UBS has released a research note suggesting that while market expectations for the Chinese biotech sector's first-half results were initially conservative—due to concerns over tighter domestic drug marketing regulations and anti-corruption campaigns in public hospitals—innovative drug-focused companies have emerged largely unscathed. Among the 12 biotech firms under the bank's coverage, 11 have reached the commercialization stage.
Of those, eight reported sales that surpassed expectations, and notably, none identified regulatory issues as a primary obstacle to their commercial progress. UBS has named BEIGENE LTD SPON ADS EACH REPR 13 ORD SHS (ONC.US) as its top pick, followed by INNOVENT BIO (01801) and SKB BIO (06990).
Aggregate product sales for the 11 commercial-stage companies increased by 34% year-over-year in H1. BEIGENE LTD SPON ADS EACH REPR 13 ORD SHS (ONC.US) led in scale with $3.2 billion in product revenue, a 31% climb, while other notable performers included SKB BIO (06990) with a 112.1% surge, INNOVENT BIO (01801) with a 56.7% rise, and INNOCARE (09969) with a 43.2% gain. Guidance updates have been positive: BEIGENE LTD SPON ADS EACH REPR 13 ORD SHS (ONC.US) raised its outlook, INNOVENT BIO (01801) offered new optimistic guidance, and all other companies maintained their full-year targets, expressing confidence in meeting or exceeding them.
Out-licensing activity remains robust, with upfront payments and total deal value through August reaching 90% and 82%, respectively, of the full-year 2025 levels. Profitability is also improving across the sector. Beyond BEIGENE LTD SPON ADS EACH REPR 13 ORD SHS (ONC.US) and INNOVENT BIO (01801) sustaining earnings growth, HUTCHMED (00013), INNOCARE (09969), and JUNSHI BIO (01877) all achieved net profitability in H1. The industry's cash position has strengthened, with aggregate cash and equivalents up 34% year-over-year across 91 companies, and the median cash runway improving to 3.4 years from 2.8 years at the end of 2025.
Looking ahead to the second half, UBS highlights the upcoming academic conference season starting in September, with a focus on WCLC/ESMO solid tumor meetings and the ASH hematology conference. Key catalysts include AKESO's (09926) PD-U.S. FDA decision date for ivonescimab on November 14, SKB BIO's (06990) BLA submission for sac-TMT in the U.S., and data readouts from the HARMONi-3 final PFS/interim OS analysis and HARMONi-2 OS update. In a separate adjustment, UBS has trimmed its price target for JUNSHI BIO (01877) to HK$29.1 from HK$32.1, citing a more competitive global market landscape, while maintaining a "Buy" rating.
Comments