Source: Jinduan
Author: Lin Yaoshi
The PD-1/VEGF bispecific antibody track has recently witnessed a dramatic capital performance with contrasting fortunes: Axion, the collaboration partner of Yimengangke's PD-L1/VEGF bispecific antibody project, decided to return the asset, dealing a blow to the expected value of the pipeline. Meanwhile,$REMEGEN (09995.HK)$Rongchang Biologics secured a licensing deal worth up to $5.6 billion with AbbVie for its PD-1/VEGF bispecific antibody RC148. This contrast not only highlights the increasing divergence within the bispecific antibody sector but also quietly outlines the core theme of pharmaceutical investment in 2026 — certainty.
Looking back at 2025, the trend of “BD as king” swept through China’s pharmaceutical investment market. At that time, out-licensing deals by innovative drug companies became the central logic pursued by capital, reflecting the market’s ultimate recognition of future pipeline value. Amidst the capital frenzy, the number and size of BD transactions were regarded as key indicators of a company’s value, often neglecting underlying factors such as clinical potential and commercial feasibility of the pipelines themselves.
However, high expectations eventually meet reality. As capital returns to rationality, the valuation logic for BD transactions is being redefined — moving away from indiscriminate hype over every licensing deal to a deeper focus on the ability to deliver on these agreements. BD collaborations that can translate into clinical progress and have commercial potential will see their valuations diverge significantly from projects that lack data support and remain conceptual.
This shift directly points to the core essence of pharmaceutical investment in 2026: moving away from generalized speculation on tracks and embracing the value of certainty amidst broader uncertainty. The concept of “certainty” is not a single-dimensional criterion but encompasses three pivotal anchors throughout the innovation and commercialization cycle of pharmaceuticals: expectation certainty, product certainty, and performance certainty.
1. Expectation Certainty
The essence of expectation certainty lies in abandoning blind enthusiasm for the total value of BD transactions and rationally assessing the feasibility of their final execution. From an industry perspective, the probability of a new drug advancing from early clinical stages to final approval globally stands at only 7.9%. Moreover, there remains a significant gap between “approval” and “commercial success.” Even after approval, drugs still face challenges such as competition, market access barriers, and more. This implies that the high expected value of most BD transactions may not be fully realized.
Take, for example, the currently high-profile PD-1/VEGF bispecific antibody track,$AKESO (09926.HK)$、$3SBIO (01530.HK)$、$RemeGen Co., Ltd. (688331.SH)$These overseas licensing partnerships were reached with total amounts of $5 billion, $6.05 billion, and $5.6 billion respectively. In an ideal vacuum environment, such transaction sizes might hold room for imagination, but the reality is that all three are on the same competitive track with highly overlapping targets and indications. Ultimately, not all players can realize their anticipated value. This situation mirrors the past frenzy and divergence seen in the PD-1 antibody out-licensing deals.
For investors, penetrating the BD valuation bubble requires focusing on three core judgment criteria: First, examine the proportion of upfront payments (upfront payments are the only nearly 100% certain revenue; the higher the proportion, the stronger the short-term certainty); second, assess the partner's strength (collaboration with global top pharmaceutical companies like AbbVie ensures better clinical progress, regulatory communication, and commercialization capabilities, significantly increasing the likelihood of milestone achievements); third, evaluate the competitive landscape of the field (if successful BD cases targeting the same point have already emerged, subsequent entrants should appropriately lower expectations to avoid overvaluation).
2. Product certainty
The core of product certainty lies in determining whether the pipeline can achieve substantial sales growth after market launch. The ultimate value of a drug lies in its commercial realization. Products with clear growth logic deserve higher valuation premiums, while those with questionable growth logic require vigilance against potential valuation pullbacks.
The representative with the most assured growth potential in 2026 is $Beijing Wantai Biological Pharmacy Enterprise (603392.SH)$and its nine-valent HPV vaccine, Cecolin®9. Not only has this product proven equivalent to imported vaccines through head-to-head trials, but it also breaks the long-standing perception of imported vaccines as 'premium' with its pricing of 499 RMB per dose (only 40% of the price of imported vaccines), laying the foundation for penetration into third- and fourth-tier markets. The enormous unmet demand in these lower-tier markets is expected to drive overall expansion of the nine-valent HPV vaccine market, while Wantai Biological, as a key domestic player in the nine-valent HPV vaccine space, will likely enter a phase of rapid sales growth starting from 2026 after achieving domestic substitution.
In contrast, domestically produced weight-loss drugs exhibit significantly weaker commercial certainty. Currently, the competitive landscape of the market has undergone fundamental changes, $Eli Lilly and Co (LLY.US)$with tirzepatide emerging as the core competitor. More critically, the price war between tirzepatide and semaglutide has fully erupted, directly compressing the pricing range and market share of domestic weight-loss drugs, substantially lowering their peak sales expectations, and significantly diminishing their commercial value.
3. Earnings certainty
The core of earnings certainty lies in identifying companies and sectors with clear expectations of earnings growth or recovery. The essence of investment is to capture the gap between expectations. Amidst the wave of 'BD supremacy' in 2025, the innovative drug sector has attracted the majority of capital attention, while sub-sectors such as medical devices, CXO, and vaccines have been undervalued by the market. Among these, targets with earnings growth support are expected to see valuation recovery in 2026.
CXO Leader$WUXI APPTEC (02359.HK)$The profit forecast announcement of the CXO leader serves as a typical confirmation of earnings certainty. On January 12, the company disclosed a net profit of 14.957 billion yuan for 2025, representing a significant year-on-year increase of 41.33%. While revenue grew steadily, profitability surged significantly. This not only underscores the pivotal role of China's CXO leader within the global pharmaceutical industry chain but also gradually reverses the undervaluation caused by geopolitical factors over the past two years. With the recovery of R&D investment from global pharmaceutical enterprises, the earnings growth certainty of CXO leaders with full industrial chain capabilities has further strengthened.
The vaccine industry similarly presents notable opportunities driven by expectation gaps. Following internal competition and adjustments related to inventory reduction on the demand side, the performance of domestic vaccine companies has bottomed out. From a long-term perspective, China’s vaccine industry remains in its early stages of development, with vast potential for domestic substitution and overseas market expansion still in its infancy. The vaccine sector, currently at a valuation low, is seeing a gradual rise in earnings recovery certainty, presenting investment opportunities that far outweigh the risks.
In summary, the transition from the capital game of 'selling BD expectations' to the realization of tangible results represents what we believe to be the shift in pharmaceutical investment style in 2026.
Editor/Rice
