2026 biotech playbook: Hong Kong at the centre of China’s globalisation

Hong Kong increasingly provides durable, repeat access to capital for public biotech firms.

For the past decade, the narrative of Chinese biotech was largely defined by potential but plagued by skepticism. Founders faced a “credibility gap” – could Chinese labs produce molecules that would withstand the Food and Drug Administration (FDA) scrutiny and compete with Western-originated assets?

In recent years, that question has been answered increasingly in the affirmative. The Chinese biotech industry hit another inflection point in 2025, another breakthrough year marked by tremendous deal flows rooted in domestic innovation, prompting global pharmaceutical players to pay closer attention.

By year’s end, the National Medical Products Administration (NMPA) reported over 150 out-licensing deals for China-originated drugs valued at more than $1.016t (US$130b), breaking previous records. China’s share of the global drug pipeline expanded to approximately 30%. It is no longer a peripheral contributor to global innovation, but a central one.

Yet validation, whilst essential, is no longer the defining challenge. As Chinese biotech gains global recognition, the core question now is how to convert that into scalable capital, durable partnerships, and sustained global presence in an increasingly fragmented regulatory and geopolitical environment.

Anchored in Hong Kong
The validation of China-originated innovation arrives amidst rising competition and complexity in the global industry. Fortunately, as investment regulations tighten and cross-border scrutiny intensifies, Hong Kong has re-emerged as the critical financial market and often the only anchor for successful fundraises and elevated profiles.

Beyond initial listings, Hong Kong increasingly provides durable, repeat access to capital for already-public biotech companies. Unlike the more episodic windows seen elsewhere, the Hong Kong market has supported a steady cadence of follow-on offerings.

These have helped issuers raise growth capital, extend cash runways, and finance late-stage clinical programs, as seen in Akeso’s $1.2b follow-on public offering and $1.9b follow-on public offering.

Importantly, momentum in the secondary market has begun to meaningfully spill over into the primary market. Active trading, improved liquidity, and more resilient aftermarket performance have reinforced investor risk appetite, making it easier for private-stage biotech companies to secure pre-IPO and crossover financing.

Strategy is the differentiator
Success in today’s biotech industry is no longer just about good science. As competition intensifies and capital becomes more selective, companies must demonstrate strategic clarity in how they advance and monetize their technologies. Increasingly, value is created not only through discoveries, but from choosing and executing the right transactional path at the right time.

As a result, many biotech companies now pursue dual- or multi-track strategies, evaluating IPOs, business development deals, and asset-level spin-outs in parallel. Increasingly, they are flexible in how they monetise platforms and pipelines, with choices shaped by the nature of underlying technologies.

Given its unique position, Hong Kong is often where Chinese biotech charts its roadmap for 2026 and beyond.

The valuation shift
A fundamental shift in how biotech assets are valued. In the previous cycle, investors favoured companies selling broad, ambitious technologies promising multiple future products. Today, the due diligence paradigm has shifted.

Global pharma and public investors are no longer “shopping” for concepts; they are auditing for differentiation. They are assessing how a drug works, its distinct advantages, and whether it can be manufactured at scale. The market is rewarding companies that have moved beyond “fast follow” strategies to produce complex, next-generation therapies.

This explains why recent IPO valuations are more grounded – settling in the $3.960b (RMB3.5b) range rather than the inflated “decacorn” valuations of the past. It reflects a healthier focus on asset value over hype.

Scaling through Hong Kong
Whilst access to public funding has narrowed elsewhere in the world, the Hong Kong Stock Exchange (HKEX) has successfully reinvigorated its 18A board. Chapter 18A has matured into a predictable and attractive pathway for biotech IPOs. This predictability has materially reduced execution uncertainty for issuers and investors alike.

Regulators are taking a more supportive stance toward biotech and specialist tech listings. In 2025, the Securities and Futures Commission (SFC) and Hong Kong Exchanges and Clearing Limited (HKEX) launched the Technology Enterprises Channel (TECH), creating a dedicated engagement pathway for biotech companies and specialist technology companies, including earlier regulatory interaction and, importantly, a confidential filing option for eligible issuers.

These developments bring Hong Kong closer to international best practices while preserving robust regulatory oversight. At the same time, the new Fast Interface for New Issuance (FINI) mechanism has cut settlements cycle from five days to two (T+2), maximising capital efficiency, whilst reformed allocation rules protect institutional anchors from mandatory retail clawbacks.

We have seen this momentum firsthand in Cooley’s 2025 landmark 18A listings, with the market reacting positively to Bao Pharmaceuticals’ $1b debut and Duality Biologics’ $1.64b listing, reflecting sustained investor interest in innovative biotech issuers.

Alongside a steady stream of other successful IPOs, these transactions confirm a crucial reality: the Hong Kong window remains wide open for issuers demonstrating clinical value.

Globalisation through business development 
Alongside public-market strategies, global business development (BD) has become an important and flexible route for Chinese biotech companies to internationalise their innovation.

Rather than a single model, BD today encompasses a spectrum of structures tailored to the maturity, scope, and geographic relevance of specific assets or platforms. These include asset-level out-licensing, broader platform or portfolio partnerships, and, in selective cases, NewCo-style spin-outs.

These approaches are not mutually exclusive and are often pursued in parallel within a multi-track strategy.

Traditional global partnerships remain a powerful path to scale. Earendil Labs’ two collaborations with Sanofi include both asset-based and platform-based arrangements focused on AI-powered biologics discovery and development, whilst Phrontline Biopharma’s deal with Samsung Bioepis centres on next-generation antibody-drug conjugates.

These examples demonstrate how Chinese biotech companies are using carefully structured partnerships to expand internationally and convert innovation into commercial opportunity – despite a complex regulatory headwinds.

A smaller subset of assets is being advanced through NewCo structures, where programs are spun out into independent entities with dedicated capitalisation and clean IP. These structures suit assets that need a distinct Western footprint or benefit from independent governance and financing.

The recently announced Chia Tai Feng Hai Pharmaceutical Co., LTD. (CTFH) and Formation Bio transaction is illustrative of this approach. Whilst more complex to execute, NewCo transactions can offer a solution when traditional licensing is not optimal.

Across all BD structures, however, execution remains paramount: clear IP ownership, strong data integrity, and aligned incentives continue to determine whether global partnerships can convert scientific promise into realised value.

2026 outlook
The defining challenge for Chinese biotech is no longer proving that innovation exists, but executing the legal, financial, and strategic playbook needed to unlock its full global value. For founders, executives, and investors driving this transformation, the priority now is navigating these complex structures to capture the global opportunities ahead.