Frost & Sullivan has released a new report examining how China’s biopharmaceutical industry is moving beyond traditional drug manufacturing and increasingly competing in international markets through innovative medicines, licensing agreements, and technology partnerships.

The 2026 Blue Book on the Internationalization of China’s Biopharmaceutical Industry examines the sector’s evolution from supplying active pharmaceutical ingredients (APIs) and intermediates to exporting generic drugs and biosimilars and developing innovative therapies for global markets. The report also assesses cross-border deal making, emerging business models, and the challenges Chinese drug makers face as they expand internationally.

According to Frost & Sullivan, global expansion has become increasingly important as domestic competition intensifies and financing conditions change. International partnerships and commercialization opportunities can give Chinese companies access to larger markets while helping them capture greater value from their drug candidates and proprietary technologies.

China remains a major supplier of APIs and pharmaceutical intermediates, supported by established manufacturing infrastructure, production scale, and competitive costs. However, the report identifies a shift toward higher-value products and services as traditional bulk ingredients face pricing pressure and fluctuating overseas demand.

Peptide hormones, specialty APIs, critical intermediates, and contract development and manufacturing organization (CDMO) services are among the areas offering opportunities for manufacturers seeking to differentiate their businesses. Some companies are also integrating operations across multiple stages of production, from intermediates and APIs to finished dosage forms.

As international supply chains change, cost alone is becoming a less reliable source of competitive advantage. Quality systems, regulatory experience, technical capabilities, and established customer relationships are playing a larger role in determining which suppliers can compete in global markets.

Generic drugs and biosimilars provide another route for Chinese pharmaceutical companies seeking international growth. Demand for lower-cost treatments continues to create opportunities as healthcare systems manage spending, populations age, and patents on established medicines expire. Rather than competing exclusively on price, generic drug makers are increasingly pursuing complex formulations, technically challenging dosage forms, and first-to-market generic opportunities. These segments can offer greater differentiation because they require specialized development and manufacturing expertise.

Biosimilar developers are also strengthening analytical characterization, chemistry, manufacturing and controls (CMC), quality management, and regulatory submission capabilities. Licensing arrangements, regional partnerships, and commercialization agreements can help these companies enter overseas markets and translate their development and manufacturing capabilities into commercial opportunities.

For companies developing innovative medicines, the route to international markets depends on the characteristics of the asset, the clinical evidence required, and the financial and commercial resources available. Frost & Sullivan identifies several approaches, including independent global development, out-licensing, co-development, cross-border mergers and acquisitions, and the creation of NewCo entities. Some developers are designing multiregional clinical trials and incorporating international regulatory requirements earlier in development, positioning their candidates for potential approval in multiple markets.

Frost & Sullivan reports that NewCo activity has increased substantially since 2024, with 31 transactions recorded through the first half of 2026. However, the long-term success of these arrangements will depend on clinical outcomes, access to financing, regulatory progress, and the ability to bring products to market.

Independent development can allow companies to retain greater control over commercialization and asset value, but it requires sustained investment and the ability to navigate overseas clinical, regulatory, and commercial requirements. Licensing and co-development arrangements can provide access to partners’ resources and expertise while distributing development costs and risks.

NewCo structures offer another option by transferring rights to an asset, often for markets outside China, into a newly established company backed by external investors. The originating company can retain an ownership interest while gaining funding and access to additional development capabilities.

The report highlights a sharp increase in business development and licensing activity involving Chinese biopharmaceutical companies. Between 2021 and 2025, the number of transactions more than doubled, rising from 159 to 328. Total disclosed deal value increased from approximately $11.1 billion to $143.1 billion over the same period. In the first half of 2026, cross-border transactions outnumbered domestic transactions for the first time, according to Frost & Sullivan. The report describes this shift as an indication of China’s growing participation in global drug development and the increasing willingness of international companies to work with Chinese innovators.

Deal structures are also evolving. Rather than focusing solely on individual drug candidates, some agreements now encompass multiple assets, proprietary technology platforms, or longer-term strategic relationships. For multinational pharmaceutical companies, the appeal increasingly lies in differentiated mechanisms of action, novel molecular designs, and technologies with the potential to support broader pipelines. Small molecules and monoclonal antibodies continue to account for a substantial share of transactions, while antibody-drug conjugates (ADCs) and bispecific antibodies have attracted particular attention.

Chinese developers are advancing bispecific antibodies into international markets, with some partnerships being established at earlier stages of development. In evaluating these assets, potential licensees are considering not only clinical results but also target combinations, molecular engineering, and the capabilities of the underlying technology platforms.

ADCs have become a prominent category in China’s out-licensing market. Frost & Sullivan reports that approximately 75% of Chinese ADC out-licensing transactions have involved candidates ranging from the preclinical stage through Phase I. Development activity is also expanding beyond established targets toward new molecular designs and differentiated approaches. Bispecific ADCs are another emerging area of interest, although increasing technological convergence may make it more difficult for developers to distinguish their platforms from competing programs.

In peptide therapeutics, international collaborations are increasingly focused on differentiated glucagon-like peptide-1 (GLP-1)-based treatments, particularly multi-target agonists. Regional licensing agreements are also being used to pursue market-specific opportunities.

Cell therapy collaborations are expanding beyond conventional chimeric antigen receptor T-cell (CAR-T) treatments to include in vivo CAR-T approaches, allogeneic CAR-T therapies, stem cell technologies, and related platforms. Collectively, these areas illustrate the growing diversity of Chinese drug development programs attracting international attention.

Despite the sector’s expanding international reach, Chinese drug makers continue to face challenges associated with changing supply chains, evolving regulatory requirements, uneven asset valuations, and limited global operating experience at some companies.

Sustained international growth will require continued investment in quality management, regulatory expertise, supply chain oversight, and overseas commercial infrastructure. Companies must also demonstrate that their products offer meaningful differentiation and can meet the clinical and operational requirements of markets outside China.

Frost & Sullivan expects continued improvements in manufacturing capabilities and innovative drug development to support the industry’s international ambitions. The sector is increasingly moving beyond exporting products toward supplying innovative drug candidates, proprietary platforms, and integrated development and manufacturing capabilities.

The report also profiles Chinese biopharmaceutical companies pursuing international growth, including ABclonal, Gene Key Life, HUALAN, Shibeikang, and VelaVigo. Their activities span research and development, global supply chain integration, overseas market entry, and international collaboration.

Visit https://hub.frost.com/chinas-biopharmaceutical-industry-on-the-global-stage-pathways-progress-and-competitive-position/ for more information.