🌟 Summary
China’CSPC secured what appears to be a blockbuster licensing agreement with AstraZeneca—$1.2 billion upfront with potential total value exceeding $18 billion. Yet the market reaction was notably muted
CSPC shares actually dipping despite the announcement. This disconnect reveals deeper concerns about CSPC's core business fundamentals.
CSPC’s Investor Skepticism
The culprit behind investor skepticism is China's Volume-based Procurement program. The numbers are striking: CSPC's flagship product Jinyouli saw a 23% price cut in 2024, followed by a devastating 89% reduction in 2025.
This isn't unique to CSPC—VBP has systematically compressed margins across China's pharmaceutical sector for off-patent drugs.
The result: revenues down 12% and profits down 7% through the first three quarters, continuing a multi-year decline.
CSPC HK share’s monthly shares price move in January 2026
Screenshot
Borrows Hengrui Playbook
CSPC appears to be executing a strategic transformation from a traditional API and antibiotics manufacturer into an innovation-driven biopharma company.
The strategy mirrors Hengrui's playbook: build a diverse pipeline of novel therapeutics and monetize them through international licensing deals.
Beyond the AstraZeneca agreement, CSPC has assets in hot therapeutic areas like ADCs and EGFR bispecific antibodies that could attract additional partnerships.
KeyMed mAb Licensing Deal
The KeyMed deal is particularly interesting as it shows CSPC building its innovation ecosystem through in-licensing from smaller biotechs.
KeyMed, a Chengdu, Sichuan-based biotech startup, which already has its own AstraZeneca partnership for a Claudin 18.2 antibody.
KeyMed in 2021 and again in 2024 licensed, and expanded its asthma/COPD monoclonal antibody exclusively to CSPC.
The drug is now entered clinical development in China, Chinese clinical registration record shows.
This suggests CSPC is actively expanding beyond its traditional areas into respiratory disease.
HSBC Upgrades
HSBC analysts upgrade CSPC shares to “buy”, reflecting a bet that the licensing strategy will eventually offset VBP headwinds.
The price target increase to HKD 11 suggests analysts believe the market is undervaluing CSPC's pipeline potential.
However, the contrast with the broader China biotech index (up 70% year-over-year) indicates investors remain cautious about companies still heavily exposed to domestic pricing pressures.
The fundamental question is whether CSPC can successfully complete its transformation from a volume-based, price-sensitive generics player to a value-based innovator before VBP erodes its legacy business too severely.
Thanks for reading,
Brian
Are you making better decisions reading his newsletter?
Consider subscribing and Sharing it, and get it directly in your inbox!
