Bernstein is bullish on the divergence in innovative-drug R&D efficiency in China; Innovent, Akeso and Hengrui are seen as future champions

Overview

This report updates Bernstein's long-term comparative framework for the R&D capabilities of Chinese pharma and biotechnology companies. The report evaluates covered companies from three dimensions: first, the return on innovative-drug sales and licensing income relative to lagged R&D investment; second, the time from IND submission to regulatory approval and the IND-to-approval hit rate; and third, the scale of the innovation pipeline, the potential FIC ratio, and trial counts. The overall conclusion is that the R&D sales return of leading biotech companies is improving, while traditional pharma companies, except for a few such as Hansoh, are under pressure due to their core products entering later stages of their lifecycle and rising R&D investment. Looking ahead to 2030E, Innovent, Akeso and Hengrui appear more like long-term winners.

Core views

The report's core views are as follows: First, the economic return on R&D investment will become a key metric for evaluating innovative-drug companies, and pipeline count alone is not enough. Second, Akeso and Innovent are expected to significantly lead by 2030E in both innovative-drug sales return and BD licensing income return, benefiting from domestic commercial scaling, overseas licensing milestones, and potential royalties. Third, although Hengrui is a traditional pharma company, its strong commercialization capability, deep pipeline and ongoing BD activity could make it the best performer in R&D returns among traditional drugmakers. Fourth, biotech companies structurally outperform traditional pharma companies in IND conversion rate and development speed, with Innovent and Akeso standing out most clearly. Fifth, Zai Lab's faster development speed mainly reflects a business model of in-licensing later-stage global assets, so it should be understood separately from companies with largely internal pipelines.

Analysis framework

The report combines horizontal peer comparison with long-term forecasting. On the economic-return side, it matches innovative-drug sales or licensing income with cumulative R&D spending from several years earlier to capture the time lag between R&D investment and commercial monetization. On the efficiency side, it measures the median number of days from first IND submission to first regulatory approval for innovative products, and computes the hit rate using cumulative IND submissions up to end-2023 versus approved innovative drugs. On the scale side, it compares each company's number of pipeline assets, the share of potential FIC assets, the number of lead clinical trials, and the number of trials per unit of R&D spending.

Methodology notes

• R&D economic returnInnovative-drug sales R&D return

  Innovative-drug sales divided by cumulative R&D expense in the years preceding the sales year

  This metric measures whether a company can convert historical R&D investment into commercial innovative-drug sales, emphasizing the lag between R&D spending and revenue realization.

• R&D economic returnLicensing revenue R&D return

  Licensing revenue divided by cumulative R&D expense three years earlier

  This metric measures the monetization power of global collaboration, out-licensing, milestone payments and potential royalties relative to R&D investment.

• R&D efficiencyIND-to-approval time

  Number of days from first IND submission to first market approval

  This metric is used to compare clinical development speed. The report notes that oncology assets are generally faster than non-oncology assets, and that biotech companies overall are faster than traditional pharma companies.

• R&D efficiencyIND-to-approval hit rate

  Number of approved innovative drugs divided by cumulative innovative-drug IND submissions through end-2023

  This metric is used to measure clinical funnel conversion efficiency. The report shows that the average hit rate for biotech companies is nearly twice that of traditional pharma companies.

• Pipeline quality and scalePipeline scale, potential FIC ratio, and trial density

  Number of assets, potential first-in-class share, number of lead trials, and trials per unit of R&D spending

  This dimension supplements the breadth and execution density of the R&D platform, but the report emphasizes that quantity must be judged together with returns and conversion efficiency.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Innovent

  Core beneficiary

  Strengths

  Innovative-drug sales R&D return is expected to keep improving, approaching 3.0x by 2030E; among internally driven pipeline companies, it leads in development speed, with both oncology and non-oncology IND-to-approval times far better than average; it has more than 100 pipeline assets and a potential FIC ratio of 28%.

  Weaknesses

  The long-term forecast depends on commercial scaling, control of R&D spending, and realization of licensing milestones.

  Comparison

  Among internally driven R&D companies, it leads in time-to-market and IND conversion efficiency; together with Akeso, it is viewed as one of the biotech champions in 2030E.

  Risks

  Clinical failures, slower-than-expected sales ramp-up, delayed or unfulfilled overseas collaboration milestones.

• Akeso

  Core beneficiary

  Strengths

  IND-to-approval hit rate exceeds 40%, and its development efficiency in oncology is strong; both innovative-drug sales return and licensing income return are expected to rise significantly by 2030E; if AK112 receives potential FDA approval, it may enter a period of milestone and royalty collection.

  Weaknesses

  Long-term value is highly sensitive to global approval and commercialization of its core assets.

  Comparison

  It is listed by the report alongside Innovent as a future champion, and its trial efficiency per unit of R&D spending is also among the leaders.

  Risks

  FDA approval, global clinical results, execution of overseas partnerships, and changes in the competitive landscape.

• Hengrui

  Long-term winner among traditional pharma companies

  Strengths

  Pipeline size exceeds 360 assets, commercialization capability is strong, BD activity continues, and R&D return is expected to be the best among traditional pharma companies by 2030E.

  Weaknesses

  Traditional pharma companies overall face downward pressure on R&D returns in 2022-2025 due to later-stage product lifecycles and expanding R&D spending.

  Comparison

  It has a clear lead in pipeline count, and its trial efficiency per unit of R&D spending is in the same top tier as Akeso; however, biotech companies are stronger overall in IND conversion rate.

  Risks

  New product launch pace, decline of legacy products, rising R&D spending, and weaker-than-expected BD monetization.

• Hansoh

  Current leader in R&D return on sales

  Strengths

  Its innovative-drug sales R&D return was about 2.0x in 2025, the highest among covered companies.

  Weaknesses

  The report believes its near-term return is high but its future upside is limited.

  Comparison

  Its current return is stronger than most peers, but the long-term champions in 2030E are more likely to be Akeso, Innovent and Hengrui.

  Risks

  Product lifecycle, slowing innovative-drug sales growth, and insufficient follow-through in the pipeline.

• Kelun-Biotech

  Leader in licensing income return

  Strengths

  Its licensing revenue R&D return was about 1.0x in 2025, showing strong out-licensing monetization capability.

  Weaknesses

  The core asset sac-TMT is still in global Ph3 development, so near-term licensing return may moderate.

  Comparison

  It currently leads on licensing return, but the expected 2030E leaders in combined sales and licensing return are Akeso and Innovent.

  Risks

  Global Ph3 progress, partner execution pace, timing of milestone recognition, and uncertainty in clinical results.

• Zai Lab

  Development-speed reference case

  Strengths

  It has the shortest IND-to-approval time, benefiting from an in-licensing model that brings in later-stage global assets for Ph3 or bridging studies in China.

  Weaknesses

  The fast launch pace mainly comes from the in-licensing model and is not fully equivalent to internal R&D strength.

  Comparison

  It is faster than most companies, but the report places greater emphasis on Innovent's leadership among companies with internal pipelines.

  Risks

  Competition for in-licensed assets, licensing costs, domestic commercialization, and dependence on global partnerships.

• BeOne

  Mature biotech comparison case

  Strengths

  It already has a mature commercial base and innovative-drug revenue of a meaningful scale.

  Weaknesses

  The report expects its R&D return on sales to stabilize, with revenue growth slowing marginally after Brukinsa scales up while R&D spending continues to rise.

  Comparison

  Compared with Innovent and Akeso, its long-term return upside is smaller.

  Risks

  Slowing growth in core products, rising R&D expenses, and weaker-than-expected pipeline commercialization.

Key data

• Hansoh innovative-drug sales R&D return in 2025about 2.0xThe report says Hansoh had the highest sales R&D return among covered companies in 2025.
• Kelun-Biotech licensing revenue R&D return in 2025about 1.0xThe report says Kelun-Biotech led in licensing revenue R&D return.
• Akeso and Innovent innovative-drug sales R&D return in 2030Eabout 3.0xThe report expects both companies to become sales R&D return champions.
• Akeso and Innovent licensing revenue R&D return in 2030Eabout 0.7x-0.9xDriven by overseas licensing, milestone payments and potential royalties.
• Average IND-to-approval time for covered companies' oncology productsabout 2,100 daysUsed to measure oncology innovative-drug development speed.
• Average IND-to-approval time for covered companies' non-oncology productsabout 2,900 daysNon-oncology assets have longer development cycles.
• Innovent IND-to-approval time for oncology productsabout 1,067 daysAbout 50% of the covered-company average.
• Innovent IND-to-approval time for non-oncology productsabout 2,111 daysAbout 30% below the covered-company average.
• Innovent and Akeso IND-to-approval hit rateabove 40%The report says both companies have the highest company-level hit rates.
• Hengrui pipeline scalemore than 360 assetsHengrui still dominates in terms of quantity.
• Innovent pipeline scalemore than 100 assetsThe report says it has reached the level of a mature biopharma company.
• Innovent potential FIC ratio28%Above the roughly 20% average.
• Akeso and Hengrui trial efficiency per unit of R&D spendingabout 20 trials per RMB 1 billion of R&D spending per year on averageThe report says the two companies have the highest trial efficiency relative to R&D spending.

Impact & implications

The investment implication is that China's innovative-drug industry is shifting from a simple contest over pipeline count to competition on commercial monetization of R&D investment, clinical development efficiency, and global BD monetization capability. Innovent and Akeso represent the biotech direction that combines commercialization, development efficiency and licensing potential; Hengrui represents the traditional pharma direction that can re-accelerate through a deep pipeline and commercial strength; Hansoh and Kelun-Biotech each have near-term strengths in sales return and licensing return respectively, but their long-term durability still needs to be assessed in light of pipeline lifecycle and global clinical progress.

Risks

• The 2030E forecast depends on innovative-drug sales scaling, milestone payments, royalties and R&D cost control; if any of these fall short, R&D returns may miss expectations.
• Clinical development carries risks of failure, delay or regulatory uncertainty, especially for assets involving FDA approval and global Ph3 trials.
• Out-licensing income has a one-off and phased nature, so near-term returns may be affected by the timing of partnership agreements, payment recognition and global development progress.
• Later-stage lifecycle pressure on traditional pharma companies' core products may continue to drag on R&D returns.
• Cross-company comparisons are affected by differences in business models; for example, Zai Lab's in-licensing model shortens development time but does not fully reflect internal R&D efficiency.
• Some visual text in the report's charts may be noisy or misread, so key conclusions should be based primarily on the body text and chart titles.

What to watch

• Potential FDA approval of Akeso's AK112 and the subsequent milestone and royalty realization.
• Potential milestone income from partnerships such as Takeda for Innovent after 2027E.
• Hengrui's 2027E-2030E new product launch pace and the sustainability of BD activity.
• Kelun-Biotech's sac-TMT global Ph3 trial progress and short-term volatility in licensing returns.
• Whether Innovent and Akeso's domestic commercialization ramp can support the roughly 3.0x sales R&D return expected in 2030E.
• Whether R&D expense growth remains controlled and whether trial efficiency per unit of R&D spending can be maintained.
• Whether the IND-to-approval hit rate and development cycle advantages persist across future pipelines.