Lilly's Two Sets of BD Strategies and Their Implications for Chinese Biotechs

At the beginning of this year, Eli Lilly acquired Ajax Therapeutics for up to $2.3 billion. Its core assets include: a Phase I molecule, 23 patients, and a 70% spleen shrinkage rate. On June 13th, at the EHA annual meeting, the first batch of clinical data was made public, validating the judgment of this deal.

Ajax is Eli Lilly's 10th acquisition this year. Jake Van Naarden, the head of Eli Lilly's BD and oncology business, said in an interview with Fierce during EHA, "We're not done yet."

In this interview, Van Naarden explained Eli Lilly's two BD strategies. One is like sowing seeds, and the other is like buying saplings. The goals of the two strategies are the same: to renovate the pipeline before the patent for tirzepatide expires.

01 Sowing Seeds

Van Naarden compares the first strategy to early - stage venture capital.

Throughout 2025, Eli Lilly signed about 40 deals with a total expenditure of only $4 billion. On average, each deal cost $100 million. Many of these deals were so small that they weren't worth issuing a separate press release.

The logic is simple: most early - stage projects will fail. By investing in enough projects with small individual amounts, as long as one or two succeed, the entire investment can be covered.

Van Naarden's exact words: "Most of these things won't succeed. But we didn't spend much money on them in total, so as long as one or two succeed, it can easily cover the entire investment."

Forty deals and $4 billion essentially buy risk hedging. The uncertainty in early - stage R & D is too high, and the success rate of any single project is too low to predict. The only way to increase the hit rate is to place enough bets simultaneously.

02 Buying Saplings

The second strategy was fully implemented after 2025. The background is clear.

Tirzepatide's annual sales in 2025 approached $30 billion, and its single - quarter sales in Q1 2026 were about $12.8 billion. The company raised its annual revenue guidance to the range of $82 billion to $85 billion. Eli Lilly's success in the metabolic field has brought a rare cash inflow in the history of the pharmaceutical industry.

The patent for tirzepatide will expire one day. Eli Lilly must make early arrangements for the post - tirzepatide era within this time window. It was in this context that Van Naarden was given an additional role as the BD head at the end of 2025.

The core of the second strategy is to invest only in assets that "you know are real at the time of signing the contract". Van Naarden's exact words: "At the moment of the deal, you know it's real."

The meaning of this sentence is very specific. The first strategy invests in early - stage projects, most of which will fail, and you don't know in advance which one will succeed. The second strategy invests in projects that already have proof - of - concept data, and there are already human trial results proving that the molecule is effective. It's more expensive but has higher certainty.

Ajax, Centessa, and Kelonia, the three acquisitions named by Van Naarden, all belong to the second strategy. Ajax's AJ1 - 11095 achieved a 70% spleen shrinkage rate in the Phase I trial. Centessa's ORX750 is an orexin receptor agonist for narcolepsy, and the Phase II data has been read out. Kelonia is working on in - vivo CAR - T, and its technology platform has completed proof - of - concept in animal models.

The common feature of these deals is that Eli Lilly takes action after seeing the data. The first strategy wins by probability, and the second strategy is priced by certainty. The risk changes from "whether this target can succeed" to "clinical progress speed, regulatory approval, and market access", and these risks can be managed.

Van Naarden himself admits the cost of the second strategy. The more mature the asset is, the better Wall Street knows how to price it, and the harder it is for Eli Lilly to negotiate a good price. His exact words: "Without strict price discipline, the second strategy will quickly become a very time - consuming way of capital misallocation."

Spending a large amount of money to buy certainty is essentially using capital to buy time. But if the price exceeds the value of the certainty itself, the deal is no longer cost - effective. Van Naarden didn't say that Eli Lilly has mastered this balance point; he said that Eli Lilly is working hard to master it.

03 The Same Anxiety

The simultaneous operation of the two strategies is driven by the systematic anxiety before the expiration of the tirzepatide patent. Merck's Keytruda will expire in 2028, and BMS's Opdivo and Eliquis will expire even earlier. The intensive acquisition wave of multinational pharmaceutical companies from 2025 to 2026 is a collective action under the same countdown.

Eli Lilly's special feature is that the cash flow brought by its metabolic business is so large that it gives the company the financial ability to operate the two strategies simultaneously. The first strategy requires patience and breadth, with a large number of small - value deals and tolerance for most failures. The second strategy requires discipline and judgment, spending a large amount of money on mature assets but not overpaying to eat up all future returns.

Van Naarden said that he is running both lines simultaneously and won't stop for the rest of 2026. The subtext is clear: Eli Lilly's acquisition window is determined by the cash flow of tirzepatide, and the window won't be open forever. When the cash flow is most abundant, fill the pipeline as much as possible.

04 Opportunities and Thresholds for Chinese Biotechs

Eli Lilly's two strategies have two direct implications for Chinese biotechs.

First, on the flip side of sowing seeds, Eli Lilly is systematically scanning global early - stage assets.

An average of $100 million per deal is pocket change for Eli Lilly, but it's a sum of money that can sustain a Chinese early - stage biotech for two to three years. However, the threshold for getting this money is getting higher.

The screening criteria that Van Naarden didn't mention are actually clear: the target doesn't have to be new, but the technology platform must have its own unique features.

In Q1 2026, the total value of BD deals for Chinese innovative drugs exceeded $60 billion, with a down payment of $3.3 billion, accounting for 45% of the global total. Money is flowing in, but it's concentrating on companies with platform capabilities at an unprecedented speed.

Companies that rely on a single pipeline to tell a story and don't have engineering barriers won't make it onto Eli Lilly's list of seed - sowing targets.

Second, on the flip side of buying saplings, the premium for certainty is being repriced by large pharmaceutical companies.

Eli Lilly is willing to pay a higher premium for assets with proof - of - concept data, but the upper limit of this premium is clear. Wall Street will price mature assets, and there isn't much arbitrage space left for the sellers.

If a Chinese biotech wants its assets to be within the scope of the second strategy, the key isn't to negotiate a high valuation but to hit the BD window at the right time when the data is read out. Van Naarden's words "At the moment of the deal, you know it's real" can be translated as: Pipeline stories without clinical data are out of the scope of this strategy.

There is an unspoken dividing line between the two strategies: look at the platform in the early stage and look at the data in the later stage.

The proposition for Chinese biotechs has never changed: whether they can use better engineering methods to create better molecules on a proven target. Eli Lilly's two strategies are just repeating this proposition with real money.

If you answer well, the money will come knocking on your door. If you answer poorly, the window will close in quarterly increments.

This article is written based on publicly available information and is for information exchange purposes only. It does not constitute any investment advice.

This article is from the WeChat official account "Medical Shine", written by Wang Zhe and published by 36Kr with authorization.