The mid-term reporting season for China's A-share pharmaceutical sector has wrapped up, with a large number of innovative drug makers swinging back to profitability.
BD realization coupled with product volume expansion, the sustainability of profitability remains to be tested
As of 8 p.m. on August 31, 2026, 508 listed pharmaceutical companies on the A-share market have disclosed their 2026 semi-annual reports. Among them, 191 companies recorded year-on-year growth in net profit attributable to parent shareholders, accounting for about 37.6%; 40 companies saw their net profit attributable to parent shareholders surge by more than 100% year on year.
Innovative drugs have become a key highlight of this round of performance improvement, and many enterprises that were previously in the continuous investment period have achieved profitability or substantial profit growth. However, from the perspective of profit composition, some enterprises have obviously benefited from the recognition of overseas licensing revenue, while others rely on the sales volume expansion of core products. The profit quality and sustainability of different enterprises still need to be observed separately.
Semi-annual reports are all released with differentiated performances
Innovative drug is one of the sectors with the most obvious performance changes in this round of semi-annual reports.
RemeGen achieved operating revenue of 5.853 billion yuan in the first half of the year, a year-on-year increase of 433.11%; its net profit attributable to parent shareholders was 4.662 billion yuan, compared with a loss of 450 million yuan in the same period of last year, realizing a substantial turnaround from losses. The performance increment mainly comes from the overseas licensing of RC148, that is, the company signed an exclusive license agreement with AbbVie in January this year and obtained a down payment of 650 million US dollars; at the same time, the domestic commercialized sales revenue of two listed innovative drugs reached 1.34 billion yuan, a year-on-year increase of 22.3%.
CSPC Innovation also achieved performance reversal relying on BD realization. In the first half of the year, the net profit attributable to parent shareholders reached 1.261 billion yuan, while the company lost 2.7461 million yuan in the same period of the previous year. After its holding subsidiary Bluestone Biotech reached a strategic cooperation on innovative peptide drugs with AstraZeneca, it received the full down payment of 420 million US dollars in May, and 70% of it was recognized as main business revenue in accordance with accounting standards; in addition, the cooperation project between CSPC Innovation and Corbus in the first half of the year also contributed 10 million US dollars in R&D milestone revenue.
Zelgen Pharma's operating revenue in the first half of the year was 1.205 billion yuan, up 220.88% year on year, and its net profit attributable to parent shareholders was 640 million yuan, compared with a loss of 72.8035 million yuan in the same period of last year, realizing semi-annual profitability for the first time since its establishment. The current revenue includes 662 million yuan of product technology licensing revenue, and the sales revenue of commercialized products increased by 44.3% year on year.
At the same time, for a number of enterprises that have entered the mature commercialization stage, profit growth comes more from product sales itself. BeiGene achieved operating revenue of 22.22 billion yuan in the first half of the year, a year-on-year increase of 26.84%; its net profit attributable to parent shareholders was 3.271 billion yuan, a year-on-year increase of 627.15%. The global sales of its core product zanubrutinib reached 16.127 billion yuan, up 28.7% year on year, and product sales have become the main support for profit growth.
The difference in profit sources of different enterprises means that the "batch turnaround of innovative drugs from losses to profits" cannot be simply understood as that the industry as a whole has crossed the profit inflection point.
Some enterprises mainly rely on the recognition of large BD down payments to generate revenue, some are driven by "BD licensing + product sales", and some leading enterprises have basically achieved sustainable profitability relying on global product commercialization. Although the report results all show profit improvement, the cash flow sources behind the enterprises, the replicability of performance and the operating stage they are in are not the same.
Mode switching, accelerated realization
The innovative drug industry is gradually moving from the stage of simply relying on R&D investment and pipeline valuation to the stage of concentrated realization of commercial value. For a long time in the past, domestic Biotech enterprises were generally in a state of high R&D investment and continuous losses, and the capital market mainly valued enterprises based on the number of pipelines, clinical progress and potential market space. As more and more domestic innovative drugs enter the late clinical stage and even the commercialization stage, this traditional valuation logic is changing.
One realization path is overseas BD licensing. In recent years, domestic innovative pharmaceutical companies have frequently authorized overseas rights and interests to multinational pharmaceutical companies, realizing the monetization of pipeline value through down payments, multi-stage milestones and sales sharing.
Data from the National Medical Products Administration shows that in the first half of 2026, 81 out-licensing cooperation deals of Chinese innovative drugs were reached, with a total transaction amount of about 1100 billion US dollars, which is about 80% of the total out-licensing transaction amount in 2025. The value of large BD is not only to improve the current income statement, that is, the down payment can quickly supplement cash reserves, but also the willingness of large overseas pharmaceutical companies to pay a high amount is itself a market-oriented verification of the R&D capability of domestic innovative drugs.
It should be noted that the "total transaction amount" in the BD agreement is not equivalent to the realized revenue. Subsequent milestone payments depend on whether conditions such as clinical R&D, approval and commercial sales can be met, and the received down payment should be distinguished from the conditional potential milestone amount in the contract.
Another realization path is product commercialization. As domestic innovative drugs are successively included in medical insurance and their indications are continuously expanded, a number of enterprises have begun to establish stable revenue sources through their own product sales. I-Mab's drug sales revenue in the first half of 2026 reached 920 million yuan, a year-on-year increase of 43.2%. The sales volume of its core product orelabrutinib continued to expand, and the company achieved a net profit attributable to parent shareholders of 246 million yuan, forming a revenue structure of parallel commercialization and global cooperation.
In this context, domestic innovative pharmaceutical enterprises are forming a more diversified cash flow structure: mature commercialized products provide continuous sales revenue, overseas licensing releases the value of R&D assets, and milestone revenue is gradually realized along with the advancement of pipelines. The industry valuation system is also shifting from a simple "pipeline valuation" to a comprehensive evaluation of "pipeline value + BD realization + commercialization capability".
Prosperity is picking up, which still needs to be verified
From the industrial perspective, the innovative drug industry has shown a number of positive signals in 2026: overseas licensing of domestic innovative drugs continues to be active, a number of listed varieties enter the sales expansion period, and the prosperity recovery of innovative drugs has also begun to transmit to upstream and downstream industrial chains such as CXO.
However, the high profit growth presented in the semi-annual reports does not mean that most enterprises in the industry have established a stable profit model. The continuous realization capability of BD-related revenue is still the core foothold for observing the fundamentals of innovative pharmaceutical companies.
Under the licensing cooperation mode, most of the transaction down payments are recognized centrally after the signing of the agreement or the achievement of specific preconditions, and the revenue presents extremely strong phased and occasional characteristics.
If new large-scale licensing cooperation cannot be closed in subsequent reporting periods, coupled with the limited sales volume of existing products, it will be difficult to cover the continuous R&D investment and marketing expenses, and the company's profit level will most likely fluctuate significantly.
The milestone revenue corresponding to overseas licensing naturally has strong uncertainty. Various variables such as clinical data failing to meet expectations, delayed approval progress, and strategic adjustment of partners may interrupt or delay subsequent payment collection.
The commercialization competition pattern in China's innovative drug track remains fierce, the homogeneous R&D and centralized listing of popular targets are prominent, and coupled with the normalized cost control of medical insurance, new drugs generally face the practical challenges of price pressure and market share diversion after listing.
Looking at the industry cycle over a longer period, innovative pharmaceutical companies that can survive industry fluctuations must complete all-round capability closed-loop verification, that is, the R&D end has the strength to continuously output differentiated pipelines, the BD end builds a mature global cooperation system, and the commercialization end relies on a mature sales network to create sustainable operating cash flow, getting rid of dependence on one-time income.
The batch turnaround from losses to profits in the 2026 pharmaceutical semi-annual reports is not a signal that the industry has fully entered a stable profit stage, but a phased financial embodiment of the transformation of innovative drugs from the R&D investment cycle to the commercialization realization cycle.
The turnaround from losses to profits at the report level is only a phased milestone of industrial transformation. How to convert the one-time monetization income of pipeline assets into sustainable product sales revenue and stable operating profit will be the core challenge that the industry needs to face in the next stage.
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