Stronger financing to fuel drug innovation

China should strengthen investment and financing mechanisms for its biopharmaceutical sector in order to support innovation and nurture new growth drivers, said a national political adviser and a pharmaceutical entrepreneur at the ongoing two sessions.

Ding Lieming, a member of the 14th National Committee of the Chinese People's Political Consultative Conference and chairman of Betta Pharmaceuticals Co Ltd, said the industry has entered a crucial stage where stronger financial support will be needed to translate scientific breakthroughs into marketable medicines.

China's pharmaceutical innovation capacity has improved markedly in recent years. During the 14th Five-Year Plan (2021-25) period, the country approved 230 innovative drugs, including 76 in 2025 alone, Ding said.

Outbound licensing deals by Chinese drugmakers also surpassed $130 billion in value, which Ding said reflects the growing global presence of Chinese pharmaceutical innovation.

"These achievements show that China has become an important source of global pharmaceutical innovation," Ding said, adding that the coming years will be a critical window for the country to further strengthen its position in the global industry.

However, drug development remains a long and costly process. According to Ding, developing a new medicine typically takes around 10 years, requires roughly $1 billion in investment and carries a success rate of less than 10 percent.

Because of those challenges, he said China needs a financing system that better matches the long development cycles and high risks associated with pharmaceutical innovation.

One of Ding's key proposals is to expand support for industry investment funds. Leading pharmaceutical companies can act as "chain leaders", he said, building collaborative innovation ecosystems centered on industrial investment funds that help connect research breakthroughs with commercial development.

Government and private capital should strengthen cooperation with such funds to support innovative drug development and accelerate the commercialization of new technologies, Ding said.

"This would give investors greater confidence to invest and innovators greater confidence to innovate," he said.

Ding also suggested broadening listing channels for biotech firms, particularly companies that have not yet turned profitable but are backed by industry funds, allowing them to access capital markets.

He further proposed introducing differentiated policies to encourage mergers and acquisitions in the pharmaceutical sector, including simplified review procedures and faster approval timelines.

A green channel for high-quality acquisition targets could help accelerate the commercialization of promising research projects, he said.

Ding also called for the development of so-called S funds — secondary market private equity funds that buy existing stakes in venture capital or private equity portfolios.

China's private equity and venture capital sector has accumulated more than 14 trillion yuan ($2.03 trillion) in outstanding funds, but many investors face difficulties exiting projects, Ding said.

S funds provide a mechanism for investors to sell their holdings while bringing in new capital, which helps maintain liquidity in the investment ecosystem.

"This can create a win-win situation for existing investors, new investors and the companies receiving funding," Ding said, adding that State-owned capital could play a leading role in establishing such funds.

chengyu@chinadaily.com.cn