Innovent-Pfizer deal makes joint development, commercialization pillar in biotech global push

The $10.5 billion partnership announced by Chinese innovative biotech Innovent Biologics and US pharmaceutical giant Pfizer in late May highlights an emerging shift in cross-border biotech dealmaking, with some Chinese drug developers moving beyond traditional out-licensing arrangements toward partnerships that include joint development and commercialization.

While the deal ranks among the largest cross-border transactions signed by a Chinese biotech company, analysts say its significance lies in its structure rather than its size.

Under the agreement, Innovent will receive an upfront payment of $650 million and could earn up to $9.85 billion in development, regulatory and commercial milestones. The partnership covers 12 oncology programs, including antibody-drug conjugates (ADCs) and multi-specific antibodies.

The portfolio includes eight early-stage Innovent programs and four discovery programs proposed by Pfizer.

For four key projects, the companies will jointly develop the assets globally and co-commercialize them in the United States and Europe, sharing profits in those markets. Innovent will retain rights in China. Another four projects will be licensed to Pfizer outside China, while four others will be granted global exclusive rights to Pfizer.

The combination of out-licensing, co-development and co-commercialization within a single transaction distinguishes the agreement from many earlier cross-border deals by Chinese biotech firms.

Hui Zhou, chief R&D officer (oncology pipeline) of Innovent, said the collaboration would help accelerate development of the company's early-stage oncology pipeline and expand its presence in overseas markets through joint development and commercialization in the United States and Europe.

Jeff Legos, chief oncology officer at Pfizer, said the collaboration brings together both companies' "highly complementary engines of innovation", combining Innovent's capabilities in drug discovery and early clinical development with Pfizer's global research and development and commercialization expertise.

The transaction comes amid a surge in cross-border out-licensing activity by Chinese drug developers.

Data from the National Medical Products Administration showed that the cross-border out-licensing deals of Chinese biotech firms hit a record transaction value of more than $60 billion in the first quarter, approaching half of the total $135.7 billion recorded for all of 2025.

Several large transactions have been announced this year. In January, Yantai in Shandong province-based RemeGen reached a collaboration agreement with AbbVie valued at up to $4.95 billion. Later that month, Shijiazhuang in Hebei province-based CSPC Pharmaceutical Group announced a deal with AstraZeneca worth up to $18.5 billion. More recently, Jiangsu Hengrui Pharmaceuticals signed a global strategic collaboration and licensing agreement with Bristol Myers Squibb with potential milestone payments of more than $15 billion.

Against the backdrop, the Innovent-Pfizer deal stands out for its use of co-development and co-commercialization, or Co-Co, arrangements, a model that is gaining traction among China's leading drugmakers.

Innovent previously adopted a similar structure in its collaboration with Takeda, while Hengrui's recent deal with Bristol Myers Squibb included options for joint development and commercialization.

Unlike conventional out-licensing deals, Co-Co arrangements allow companies to share development costs as well as future commercialization returns.

Analysts at China Securities said the Pfizer transaction represented another milestone in Innovent's globalization strategy, noting that the company would gain access to overseas markets through a combination of licensing and Co-Co arrangements.

Another notable feature of the deal is the expansion of profit-sharing rights beyond the United States.

You Fei, chief financial officer of Innovent, told investors during a conference call on June 1 that previous profit-sharing arrangements had primarily focused on the US market, while the Pfizer agreement extends that model to Europe.

"This time, both the US and Europe are included in profit sharing," You said, adding that the two regions together account for more than 80 percent of the global pharmaceutical market.

The company now has more than 20 drug candidates partnered with four multinational pharmaceutical companies, including five projects using Co-Co structures, according to You.

The inclusion of Europe broadens the geographic scope of Innovent's profit-sharing arrangements, reflecting that leading Chinese drugmakers are seeking to retain a larger role in global commercialization rather than relying solely on royalties.

The boom in cross-border business development has also drawn attention to the policy and geopolitical environment surrounding China's biotechnology sector.

Song Ruilin, chief expert of the China Pharmaceutical Innovation and Research Development Association, said that while some US lawmakers have proposed restrictions on Chinese biotechnology companies and questioned the use of Chinese clinical-trial data, multinational pharmaceutical companies continue to pursue partnerships with Chinese firms because of their growing role in global drug development.

Morgan Stanley forecast in 2025 that drugs originating from China could account for 35 percent of new medicines approved by the US Food and Drug Administration by 2040, underscoring expectations that Chinese companies will play a larger role in global drug innovation.

Speaking at a healthcare policy forum in May, Song emphasized that cross-border business development deals have become an increasingly important source of financing for China's innovative drug sector and a necessary phase for its globalization.

At the same time, he urged policymakers to take a cautious approach toward any potential measures affecting cross-border transactions.

"How to manage innovative-drug BD transactions requires respect for science and market principles. Policies should be introduced prudently," Song said.

lijing2009@chinadaily.com.cn