Core Insights - The total value of China's biopharmaceutical business development (BD) transactions reached $63.5 billion in 2024, marking a year-on-year growth of 22.59% [1] - The surge in BD transactions indicates a significant transformation in China's biopharmaceutical industry, moving from generic drugs to original innovation [1][4] - The first five months of 2025 saw China account for 42% of global transactions with upfront payments exceeding $50 million, a substantial increase from 5% in 2021, suggesting a strong growth momentum [2] BD Transaction Growth - In 2024, there were 24 major transactions exceeding $500 million, totaling $43 billion, which accounted for nearly 20% of global heavyweight transactions [1] - Notable transactions include the licensing of SSGJ-707 by 3SBio to Pfizer for an upfront payment of $1.25 billion and a total deal value exceeding $6 billion, setting a record for Chinese innovation drug licensing [2] Challenges in BD Transactions - The current BD landscape shows a trend where local innovative drug companies are forced to sell promising pipelines due to weak cash flow and limited external financing options, leading to low-margin transactions [4][5] - Structural imbalances exist between buyers, typically large multinational corporations, and sellers, often local firms in early clinical stages, resulting in unfavorable negotiation positions for local companies [4][5] Long-term Implications - The focus on BD transactions may lead to a decline in original innovation capabilities, as evidenced by over 15 domestic companies halting R&D projects in 2024, including Shanghai Pharmaceuticals, which terminated 12 new drug pipelines [3][4] - The loss of potential assets could trigger a chain reaction of degradation across the industry, affecting R&D focus and leading to a decrease in high-risk, long-term investment in original drug development [6] Recommendations for Sustainable Development - To address the structural contradictions in BD transactions, it is essential to build an innovation ecosystem that supports local companies and enhances their long-term value [7] - Suggested reforms include deepening pricing and payment reforms, broadening financing channels, and improving clinical application support policies to facilitate a more favorable environment for innovation [7][8][9]