Hengrui Medicine: A High-Conviction Growth Play in China's Oncology Revolution

In the rapidly evolving landscape of China's biopharma industry, Jiangsu Hengrui Medicine (300760.SZ) has emerged as a standout innovator, leveraging regulatory breakthroughs, strategic partnerships, and a robust pipeline to position itself as a global leader in oncology and specialty drugs. With a 30% market share in androgen receptor (AR) inhibitors and a growing presence in antibody-drug conjugates (ADCs), Hengrui is not just capitalizing on domestic demand but also setting its sights on international markets. For investors seeking exposure to the next wave of precision oncology, Hengrui's recent advancements present a compelling case for long-term growth.

Regulatory Breakthroughs: A Catalyst for Global Expansion

Hengrui's May 2025 approval of trastuzumab rezetecan by China's National Medical Products Administration (NMPA) marks a pivotal moment. This ADC therapy, designed for non-small cell lung cancer (NSCLC) patients who have failed prior treatments, received Breakthrough Therapy and Priority Review designations, accelerating its path to market. The drug's potential extends beyond China: it has already secured Orphan Drug Designation in the U.S. for biliary tract cancer, a rare but aggressive malignancy. This regulatory momentum not only validates Hengrui's scientific rigor but also opens doors for U.S. and European approvals, where ADCs are projected to exceed $50 billion in market value by 2030.

Strategic Partnerships: Scaling Global Reach

Hengrui's partnerships with global pharma giants underscore its ambition to compete on the world stage. The €160 million upfront payment from Merck KGaA for exclusive rights to HRS-1167 (a next-generation PARP1 inhibitor) and an option to acquire SHR-A1904 (a Claudin-18.2 ADC) highlights the value of its pipeline. Similarly, the $500 million collaboration with GSK for HRS-9821 (a PDE3/4 inhibitor for COPD) and 11 other programs provides Hengrui with a revenue buffer while leveraging GSK's global commercial infrastructure. These deals are not one-off successes but part of a broader strategy to monetize intellectual property and reduce the capital burden of international expansion.

Market Dynamics: Capturing China's $5.34 Billion Lung Cancer Opportunity

The China lung cancer therapeutics market, valued at $2.18 billion in 2023, is projected to grow at a 13.7% CAGR, reaching $5.34 billion by 2030. Hengrui's Rezvilutamide, an AR inhibitor for metastatic hormone-sensitive prostate cancer (mHSPC), has already captured 30% of the AR inhibitor market in 2025, driven by its inclusion in the National Reimbursement Drug List (NRDL) and cost-effectiveness compared to imported alternatives. Meanwhile, Fuzuloparib, a PARP inhibitor, demonstrated a 46% combined pCR/MRD rate in high-risk prostate cancer trials, positioning it as a potential standard-of-care for metastatic castration-resistant prostate cancer (mCRPC), a segment growing at 8% annually. Analysts project that these two drugs alone could generate $2.5 billion in combined revenue by 2028.

Financial Resilience and R&D Prowess

Hengrui's financials reflect its commitment to innovation. In 2024, the company reported 27.98 billion CNY in revenue, with 52.14% derived from oncology drugs. Its R&D-to-revenue ratio of 15% in 2025—among the highest in China's biopharma sector—ensures a steady pipeline of next-generation therapies. With over 5,500 R&D professionals and 14 global research centers, Hengrui is also advancing PROTAC-based therapies like HRS-5041, targeting AR degradation in mCRPC. This focus on cutting-edge science, coupled with strategic licensing deals, creates a moat against competitors.

Risks and Mitigants

While Hengrui's trajectory is bullish, challenges persist. Regulatory hurdles in the U.S. and Europe, competition from Western pharma giants like AstraZeneca and Roche, and pricing pressures from China's centralized procurement system could temper growth. However, Hengrui's diversified portfolio—spanning ADCs, PARP inhibitors, and immunotherapies—and its partnerships with global players like GSK and Merck provide a buffer. Additionally, the Healthy China 2030 initiative, which prioritizes cancer survival rates and reimbursement for innovative therapies, offers a favorable policy environment.

Investment Thesis: A High-Conviction Play

Hengrui's combination of regulatory momentum, global partnerships, and a high-growth market makes it a rare high-conviction opportunity in China's biopharma sector. With a $2.5 billion revenue runway from Rezvilutamide and Fuzuloparib by 2028, and a pipeline of 11 partnered programs with GSK and Merck, the company is poised to outperform peers. For investors, the key is to monitor Phase III trial results for trastuzumab rezetecan in the U.S. and the scaling of global partnerships.

In conclusion, Hengrui Medicine is not just a beneficiary of China's oncology boom—it is a driver of it. By bridging the gap between domestic innovation and global commercialization, the company is building a durable competitive advantage. For those willing to ride the wave of precision oncology, Hengrui offers a compelling mix of growth, resilience, and strategic foresight.