What is the basis for HengRui Medicine to raise the sales revenue growth target for innovative drugs to over 30%?

In 2025, it’s the year Chinese innovative medicines’ value “woke up.”

In that year, the Hang Seng Hong Kong Stock Connect Innovative Drugs Select Index saw its year-to-date gain temporarily break above 125%, and industry sentiment hit fresh records in many years. As an industry flagship, Jiangsu Hengrui Medicine also completed a leap from “quantitative change” to “qualitative change” in this wave:

Revenue first surpassed RMB 31.6 billion, net profit RMB 7.7 billion—both hitting historical highs;

The share of sales revenue from innovative drugs surged to 58%, and it is expected that the year-on-year growth rate in 2026 will reach 30% or more;

Listed in both A and H shares, with a near 5-year largest IPO size in Hong Kong’s pharmaceuticals sector, fully stocked with ammunition for globalization.

These “hard-core” results drove the stock price to rebound strongly, and market attention quickly returned. But even so, at the start of 2026, amid a complicated and ever-changing market environment, the company’s stock price still hovered around the low level from a year earlier.

When the industry has moved from “valuation repair” to “value reappraisal,” is the market’s pricing logic lagging behind the company’s fundamentals by one step?

Scale effects: the “Hengrui speed” that can’t be replicated

In the pharmaceutical industry, scale itself is the deepest moat. But Hengrui’s “elephant dancing” is not driven by brute force over sheer size—it’s driven by years of accumulated, systematized capabilities: from R&D and commercialization to capital, forming a set of systematic advantages that rivals find hard to copy.

R&D efficiency: crushing both in quantity and quality.

High-intensity R&D spending is the foundation of innovation. In 2025, Hengrui’s cumulative R&D investment reached RMB 8.724 billion, accounting for as much as 27.58% of operating revenue. That means nearly RMB 24 million is invested in R&D every day.

Such long-term, high-intensity investment is turning into outputs that make peers envious. According to data from Citeline, in 2025 the size of Hengrui’s in-house pipeline ranked strong #2 globally, and the growth rate of its R&D pipeline ranked among the global TOP3.

Figure 1: Company original-research pipeline size and growth rate

Source of data: the company’s JPM materials, Citeline 2025 and 2023 reports, compiled by Gelonghui

Commercialization兑现: a qualitative leap from “2 products a year” to “8 products in a year.”

In 2025, Hengrui (including subsidiaries) secured seven Class 1 innovative drugs and one Class 2 new drug上市 in one go, and the number of innovative drug approvals showed explosive growth. As of now, the company has received approval for 24 Class 1 innovative drugs and 5 Class 2 new drugs in China. This “approve a batch for launch, another batch enters the clinic, and another batch advances in development” virtuous cycle is precisely the confidence Hengrui has to withstand industry volatility and sustain growth.

Financial strength: ammunition for globalization is well stocked.

During the reporting period, the company successfully listed on the Hong Kong Stock Exchange to achieve an “A+H” listing, raising a net amount of HKD 11.374 billion—making it the largest IPO in Hong Kong’s pharmaceutical sector in the past 5 years. Its financial strength has been significantly enhanced, and Hengrui’s journey toward globalization has stronger capital backing.

Three key keywords to understand the “trigger point” in 2026

If 2025 was a year of thick accumulation before payoff, then 2026 will be the full throttle.

Hidden in the annual report is a key signal: the company clearly states that in 2026, sales revenue from innovative drugs will grow by over 30% year over year. Compared with the 25% target proposed at the JPM conference at the beginning of the year, this upward adjustment is loaded with meaning—management clearly holds more chips that haven’t been played yet.

First layer of driving force:医保 volume expansion, innovative drugs entering a “steep growth” curve.

The national医保目录 adjustment at the end of 2025 laid a heavy-footnote for Hengrui’s growth in 2026. A total of 20 products/indications of the company passed the adjustment to the新版医保目录, including 10 products entering医保 for the first time, 5 products adding new indications into医保, and 5 products completing续约 within the catalog.

This means that new products with major potential—such as rituximab?—will enjoy the volume-expansion benefit of医保 reimbursement for the first time. Taking rituximab? as an example: after this HER2ADC drug was approved for launch in May 2025, it quickly opened up the market thanks to excellent clinical data; when it enters医保 in 2026, it is expected to see explosive growth. Based on this, management provided a clear guidance that sales revenue from innovative drugs will grow by more than 30% year over year in 2026, demonstrating strong confidence in growth for the coming year.

Figure 2: Company innovative drug sales overview

Source of data: company website, compiled by Gelonghui

Second layer of driving force: dense clinical data readouts drive a new BD wave.

Many new drugs that Hengrui entered the clinic in 2024–2025 will enter a period of dense data readouts in 2026. According to the company’s plan, it is expected that around 25 items of NME Phase III clinical data will be read out, and around 20 NMEs will enter clinical trial stages.

Against the backdrop that in 2025 the total value of Hengrui’s outward licensing transactions for innovative drugs exceeded USD 130 billion, these early-stage pipelines with global competitiveness have the potential to, through excellent data in 2026, drive a new round of outward licensing collaborations and continue to contribute substantial BD revenue.

Figure 3: Major clinical data readouts for 2026

Source of data: company website, compiled by Gelonghui

Third layer of driving force: licensed assets enter global Phase III, with value continuing to be realized.

In 2025, Hengrui Medicine (HK:1276) (SS:600276) continued to innovate its BD partnership model and reached five transactions for overseas business expansion of innovative drugs. Among them, the strategic alliance with GSK is especially eye-catching: the two sides jointly develop up to 12 innovative drugs, including the PDE3/4 inhibitor HRS-9821; Hengrui receives a US$500 million upfront payment, plus options exercise fees and milestone payments totaling around US$12 billion, and corresponding sales royalties. Notably, in this annual report, revenue of about US$100 million has been recognized based on the completion progress of performance obligations—meaning the remaining US$400 million has not yet been recognized as revenue.

This revenue model of “recognizing in batches, realizing in tiers” shows that BD is evolving from “one-off buy-and-sell” toward “full lifecycle value management.” It reflects not only the maturity of the business model, but also the international pharmaceutical companies’ high trust in Hengrui’s R&D platform: from buying a product to being willing to bet on an entire R&D system.

Entering 2026, several major assets previously licensed by Hengrui will hit critical milestones. As these milestones land one after another, Hengrui’s global value from innovative drugs is expected to continue to be realized.

Figure 4: Company BD progress

Source of data: company website, compiled by Gelonghui

From a “China leader” to a “global player”

The logic of valuation reconstruction is happening. It’s just that the capital market seems not to have fully caught up yet.

Previously, the valuation anchor for Hengrui Medicine in the market was “China’s leading innovative drug company.” Now, as a series of assets with global first-in-class or best-in-class potential enter global Phase III clinical studies, Hengrui’s valuation framework is gradually moving closer to that of global pharmaceutical giants.

This kind of internationalization is no longer just a simple “exporting products overseas,” but a strategic elevation from the inside out.

On one hand, Hengrui is accelerating its independent overseas expansion and building its own global network.

During the reporting period, the company opened a new clinical R&D and collaboration center in Boston, USA, and recruited multiple key management personnel and medical experts to join the overseas R&D team. Currently, the company has established 15 R&D centers in Asia, Europe and the Americas, and Australia; multiple innovative drugs have launched their first overseas clinical trials, spanning Phase I to Phase III stages. From R&D to clinical development, Hengrui is building its own global network.

On the other hand, Hengrui is deeply binding global giants through platform-based output.

Since 2023, the company has completed 12 overseas business expansion transactions, with a potential total transaction value of more than USD 27 billion. Its partners include top global pharmaceutical companies such as Merck, MSD, and GSK. Every collaboration is a vote of trust; every milestone payment is international recognition of Hengrui’s R&D system.

Looking ahead, Hengrui’s strategic value has gone beyond the company itself.

Against the backdrop of the “15th Five-Year Plan” positioning biopharmaceuticals as an emerging pillar industry, as the flagship of China’s pharma industry, Hengrui’s growth is moving in sync with the rise of China’s innovative drugs. As China’s voice in innovative drugs on the global stage keeps strengthening, Hengrui is undoubtedly one of the most weighty participants in this era-defining shift.

For Hengrui specifically, over the next three years (2026–2028), Hengrui expects around 53 innovative products and indications to be approved for launch. This is not only growth in performance, but also a leap in development quality.

These include repotrect?—a GLP-1/GIP dual receptor agonist, Ripbupetide (HRS9531)—for severe obesity/obesity, which is expected to be approved; and Ricon?—ritux?—for HER2-positive colorectal cancer, first-line breast cancer, and multiple other new indications.

With these major products rolling out one after another, they will continuously refresh the market’s imagination space regarding Hengrui.

A long runway and thick snow—opening a new chapter

Returning to the original question: when the industry has moved from “valuation repair” to “value reappraisal,” whether there is an “awareness gap” in the market’s view of Hengrui Medicine’s value.

From a macro perspective, China’s innovative drug industry is standing at a historic turning point. The market size in 2030 is expected to exceed RMB 2 trillion, with a CAGR of 24.1%.

From a fundamentals perspective, Hengrui Medicine has completed a qualitative leap from “scale advantage” to “system advantage.” Capital markets’ recognition often lags behind fundamental breakthroughs. With the sprinting toward a 30% growth target, dense global clinical data readouts, accelerated BD expansion, and steady progress in overseas self-driven R&D, that value reappraisal that belongs to Hengrui may not be delayed for too long.

A long runway and thick snow—the real value will ultimately be discovered.

**?4月火力全开！AI精选股重磅来袭，即将震撼上线！现在订阅InvestingPro立减50%，**点击此处订阅！