Multinational pharmaceutical firms, particularly U.S. giants, are increasingly recognizing China's burgeoning innovative drug sector as a strategic goldmine to bolster their global competitiveness.

Last week, Lilly's newly-opened Lilly Gateway Labs in Beijing welcomed its first tenant, namely a Chinese biotechnology company focusing on innovative medicines for neurodegenerative and neurological disorders.

This marked the launch of Lilly's first shared lab platform outside the United States, said David A. Ricks, chairman and CEO of Eli Lilly and Company. "China's biopharmaceutical innovation is accelerating at an unprecedented pace," he noted.

China's vast healthcare market has long been a magnet for global pharmaceutical giants. Notably, the country's robust biotechnology creativity is now also emerging as a more compelling draw for foreign capital.

This week, medical tech firm Medtronic opted for tapping into China's biotech advancements. On Monday, it launched a digital healthcare innovation base at BioPark in the Beijing Economic-Technological Development Area (BDA) -- its first in China.

The new facility plans to leverage Beijing's leading medical resources and innovation momentum to develop disease management solutions based on AI and big data. To date, nearly 5,000 medical and healthcare companies have gathered in the BDA.

In addition, Pfizer Inc. is set to open its first Beijing-based entity, a research center -- to align clinical trials with global timelines and focus on new product development in oncology.

British pharma AstraZeneca joined the bandwagon by signing a landmark 2.5-billion-U.S. dollar agreement last Friday to invest in Beijing over the next five years, with the aim of establishing a global strategic R&D center in China's capital city.

"China's biotechnology sector thrives on a dual engine -- Beijing's constellation of famous medical universities training great minds and biotechnology, coupled with an environment that's cultivating new company formation," Ricks from Lilly said.

Lilly's lab platform is designed to accommodate 5 to 8 biotech companies. Ricks confirmed plans to establish additional facilities in east China's Shanghai and other innovation hubs in the country.

"We have hit the optimal moment to develop innovative drugs," said Guan Xiaoming, co-founder of 4B technologies, a Chinese biotech that has joined Lilly's Beijing incubator.

Huzur Devletsah, president and general manager of Lilly China, said: "China's biopharmaceutical market is rapidly evolving, with significant growth and a strong focus on innovation."

Biotech boom

China's growing appeal for international pharmaceutical giants stems partly from the remarkable global market performance of its homegrown innovative drugs.

Akeso, Inc., a startup based in the southern Chinese city of Zhongshan, saw its license-out lung cancer drug outperform blockbuster therapy Keytruda of MSD, which is known as Merck in the United States, in a head-to-head trial. A Wall Street Journal columnist described it as the DeepSeek moment for China's biotech industry, albeit in a more "incremental" fashion.

"China has made notable progress in pharmaceutical innovation, both in terms of quantity and quality," said Xia Yu, Akeso's founder. "This has boosted its international standing and competitiveness."

Currently, an increasing number of Chinese biotech firms are relying on well-trained domestic researchers to quickly advance lab findings to clinical stages. Many such fast-moving startups are choosing to license their innovations to global giants or partner with them in a bid to explore overseas markets.

On Tuesday, Hengrui, a major pharmaceutical company located in the eastern Chinese city of Lianyungang, inked an exclusive licensing agreement with MSD for a clinical-stage oral coronary heart disease drug.

Hengrui will receive a 200-million U.S. dollar upfront payment from the global firm headquartered in New Jersey, U.S., and is eligible for up to 1.77 billion in milestones and royalties on net sales if the product is approved.

Another recent development saw Avenzo Therapeutics, a California-based firm, entering into a license contract in January with Shanghai's DualityBio, to develop next-generation antibody-drug conjugate (ADC) cancer therapies.

"DualityBio has a strong track record of developing and advancing a pipeline of differentiated ADCs that target a broad range of indications," said Athena Countouriotis, co-founder, president and CEO of Avenzo Therapeutics, in a statement. The first-in-human clinical study of an ADC candidate drug is anticipated to take place this year.

Such business collaboration has become a standard practice in the industry. Statistics showed that in 2025 alone -- about 20 Chinese innovative drug license-out deals have been struck, with these deals worth over 11 billion dollars.

Bi Jingquan, an economist from the China Center for International Economic Exchanges, said an ecosystem that encourages innovative drug discovery is taking shape in China.

"China boasts abundant and well-educated human resources, rich clinical research resources, and a drug review and approval system that is largely aligned with international standards," Bi noted.

"If you're looking for innovation, that's the logical place to go," Robert Duggan, founder of Summit Therapeutics, which is Akeso's U.S. partner, was quoted as saying about China.