From Longdong Avenue in Shanghai's Pudong New Area, a dense cluster of multinational pharmaceutical giants such as Roche, Novartis, AstraZeneca, Eli Lilly, Pfizer and Boehringer Ingelheim can be seen lining both sides of the road.

A short walk away sits the Shanghai Institute of Materia Medica, Chinese Academy of Sciences, and National Center for Drug Screening, two pillars of China's public drug-discovery capabilities.

Deeper inside Zhangjiang town in Pudong New Area lies a constellation of homegrown biotech names such as Hutchmed, Zai Lab, Junshi Biosciences, Medicilon, Hua Medicine, and MicroPort, underscoring the area's dense innovation ecosystem.

Pudong is now one of the most concentrated biopharmaceutical hubs in China, home to a diverse mix of major foreign-invested pharmaceutical companies, scientific research institutions, and local innovators across the industry value chain.

Over 35 years of development and opening-up, Pudong's biopharma sector has evolved from following global trends into an international pioneer, with improving institutional support paving the way for breakthrough growth.

Between 2020 and 2024, Pudong's biopharma industry grew from 240.8 billion yuan ($33.62 billion) to 410 billion yuan, a compound annual growth rate of 14 percent, with innovative pipelines reaching 718 candidates — about 20 percent of China's total and 6 percent of the global total.

The area now accounts for 13 percent of China's approved domestic innovative drugs and 11 percent of its Class III innovative medical devices, reflecting its national importance in life-science innovation.

Against a backdrop of rapid global technological change, evolving policy landscapes and intense market competition, China's biopharma industry faces both unprecedented opportunities and formidable headwinds.

Challenges such as slowing capital markets, homogeneous pipelines, and pressure on valuations are driving more companies to seek overseas markets as a key growth strategy.

Global push: Chinese biopharma innovation at a turning point

In recent years, China's biopharma sector has seen explosive growth. As domestic competition intensifies, more firms are venturing abroad, marking the beginning of a "great voyage" for innovative medicines.

China is evolving from an importer of novel therapies to an exporter. Emerging modalities such as ADC, bispecific antibodies, and Cell and Gene Therapy (CGT) are gaining international recognition, putting Chinese firms on a more equal footing with global peers.

"Chinese biopharma innovation has reached a critical inflection point," said Wang Tongyan, head of the Drug Information Association (DIA) Shanghai Representative Office. "We're moving from bringing in foreign products to building homegrown biotech and biopharma multinationals."

By 2024, Pudong-based firms had signed over 30 overseas licensing deals, representing 30 percent of China's total. In the first half of 2025 alone, outbound transactions reached nearly 30 deals, accounting for 31 percent and 14 percent of the national and global totals, respectively.

A standout case is Hutchmed's fruquintinib, which won US FDA approval in 2023 and was subsequently approved across the EU, Japan and other regions in 2024. It is the first selective inhibitor targeting all three VEGFRs for metastatic colorectal cancer in over a decade.

Hutchmed has signed overseas licensing deals worth over 8 billion yuan for fruquintinib, with global sales surpassing 2.9 billion yuan in 2024 — providing a strong example of Chinese innovation competing on the world stage.

In August 2024, ImmunoOnco reached a strategic collaboration agreement exceeding $2 billion with Axion, a wholly owned subsidiary of Instil Bio, for its bispecific programs IMM2510 and IMM27M.

IMM2510, a PD-L1/VEGF bispecific antibody with potential best-in-class attributes, completed dose-escalation studies in advanced solid tumors and showed encouraging efficacy signals. It may herald a breakthrough trend in 2025.

From volume to value: hurdles remain for original innovation

Despite rapid expansion, China's innovative drug sector still faces fundamental weaknesses in basic research and original theory, slowing the shift from quantity to quality.

According to Academician Ding Jian of the Chinese Academy of Engineering, none of the more than 30 foundational breakthroughs in modern drug discovery over the past 130 years originated in China.

Between 2015 and 2024, only six first-in-class drugs were approved in China, compared with 152 in major foreign markets. Even Zhangjiang produced just two.

Pipeline homogeneity is also an issue. In the past decade, 716 Chinese drug candidates have targeted the top 20 targets, with 70 percent of trials clustered around just 21 percent of those targets.

Pricing remains a hard nut to crack. Immature mechanisms make it difficult for companies to secure returns that reflect innovative value, pushing some to go global as a survival strategy.

Compared with the US, China still lags in translating biotech discoveries into commercial products. The gap is particularly evident in small-nucleic-acid drugs and CGT, where Chinese R&D remains in the shadow of foreign competitors.

Pudong pursues breakthroughs through deep reforms

To break these bottlenecks, Pudong is doubling down on reforms, targeting pain points, and fostering an enabling environment for world-class innovation.

On April 18, 2025, Pudong released its new action plan to support enterprises "going global", prioritizing countries involved in the Belt and Road Initiative and promoting integration into global supply chains and innovation networks.

In July, Pudong launched a 2025-27 plan to strengthen the role of its biopharma parks, introducing five major initiatives and 17 specific measures to strengthen innovation clusters, upgrade industrial carriers, and enhance the "Zhangjiang Pharma Valley" brand.

"This is the first time we've proposed building an innovation 'core-explosion point' in Zhangjiang to drive cluster upgrading," said Ling Gang, deputy director of the Science and Technology and Economic Commission of Pudong New Area.

By concentrating talent, capital and technology in core zones and promoting deep integration, Pudong aims to forge interconnected value chains spanning technology transfer, financing and enterprise growth.

To help firms expand overseas, Pudong has also built the "Shanghai International Biopharma Collaboration Platform", offering policy support, cross-border regulatory facilitation and international cooperation mechanisms.

Reforms are underway to address domestic-foreign price disparities through commercial insurance pilots and to modernize drug-pricing systems, laying a foundation for sustainable innovation.

Pudong also plans to accelerate policy implementation, roll out support packages for flagship products and enterprises, and enhance services for high-end medical devices and global expansion.

Those who refuse to take the easy path will succeed; those who meet challenges head on will prevail. Despite the challenges, Pudong's biopharma industry is set to grow through global engagement. Zhangjiang Pharma Valley is setting sail, and Chinese innovative drugs are charting a course toward the future.