Core Insights - The innovative drug industry is experiencing a "triple resonance" of policy support, industry upgrades, and performance recovery, leading to a restructuring of capital market valuation logic [1] - The market performance of innovative drug stocks has been notably strong, with significant increases in share prices for leading companies [2] - The Chinese innovative drug sector is transitioning from a "cold winter" to a "warm spring," indicating a new cycle of policy support and development [2][3] Market Performance - As of May 26, 2023, the healthcare sector in the Hang Seng Index has seen a year-to-date increase of over 30%, with specific companies like 三生制药 (Sihuan Pharmaceutical) rising by 210.86% [2] - The unprofitable biotech index in the Hong Kong market has also increased by over 39% year-to-date, with companies like 德琪医药 (Dechra Pharmaceuticals) seeing a staggering rise of 456.92% [2] Policy Environment - The innovative drug industry is characterized by strong regulation and a "policy cyclicality," with new supportive policies gradually being implemented since 2024 [3] - The total sales of newly negotiated drugs from 2018 to 2024 exceeded 540 billion yuan, indicating significant room for growth in the use of medical insurance funds [3] International Market Dynamics - In the first quarter of 2023, 60 pharmaceutical companies in China reported revenues exceeding 1 billion yuan, with 2 companies surpassing 10 billion yuan [4] - Chinese original innovative drugs have outnumbered those from the U.S. from 2015 to 2024, with a global share of 24% for original FIC drugs [4] R&D Trends - Chinese innovative drug companies are shifting focus from PD-1 and ADC markets to new targets such as peptide-conjugated drugs and cell therapies [5] - The number of international multi-center clinical trials in China has increased significantly, reflecting a strategic shift towards globalization [6] Investment Landscape - The average cost of developing a new drug is approximately $1.778 billion, necessitating substantial annual sales to recoup costs [7] - The investment landscape is challenging, with a significant portion of the market share still dominated by foreign companies, highlighting the need for Chinese firms to adopt global strategies [7] Business Development (BD) Strategies - There has been a notable increase in high-value BD transactions, with 21 deals exceeding $1 billion in early 2025 [8] - Chinese pharmaceutical companies are becoming key players in global pharmaceutical innovation, with 42% of major licensing deals involving Chinese firms [8] Valuation Shifts - The valuation of unprofitable biotech companies is increasingly based on their core product pipelines and commercial capabilities rather than just technical assessments [11] - The market is beginning to adopt a "finality thinking" approach to pricing unprofitable drug companies, allowing for short-term losses if core products are globally competitive [11] Challenges Ahead - Despite a favorable policy environment, innovative drug companies must navigate high R&D risks and potential market fluctuations [12] - The increasing regulatory scrutiny on Chinese drugs entering international markets may slow down the pace of globalization for these companies [13]

Core Viewpoint - BeiGene has achieved a significant turnaround in its financial performance, transitioning from losses to profitability in Q1 2025, driven by strong product sales and improved operational cash flow [1][2][12]. Financial Performance - In Q1 2025, BeiGene reported revenue of 8.048 billion RMB, a year-on-year increase of 50.2% [1]. - Product revenue reached 7.985 billion RMB, up 49.9% year-on-year, primarily due to the strong sales of core self-developed products, Brukinsa® (Zebutinib) and Tislelizumab [1]. - The company expects full-year revenue for 2025 to be between 35.2 billion and 38.1 billion RMB [1]. Product Performance - Brukinsa® (Zebutinib) achieved global sales of 5.692 billion RMB in Q1 2025, a 63.7% increase year-on-year, with U.S. sales reaching 4.041 billion RMB, up 61.9% [3]. - Tislelizumab (替雷利珠单抗) generated sales of 1.245 billion RMB in Q1 2025, a 19.3% increase, driven by new indications included in the national medical insurance [4]. Globalization Strategy - BeiGene's global registration strategy for Tislelizumab is progressing, with recent approvals in Japan and Indonesia, and the product is now approved in 46 markets globally [4][6]. - The company emphasizes the importance of FDA approval for enhancing global market competitiveness and accelerating the approval process in other countries [5][6]. Market Dynamics - The Chinese PD-1 market is valued at approximately 14 billion RMB in 2023, with global PD-1 sales expected to reach 43 billion USD in 2024 [6]. - The shift in valuation logic for PD-1 companies from "sales volume" to "internationalization capability" reflects the competitive landscape under domestic cost control measures [4]. Industry Trends - The Chinese pharmaceutical industry is witnessing a transformation towards globalization, with a record high of 640.8 billion USD in BD transactions in 2024, indicating a shift from "License-in" to "License-out" strategies [8]. - The number of new drugs in international multi-center trials has increased significantly, showcasing the growing involvement of Chinese companies in global clinical trial designs [8][10]. Future Outlook - BeiGene's strategy integrates China into the global development framework, aiming to reduce development costs while enhancing global market presence [11][12]. - The company’s success is seen as a reflection of the broader transformation in the Chinese innovative drug industry, with potential for emerging as a top player in the global pharmaceutical landscape [12].