Analysis: China’s Drugmakers Post Improved Earnings, but Market Doubts Persist

1. Several Chinese drugmakers reported improved financial results for 2025, yet these positive earnings did not boost investor sentiment. Shares of health care companies on mainland China and Hong Kong lagged behind broader equity indexes, demonstrating a lackluster response from the markets despite the industry’s progress. [para. 1]

2. BeOne Medicines Ltd. (formerly BeiGene), reported its first annual profit after over ten years of heavy investment in building a global oncology business. Revenues for 2025 rose 40% year-on-year to 38.2 billion yuan ($5.5 billion), resulting in a net profit of 1.42 billion yuan according to their preliminary earnings. [para. 2]

3. The company’s success was primarily driven by its blockbuster blood cancer drug, Brukinsa. Global sales for Brukinsa surged nearly 49% to reach 28.1 billion yuan. The U.S. market accounted for the largest share, with sales rising 45.5% to 20.21 billion yuan, while sales in Europe increased 66.4% to 4.3 billion yuan, and China saw a 33.1% rise to 2.5 billion yuan. [para. 3]

4. Despite BeOne Medicines’ profits, investor enthusiasm was muted. The company’s shares fell by 1.08% in Hong Kong, 2.18% on Shanghai’s A-shares, and 8.29% on the Nasdaq following the results announcement. The downward trend continued over the subsequent trading days. [para. 4]

5. Other Chinese drugmakers presented similar patterns. RemeGen Co. Ltd. returned to profitability in 2025, Shanghai Junshi Biosciences Co. Ltd. reduced its net loss by 407 million yuan, and Cheng Du Sheng Nuo Biotec Co. Ltd. saw profits surge 231%. However, shares of all three companies dropped after their positive earnings announcements, and RemeGen and Junshi continued to decline. [para. 5]

6. The broader pharmaceutical sector underperformed compared to the general market. Mainland pharmaceutical indexes gained just 0.5% over four trading days, while the Shanghai Composite Index rose 2%. In Hong Kong, the Hang Seng Healthcare and Biotech indexes fell more than 4.5% over five days, contrasting with the Hang Seng Index’s 0.82% gain. [para. 6]

7. These lukewarm reactions reflect a shift in investor concerns from single-year successes to the sustainability of profits, given intense domestic competition and geopolitical uncertainties. [para. 7]

8. Industry voices echoed this skepticism. A biotech CEO told Caixin that short-term profitability is not enough; consistent long-term earnings are now the primary concern for commercial-stage biopharma companies. [para. 8]

9. BeOne Medicines forecasted 2026 revenues between 43.6 and 45 billion yuan, representing a potential growth of up to 17.8%, which is a notable slowdown from its 40.4% growth in 2025. [para. 9]

10. The cautious outlook has made investors doubtful about the industry’s future growth prospects, with articles highlighting that BeOne continues to dedicate 40% of revenue to research and development (R&D), possibly leading to continued cash burn despite recent profitability. [para. 10][para. 11]

11. The biotech sector’s future will rely on firms’ ability to commercialize treatments, the range of approved drug indications, and the strength of their clinical pipelines, alongside continued efficiency improvements from AI and automation, robust government basic research support, an efficient supply chain, and a large domestic talent pool. [para. 12][para. 13]

12. In 2025, Chinese drugmakers signed a record $135.7 billion in cross-border out-licensing deals, up from $51.9 billion in 2024, with 157 deals completed during the year. These transactions enable overseas partners to develop and commercialize drugs created by Chinese companies. [para. 14][para. 15]

13. Despite increased global collaborations, experts advise Chinese pharma firms to remain focused on domestic opportunities given China’s large population and government backing for innovation, while also aspiring for global reach. [para. 16]

14. Risks remain, including China’s push for lower drug prices, insurance reforms, potential U.S. funding cuts under the Trump administration, and ongoing geopolitical tensions that could disrupt supply chains and jeopardize overseas market access. [para. 17]

15. The report was contributed to by Chen Xi, with journalists Wang Xintong and editor Kelsey Cheng as contacts for further information. [para. 18][para. 19]