Institutions are "buying the dip" in the assets of multinational pharmaceutical companies.

Recently, some multinational pharmaceutical companies have started selling some of their businesses in China. Different from the previous model of selling assets to pharmaceutical companies in the same industry, the acquirers this time have become investment institutions.

Previously, it was reported that Bristol Myers Squibb Company (BMS) would sell its 60% stake in Sino-US Shanghai Squibb Pharmaceuticals Co., Ltd. (the first Sino-US joint-venture pharmaceutical company after China's reform and opening up), along with the associated products manufactured for the Chinese mainland market, to Hillhouse Capital Group. The transaction is expected to be completed in early 2026.

According to a reporter from Science and Technology Innovation Board Daily who learned from an informed source, Bayer recently sold the intellectual property rights, brand ownership, and global commercial rights of its antibiotic drug Avelox (moxifloxacin) to Sequoia China. The transaction is expected to be completed in the first quarter of 2026.

Even earlier, UCB sold its mature product business in China in a package to two investment institutions, including Cormorant Capital.

Behind this series of "investment institutions taking over pharmaceutical company assets", is it that the investment logic of multinational pharmaceutical companies in China is quietly changing, or is the industrial layout boundary of investment institutions continuously expanding? And will this trend trigger deeper chain changes in the pharmaceutical industry?

Seeking to "Travel Light" as Profits are Squeezed

"With the normalization of policies such as national centralized procurement and medical insurance cost control, some mature businesses of multinational pharmaceutical companies in China are facing significant profit pressure, and their profit margins are continuously being squeezed. This has also become one of the key drivers for them to divest such assets. At the same time, domestic pharmaceutical companies are rapidly dividing up the market share of original research drugs whose patents have expired, thanks to their cost control advantages in the generic drug field and their ability to penetrate deeply into the channels." Liu Lihe, Managing Director of CIC Consulting, told a reporter from Science and Technology Innovation Board Daily.

Zhao Heng, the founder of the medical strategic consulting company LatitudeHealth, also pointed out in an interview with a reporter from Science and Technology Innovation Board Daily: For multinational pharmaceutical companies, if the high cost of the business pipeline leads to a decline in profits, it is better to sell the sales rights and "travel light". This is a rational choice to reduce costs, increase efficiency, and optimize the asset structure.

Taking Sino-US Shanghai Squibb as an example, according to information on the official website of the National Medical Products Administration, the products it sells in the Chinese market cover more than a dozen varieties, such as entecavir tablets, cefradine capsules, paracetamol drops, and metformin hydrochloride tablets, involving multiple therapeutic areas such as respiratory diseases and chronic diseases. Many of these products are commonly used in Chinese families, and there are also some once-famous large varieties.

For example, entecavir, a drug for treating hepatitis B with the brand name Baraclude, has been on the market in China for twenty years as of now. As the first potent and low-resistance anti-hepatitis B virus drug, it was included in the first Chinese guidelines for the prevention and treatment of chronic hepatitis B in the year of its launch and quickly opened up the domestic market.

However, as this variety has been included in multiple batches of national centralized drug procurement, and the winning bidders are all domestic generic drugs with significantly lower prices (the annual treatment cost has dropped from thousands of yuan to the level of hundreds of yuan), the original research drug Baraclude has lost all its advantages. Its market share has been continuously shrinking under the impact of generic drugs and has gradually withdrawn from the mainstream market.

Another diabetes drug of Sino-US Shanghai Squibb, metformin hydrochloride tablets (brand name: Glucophage), has also seen a continuous decline in hospital sales due to not winning the centralized procurement bid, further weakening its market competitiveness.

The development trajectory of Bayer's antibiotic drug Avelox (moxifloxacin) in the Chinese market is also quite representative. Since its launch in China in 2002, its sales have maintained a glorious and steady growth trend for a long time. However, with the in-depth implementation of the national centralized drug procurement policy, this classic original research drug has gradually faced growth challenges. Data shows that the sales of Glucophage at the national hospital terminals have been continuously declining since 2021, with a decline of 28.77% that year. Since 2023, its sales in physical pharmacies have also started to decline, and the decline has reached 20% since 2025.

Miao Tianyi, Executive Partner of Puzhuo Capital, said: "By divesting these assets, multinational pharmaceutical companies can better recover funds, concentrate resources on introducing and researching more competitive innovative drugs (such as in the fields of oncology, immunology, and metabolic diseases), and integrate the Chinese market more deeply into their global innovation system."

At the same time, Miao Tianyi also mentioned that as China allows foreign-owned operations, the structure of joint-venture enterprises established in the early years to explore the market has naturally become an object of adjustment. Their historical mission has been completed, and it is only natural for joint-venture pharmaceutical companies to gradually withdraw from the Chinese pharmaceutical industry.

Before Sino-US Shanghai Squibb, in September 2023, Johnson & Johnson announced that it would rename Xian Janssen as "Johnson & Johnson Innovative Pharmaceuticals", officially ending its status as a joint-venture enterprise. And Sino-US SmithKline, famous for classic products such as Fenbid and Contac, was wholly acquired by Haleon for a total price of 1.6 billion yuan in June this year, putting an end to its nearly 40-year joint-venture history.

How Investment Institutions Activate the Value of Mature Assets

In recent years, under the combined influence of multiple factors such as economic cyclical adjustments and market environment fluctuations, the investment strategies of primary market capital institutions have become increasingly prudent, and their investment pace has significantly slowed down. Against the background of capital institutions generally "tightening their purse strings", why are investment institutions still willing to take over the non-core assets of multinational pharmaceutical companies?

A secondary market investor told a reporter from Science and Technology Innovation Board Daily: Leading investment institutions are no longer limited to simple financial investments. Instead, they are starting to enter the market as "industrial operators". Relying on their capital advantages, powerful channel resources, and industrial chain integration capabilities, they take over high-quality mature assets and then explore value-added space.

Liu Lihe also expressed a similar view. He pointed out that investment institutions have their own unique advantages: On the one hand, they have a keen insight into the market, are well-versed in regulatory policy orientations, medical insurance negotiation rules, and the operating logic of medical institutions, and can efficiently conduct government-enterprise communication and channel resource integration. On the other hand, their strong industrial chain resource coordination ability, refined cost control level, and shorter decision-making chain make them more flexible and proactive in responding to dynamic market changes.

As in the case of the relevant products of Sino-US Shanghai Squibb and Bayer's moxifloxacin, although the sales space in core channels such as hospitals and retail pharmacies has been significantly compressed due to industry policies, there is still a stable market demand in non-centralized procurement markets and private hospitals, thanks to the brand recognition accumulated over the years. Investment institutions can use their powerful market channels and marketing networks to re-explore the incremental value of these assets through more professional operations.

When talking about the operation methods after capital institutions take over, Liu Lihe introduced that value is often activated in two ways: either by optimizing and integrating them with the resources of pharmaceutical companies under their umbrella to achieve resource complementarity; or by empowering Biotech companies with growth potential to help them quickly obtain mature production capacity and channel support and build a closed-loop ecosystem from R & D to commercialization.

Cormorant Capital once completed the acquisition of five cardiovascular and metabolic drugs of Takeda Pharmaceutical through its subsidiary Haisheng Biotech. With the model of "integrated operation + cost optimization", Haisheng Pharmaceutical quickly obtained mature commercialized products and teams and soon grew into a leading pharmaceutical company in the region. It also provided key support for Cormorant Capital to build a platform for mature drugs for basic diseases.

Miao Tianyi said that the above transaction model of investment institutions entering the market has, to a certain extent, changed the competitive ecosystem of China's biomedical industry: Specifically, the dimension of market competition has achieved a structural upgrade. The previous "product-oriented" pattern dominated by multinational pharmaceutical companies has gradually evolved into a differentiated competition situation where multinational pharmaceutical companies focus on cutting-edge innovative drugs and investment institutions deeply cultivate the mature drug market. The two sides form a staggered competition in the two dimensions of "frontier innovation" and "mature market efficiency".

At the same time, the specialized division of labor in the industrial chain continues to deepen. The dual pattern of "R & D-driven multinational pharmaceutical companies" and "operation-driven domestic platforms" is accelerating its formation. Some platform companies affiliated with investment institutions have become professional players with strong commercialization capabilities in specific disease fields (such as chronic diseases) by integrating the mature product portfolios of multiple multinational pharmaceutical companies.

In the future, with the in-depth strategic adjustment of multinational pharmaceutical companies, more mature products or non-core businesses will be divested, and capital institutions and domestic pharmaceutical companies will become important potential buyers.

Focusing on Innovation to Feed Back Global Business

When divesting some products or businesses becomes a normal operation in the strategic adjustment of multinational pharmaceutical companies in China, another question to be explored is: In the global strategic layout of multinational pharmaceutical companies, is the weight of the Chinese market tending to weaken or, on the contrary, continuously strengthening? Judging from a series of actions of many multinational pharmaceutical companies to continuously increase their investment in China in the past two years, the answer obviously points to the latter. It should be noted that the layout of innovative drugs is the top priority in this series of strategic actions.

In the past decade, with the release of the dividends of a series of policies from the Chinese drug regulatory department, the innovative drug industry in China has achieved a qualitative leap: from the former "imitation and follow-up" to "original innovation", the transformation effect is remarkable, and it has strongly broken through and made great progress in the global pharmaceutical innovation track, running out the acceleration of Chinese innovative drugs.

"The growth model of the Chinese market is no longer the same as before. The competition has become more intense. Selling old businesses and investing more funds in innovative products is more in line with the current development logic of the Chinese market." The aforementioned secondary market investor told a reporter from Science and Technology Innovation Board Daily.

At this year's China International Import Expo, deeply cultivating and heavily investing in the Chinese market has become the unified stance of multinational pharmaceutical and medical device companies. For them, China is no longer just a profitable market but has been upgraded to a key hub in the global industrial chain. Investing and laying out here is not only about deeply cultivating the local market but also about feeding back their global business and helping them gain more growth space and commercial value in the broader international market.

Correspondingly, multinational pharmaceutical companies are accelerating their strategic transformation, shifting from the traditional model of "imported products + local distribution" to a trinity full-chain layout of "localized R & D, localized production, and localized cooperation".

Since this year, many multinational pharmaceutical companies have successively announced large-scale investment plans in China: In March, AstraZeneca proposed a 2.5 billion US dollars investment plan in China; in May, Roche announced an investment of 2.04 billion yuan to build a new biopharmaceutical production base in Zhangjiang High-Tech Park, Pudong New Area, Shanghai; in October, Sanofi launched an insulin API production base project with a total investment of 1 billion euros in the Beijing Economic and Technological Development Area to strengthen its local production capacity layout. At the same time, many multinational pharmaceutical companies, including Eli Lilly and Pfizer, have established innovation incubators or R & D centers in China.

"Once, China was an 'important sales end' that multinational pharmaceutical companies relied on. Now, with the rapid development of the industry, the Chinese market has grown into an emerging R & D highland that can deeply coordinate and resonate with the global pharmaceutical industrial chain. In the future, the development of multinational pharmaceutical companies in China will be promoted simultaneously in three dimensions: core competition in the innovative drug track, reallocation of global resources, and in-depth competition in the local market." The aforementioned secondary market investor said.

This article is from the WeChat public account "Science and Technology Innovation Board Daily", author: Shi Shiyun. It is published by 36Kr with authorization.