite an overall decline in healthcare VC investments [18]. 5. **Sector-Specific Insights**: - **Medical Devices**: AI is expected to enhance trial and product design, manufacturing, and labor productivity [22]. - **Healthcare Services**: Improved data analytics and process automation are anticipated to enhance operational efficiencies [25]. - **Therapeutics**: Drug development and trial optimization are seen as key areas for AI adoption [26]. 6. **Company-Specific Developments**: - Companies like **Edwards Lifesciences** and **Medtronic** are actively piloting AI initiatives to improve patient identification and treatment processes [28]. - **Quest Diagnostics** reported a **3%** annual productivity increase attributed to AI, while **LabCorp** noted over **$100 million** in savings from AI-driven cost-cutting measures [34]. Additional Important Content - The call highlighted the increasing frequency of AI mentions in healthcare earnings calls, with **10%** of calls in **1Q25** discussing AI, particularly among providers and medical devices [11]. - The report emphasizes that while AI presents numerous opportunities, evidence of its impact on revenue and margins remains limited and early-stage across various subsectors [22][29]. - The analysts noted that companies slow to adopt AI may face challenges in maintaining competitiveness in the evolving healthcare landscape [30][34]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future potential of AI in the healthcare industry.

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Global Biopharma, specifically focusing on China's biotech sector transitioning from generics to innovation - **Projection**: By 2040, China-originated assets are expected to account for 35% of US FDA approvals, up from 5% today, generating approximately US$220 billion in ex-China revenue [6][33][41] Core Insights - **China's Biotech Evolution**: China's biotech sector is moving from being a generics manufacturer to a significant player in drug discovery and development, driven by regulatory harmonization, cost-efficient infrastructure, and a maturing funding ecosystem [6][7][24] - **R&D Returns**: A projected 48% improvement in global R&D returns by 2040 is anticipated due to China's advantages in speed and cost in drug R&D [7][33] - **Loss of Exclusivity (LOE) Challenge**: The global pharma industry faces a US$115 billion LOE cliff by 2035, with oncology, immunology, and cardiometabolic therapies making up over 80% of this shortfall [8][75] - **M&A Opportunities**: US and EU biopharma have a combined M&A capacity of US$480 billion, which is 1.7 times the value needed to fill the LOE gap, indicating a potential surge in cross-border deal-making [9][28] Geopolitical Considerations - **Geopolitical Risks**: Tensions between the US and China could hinder the flow of innovation, with three scenarios outlined: base case (35% FDA penetration), bull case (46%), and bear case (15%) [10][44] - **Co-opetition**: A blend of competition and collaboration is expected as global pharma navigates the dual imperatives of innovation and resilience [11] Investment Implications - **Stock Performance Drivers**: Factors such as M&A activity, regulatory clarity, and the opening of new therapeutic markets are expected to drive stock performance in the pharma and biotech sectors [37] - **Key Players**: Companies like AstraZeneca, Bristol-Myers, Merck, and Pfizer are expected to be active in M&A to replenish their pipelines, particularly through partnerships with Chinese firms [38][51] Emerging Trends - **Innovative Therapies**: Chinese biotechs are increasingly developing "1-to-N" therapies that are commercially viable globally, while also striving for "0-to-1" innovations traditionally dominated by US/EU firms [25][52] - **Pipeline Opportunities**: Companies with strong balance sheets and diversified pipelines are likely to benefit from in-licensing opportunities and successful navigation of patent cliffs [37][53] Conclusion - **Future Outlook**: The global biopharma landscape is shifting, with China's biotech sector poised to play a crucial role in addressing the innovation gap created by LOE challenges, while geopolitical dynamics will continue to influence the pace and nature of this transformation [23][39][44]

Summary of Conference Call on China Healthcare Sector Industry Overview - The conference call focused on the **China Healthcare** sector, particularly the pharmaceutical industry, amidst concerns regarding potential tariffs from the US on pharmaceutical products and services [1][67]. Key Points and Arguments 1. **Tariff Concerns**: The US announced a ~100% tariff on semiconductor chips, which has negatively impacted market sentiment regarding upcoming pharmaceutical tariffs [2][8]. 2. **Low Likelihood of Tariffs on BD Deal Payments**: The analysis suggests a low probability of tariffs being imposed on out-licensing deal payments, as US tariffs have primarily targeted tangible goods rather than service-related income [3][8]. 3. **Focus on Manufacturing Rights**: Most business development (BD) agreements grant manufacturing rights to licensors, with some companies like Pfizer planning to manufacture licensed products in the US [3][8]. 4. **Expectations for Future BD Deals**: There is an expectation for an increase in BD deals in the second half of 2025, particularly from key pharmaceutical companies with robust pipelines such as Hengrui, Hansoh, Sino Biopharma, and CSPC [4][8]. 5. **Minimal Impact of Tariffs**: Chinese pharmaceutical companies have low exposure to finished drug sales in the US, indicating that any potential tariffs would likely have a minimal immediate impact [4][8]. Additional Important Insights - **Market Reaction**: The Hang Seng Healthcare index experienced a 3% decline during the trading session, attributed to profit-taking and concerns over US pharmaceutical tariffs [8]. - **Service Trade Surplus**: The US maintains a services trade surplus with China, which may further reduce the likelihood of tariffs on service-related income, including intellectual property transfers [3][8]. - **Exhibit Data**: An exhibit presented data showing that most Chinese pharmaceutical companies have minimal overseas sales contributions, reinforcing the argument that tariffs would not significantly affect their operations [11][12]. Conclusion - The overall sentiment regarding the China Healthcare sector remains **attractive**, with expectations for continued growth in business development activities despite tariff concerns [5][67].

Summary of Key Points from the Conference Call Industry Overview - The Chinese pharmaceutical sector has shown strong performance, with HSHKBIO up 95% YTD, outperforming major indices [2][4] - Domestic pharma firms have collected 47% of all upfront payments globally for cancer drugs YTD, indicating a robust out-licensing trend [2] Company-Specific Insights 3SBio, SBP, and Hansoh - 3SBio is reiterated as a top pick due to its innovative drug exposure and near-term business development (BD) revenue [2] - SBP and Hansoh are also viewed positively for their high exposure to innovative drugs and potential revenue growth from BD activities [2] CSPC and Kelun - Potential downside surprises are anticipated in Q225 results for CSPC and Kelun due to the lingering impact of Value-Based Pricing (VBP) price cuts on legacy products [2] Financial Estimates and Model Changes SBP - Revenue and margin estimates for SBP have been raised, with EPS estimates for 2025/26/27 increased by 37%/13%/21% due to higher revenue and margin assumptions [3][23] - The acquisition of LaNova Medicines is expected to enhance SBP's innovative drug pipeline and revenue potential [14][18] Hansoh - Hansoh's sales estimates have been adjusted upwards, particularly for combo therapies, with expected peak sales of Rmb8.5 billion in 2029 [3] - EPS estimates for Hansoh for 2025/26/27 have been raised by 3%/5%/5% based on higher revenue expectations [3] Sino Biopharm (SBP) - SBP's total revenue is forecasted to grow at an 8.9% CAGR from 2024-34, driven by stable generics and innovative drugs [8] - The operating profit margin (OPM) is expected to increase from 21.8% in 2024 to 33.4% in 2034 [8] Valuation Adjustments - Price targets for SBP and Hansoh have been raised to HK$11.70 and HK$44.00 respectively, with both stocks rated as "Buy" [5][28] - The pharma sector trades at a median 23.7x 2026E PE and 1.7x 2026E PEG [5] Catalysts and Future Outlook - Key catalysts for the pharma sector include upcoming license-out deals and data readouts from ESMO [4][25] - SBP is expected to announce two more license-out deals in H225, while Hansoh is anticipated to have significant data readouts [4] Risk Factors - The implementation of the 10th round GPO has negatively impacted pharma sales, with a 3.2% decline in QTD Q225 [4] - The potential impact of the 11th round GPO is expected to be limited, but the sector remains sensitive to pricing pressures [4] Additional Insights - The acquisition of LaNova Medicines is seen as a strategic move to enhance SBP's oncology portfolio, with expected milestone revenues contributing significantly [14][18] - The TQC3721 (PDE3/4 inhibitor) is undergoing Phase II trials and is expected to enter Phase III in 2025, indicating promising market potential [15] This summary encapsulates the key insights and financial projections discussed in the conference call, highlighting the performance and outlook of the Chinese pharmaceutical sector and specific companies within it.

Summary of China Pharma and Biotech Sector Conference Call Industry Overview - The Chinese pharmaceutical and biotech sector is experiencing a significant rally, with the Hang Seng Biotech and MSCI China Healthcare indices showing year-to-date (YTD) returns of 57% and 38%, respectively, outperforming broader market indices which are at 16-20% [1][10][26] - Public financing has increased fourfold in the first half of 2025 compared to the same period in 2024, driving IPO activity on the Hong Kong Stock Exchange, particularly in biotech [1][40] - Despite the rally, valuations have sharply re-rated, with China's biotech price-to-sales multiples now aligning with global peers, suggesting limited further upside compared to the peaks of 2020-2021 [1][11] Key Growth Drivers - Oncology and metabolic diseases are identified as primary growth drivers, with significant market potential in PD-1-based bispecific antibodies and GLP-1 drug classes [3][4] - The global market for PD-1-based bispecific antibodies could reach US$70-80 billion, while the domestic GLP-1 market is projected to hit CNY87 billion by 2035 [3] - Chinese companies are competitive in clinical results, particularly in lung cancer treatments, and domestic GLP-1 drugs are matching international efficacy [3][4] Company Highlights - **Akeso**: Leading in PD-1/VEGF bispecific antibodies with multiple phase 3 trials; however, overall survival results remain uncertain [4] - **Innovent**: Offers a diversified portfolio across various disease areas and leads in advanced antibody modalities [4] - **Hansoh**: Transitioning to innovation-driven growth with strong sales in its 3rd-generation EGFR inhibitor and significant GLP-1 business development deals [4] R&D and Innovation - The sector is shifting from me-too drugs to best-in-class and first-in-class assets, focusing on novel targets and drug combinations [2][38] - Clinical trial activity is robust, with Chinese assets comprising over 50% of new global trials in 2025 [2][42] - The number of new clinical trials has shown stable growth, with a notable increase in innovative drug approvals [42][65] Policy Environment - Government policies have fluctuated but are currently favorable, balancing innovation stimulation with price control [2][43] - Recent supportive policies include initiatives to cover innovative drugs under commercial insurance, indicating a long-term positive outlook for the sector [43] Out-Licensing Trends - Out-licensing activity has surged in 2025, with total deal value reaching US$59 billion, surpassing the previous year's total [72] - The focus has shifted from PD-1 drugs to PD-1/VEGF and GLP-1 assets, with significant deal values and upfront payments [75][72] - Despite the increase in total deal value, upfront payments in China still lag behind developed markets, indicating a need for caution regarding the sustainability of this growth [73][81] Investment Implications - Companies such as Akeso, Hansoh, Innovent, and Hengrui are rated as Outperform, while BeiGene, CSPC, Sino Biopharm, and Zai Lab are rated as Market-Perform [7] - The current rally may require new catalysts beyond existing out-licensing deals to sustain momentum, as valuation headroom appears limited [5][22] Conclusion - The Chinese pharma and biotech sector is evolving into a mature, innovation-driven industry with growing global competitiveness, tempered by valuation caution and sector uncertainties [5][11]

Summary of Key Points from the Conference Call on China's Biotech Industry Industry Overview - **Industry**: China's Biotech Sector - **Context**: The call discusses the evolution and future potential of China's biotech industry, emphasizing its role as a global player in drug development and innovation [1][3][51]. Core Insights and Arguments 1. **Recognition and Growth**: China's biotech sector experienced a boom from 2018 to 2020 due to repatriation of scientists and increased R&D investments, but faced corrections due to an oversupply of undifferentiated products [3][14]. 2. **Innovation Gap**: The gap in drug innovation between China and global leaders has narrowed to 3.7 years, enabling China to develop competitive follow-on pipelines, particularly in complex modalities like antibody-drug conjugates (ADC) [4][20]. 3. **Market Potential**: The domestic innovative drug market in China is projected to reach approximately US$200 billion by 2030, driven by addressing rural healthcare disparities and health-related productivity losses [5][26]. 4. **Out-licensing Activities**: Out-licensing activities in China exceeded US$50 billion in 2024, indicating a strong resurgence in global interest in Chinese biotech innovations [4][10]. 5. **CAGR Forecast**: Innovative drug sales are expected to grow at a compound annual growth rate (CAGR) of 21% from 2024 to 2030, increasing their share of the pharmaceutical market from 29% in 2023 to 53% by 2030 [10][12]. 6. **Aging Population**: China's aging population is projected to reach 260 million by 2030, creating significant demand for innovative healthcare solutions [65][66]. 7. **Rural Healthcare Disparity**: The healthcare spending gap between urban and rural areas is estimated at RMB 2.4 trillion, which is a key driver for the growth of innovative drugs [26][69]. Additional Important Insights 1. **Regulatory Environment**: Recent policy reforms have created a more favorable environment for innovation, aligning closely with global standards [14][15]. 2. **Talent Pool**: The repatriation of STEM graduates has bolstered China's scientific output and kept clinical trial costs competitive [14][20]. 3. **Globalization of Pharma**: Chinese pharmaceutical companies are increasingly focusing on globalization, with significant out-licensing deals indicating a shift towards international markets [33][38]. 4. **Valuation Trends**: The valuation of Chinese biotech stocks has surged, with a current price/peak sale multiple of approximately 4.5x, which is significantly higher than the US biotech average of 2.5x [21][50]. 5. **CDMO Role**: Contract Development and Manufacturing Organizations (CDMOs) in China are playing a critical role in reducing drug development costs and enhancing speed to market, which is vital for smaller biopharma companies [41][42][44]. Conclusion - The call highlights the transformative potential of China's biotech industry, driven by innovation, favorable demographics, and a supportive regulatory environment. The sector is poised for significant growth, with increasing global recognition and opportunities for both domestic and international markets [51][64].

Summary of Key Points from the Conference Call on China's Biotech Industry Industry Overview - **Industry**: China's Biotech Sector - **Positioning**: China is emerging as a global player in drug development, driven by innovation and significant investments in R&D [1][12][51]. Core Insights - **Biotech Boom**: The repatriation of overseas-trained scientists and increased pharmaceutical R&D investments initiated China's first biotech boom from 2018 to 2020. However, the sector faced corrections due to an oversupply of undifferentiated pipelines [3][12]. - **Out-Licensing Growth**: Out-licensing activities surged to over US$50 billion in 2024, indicating a strong recovery and competitiveness in the global market [4][12]. - **Innovation Gap**: The gap in drug innovation between China and global players has narrowed to just 3.7 years, enabling China to create viable follow-on pipelines for the global market [4][18]. - **Market Forecast**: The domestic innovative drug market in China is projected to reach US$280 billion by 2030, driven by addressing rural healthcare disparities and health-related productivity losses [5][25]. Key Drivers of Growth - **Aging Population**: China's aging demographic is expected to reach approximately 260 million individuals aged 65 and older by 2030, increasing demand for innovative treatments [65][66]. - **R&D Investment**: Pharmaceutical-related R&D expenditure is forecasted to grow to 18.8% of global R&D by 2026, up from 12% in 2020, reflecting a robust commitment to innovation [13][85]. - **STEM Talent Pool**: The repatriation of STEM graduates has bolstered the domestic talent pool, enhancing the competitiveness of clinical trials and drug development [13][12]. Implications for the Global Market - **Globalization of Pharma and CDMO**: Chinese pharma and Contract Development and Manufacturing Organizations (CDMOs) are increasingly focusing on globalization, transitioning from out-licensing to direct global operations [6][38]. - **Valuation Re-rating**: As China's biotech innovations gain global acceptance, there is potential for re-rating of stocks in this sector, aligning them closer to overseas biotech valuations [19][12]. Challenges and Considerations - **Market Corrections**: The rapid growth of undifferentiated pipelines led to funding shortages and corrections in sector outlook, necessitating a focus on quality over quantity in drug development [3][57]. - **Regulatory Environment**: The Chinese regulatory framework is evolving to support innovation, but challenges remain in reimbursement and market access for new drugs [57][64]. Conclusion - **Future Outlook**: The combination of a large patient population, increasing R&D investments, and favorable policy frameworks positions China biotech for significant growth and innovation in the coming years, with the potential to contribute substantially to the global drug market [12][51][64].

Summary of China Pharma and Biotech Conference Call Industry Overview - The China healthcare sector is experiencing its strongest rally since mid-2023, with the Hang Seng Biotech and MSCI China Healthcare indices showing year-to-date (YTD) returns of 57% and 38%, respectively, outperforming broader indices like Hang Seng and MSCI China at 20% and 16% [1][10] - The current market is at 30% of the peak seen during the last healthcare boom in 2020-2021, with a notable shift towards mature companies and top players rather than early-stage firms [1][2] - Public financing has surged, increasing 4 times in 1H25 compared to 1H24, with about two-thirds of IPO and follow-on offerings yielding positive returns [1][12] Market Valuation and Opportunities - Valuations in the China healthcare sector are now at or above global counterparts, with MSCI China healthcare P/S ratios crossing over with S&P 500 healthcare [2] - Individual stock performance varies significantly, with funds showing interest in companies with lower valuation multiples and potential for out-licensing deals [2][52] - Specific companies like CSPC are considered overheated with a PEG ratio of 14.5x, while Hengrui (2.3x) and Sino Biopharm (2.0x) are viewed as cheaper alternatives [3][44] Biotech Sector Insights - Biotech companies are valued based on market cap to projected 2032 revenue, ranging from 2-5x. Companies like BeiGene (2.7x) and Zai Lab (1.2x) are seen as undervalued, while Akeso (4.7x) and Kelun Biotech (5.6x) are considered relatively pricey [4][48] - The biotech sector has seen a significant increase in market capitalization, rising from US$102 billion to US$160 billion YTD 2025 [11] Clinical Trials and R&D - The number of clinical trial starts in China has shown consistent growth, with local assets making up over 50% of the global pipelines for the first time in 2025 [1][33] - Innovative drug modalities, particularly in oncology, have seen a resurgence in clinical trials, indicating sustained R&D efforts despite previous market downturns [32][36] Out-licensing Trends - There has been a boom in outbound licensing deals, with companies like RemeGen and Innovent leading the way. This trend is expected to continue, although there are concerns about saturation in certain drug classes [34][52] - The out-licensing model has remained resilient against geopolitical challenges, with no significant shifts in FDA attitudes towards China-originated drugs [34] Investment Implications - The report rates Akeso, Hansoh, Innovent, and Hengrui as Outperform, while BeiGene, CSPC, Sino Biopharm, and Zai Lab are rated as Market-Perform [7] - A methodological shift in valuation is noted, with increased emphasis on multiple-based valuation for mature companies, while biotechs will continue to use P/S and DCF models [8] Conclusion - The China pharma and biotech sector is on an upward trajectory, driven by strong market sentiment, increased public financing, and a robust pipeline of clinical trials. However, caution is advised regarding valuation levels and the sustainability of the current rally, particularly in the context of out-licensing deals and market saturation [52][53]

Summary of China Pharma and Biotech Conference Call Industry Overview - The focus is on the **China Pharma and Biotech** sector, particularly the out-licensing activities and their sustainability in 2025 [1][7]. Key Insights - **Out-licensing Growth**: As of June 17, 2025, the total value of China's out-licensing deals reached **$54 billion**, surpassing the **$47 billion** total for the entire year of 2024. This indicates a significant increase in deal-making activity [1][9]. - **US-bound Deals**: Historically, about half of China's licensing deals have been with US partners. In 2025, **57%** of the deal value is attributed to US-bound deals, suggesting that geopolitical tensions have not significantly impacted these transactions [1][9][11]. - **Global Licensing Trends**: The total value of global license transfers has been steadily increasing, with a notable contribution from China. In 2025, China's outbound deal value exceeded that of developed markets for the first time [2][13][15]. Emerging Drug Classes - **New Favorites**: The PD-1/VEGF bispecific and GLP-1 drug classes have emerged as the new favorites in out-licensing, with the former attracting deals worth over **$20 billion** and upfront payments exceeding **$3 billion** [4][38]. - **Historical Context**: Previous booms in 2020-2021 were primarily driven by PD-1 and TIGIT drugs, which ultimately faced saturation and deal terminations. The current growth drivers may also face similar risks of overheating and saturation [3][5][39]. Market Dynamics - **R&D Efficiency**: China's R&D efficiency has improved significantly, with clinical trial costs being approximately **1/5** of those in the US. This has led to a substantial increase in the size and quality of local players' pipelines [7]. - **Investment in R&D**: Despite market challenges, top pharma and biotech players in China continue to invest heavily in R&D, leading to a growing number of first-in-class assets [7]. Deal Activity - **Mega-deals**: There have been **23 license transfers** to global players with total deal values exceeding **$500 million**, with over **two-thirds** of these deals valued at **$1 billion or more** [8][9]. - **Upfront Payments**: The average upfront payment for China's outbound deals is lower than that of developed markets, with a typical range of **3-5%** of total deal value compared to around **10%** in developed markets [2][14]. Future Outlook - **Cautious Optimism**: While long-term growth in out-licensing is expected, there are short-term concerns regarding the sustainability of the current boom, particularly with the potential saturation of key drug classes [5][39]. - **Market Share Potential**: Despite the significant role of top 20 multinational corporations (MNCs) in China's out-licensing deals, China's share of these MNCs' licensing deals remains low, indicating potential for market share gains [44][50]. Conclusion - The China Pharma and Biotech sector is experiencing unprecedented growth in out-licensing activities, driven by improved R&D efficiency and strategic partnerships, particularly with US firms. However, the sustainability of this growth remains a concern as the market evolves and potential saturation looms for key drug classes.