As ChinaBio Partnering Forum in Shanghai, China approaches, BioXconomy  sat down with Fangning Zhang, partner at management consultancy firm McKinsey & Company, to discuss the growing success of biopharma partnerships across Asia.

In 2025, Chinese drug developers  signed 157 out-licensing deals with pharmaceutical companies worth $136 billion in total. The “NewCo” model has played a significant role in this. This business growth model involves spinning off specific drug assets into independent, offshore entities to partner with foreign investors. NewCos allow Chinese firms to fund international development, bypass local financing hurdles, and retain equity stakes.

Zhang delved into how these models facilitate cross-border partnerships and reshape innovation, investment, and clinical development across Asia’s ecosystem.

BioXconomy (BX): What are the most effective models for cross-border partnerships between Asian biopharma companies and global players to drive innovation and market expansion?

Related:A growing phenomenon: The rise of biopharma NewCos in China

Fangning Zhang (FZ): What we’re seeing in Asia is not a single dominant partnership model, but a portfolio of approaches that companies deploy selectively based on asset maturity and strategic objectives. Asian biopharma companies now account for roughly 30 percent of global partnerships, underscoring the growing importance of these cross‑border models.

We see several partnership models: out-licensing, co-development and co-commercialization, discovery and early development partnerships and NewCos.

Out-licensing remains a core foundation, with Asia contributing around 25 percent of global deals. It continues to be an efficient way to translate early innovation into global development while managing capital requirements. At the same time, there is a clear shift toward more integrated models, such as co-development and co commercialization, where both risk and value are shared more evenly between partners.

We are also seeing increased activity in discovery and early development collaborations. Over the past 12 months, partnerships such as GSK–Hengrui and Innovent–Eli Lilly illustrate a model in which Asian innovators advance a portfolio of assets through Phase I or proof of concept before partnering with global players for later stage development and commercialization.

More recently, NewCo structures have begun to emerge. In these arrangements, assets are spun out into new entities with dedicated capital and localized leadership, allowing companies to separate scientific risk from commercialization execution while maintaining strategic exposure.

Related:China biotech continues its growth trajectory

BX: What advantages do these models provide companies with?

FZ: Taken together, these models give companies greater flexibility to balance speed, control, and capital efficiency. What is notable is not one model replacing another, but companies increasingly combining them - selecting the right structure based on the asset, capability gaps, and desired speed to market.

BX: How can international biopharma companies identify and collaborate with the most promising Asian startups and research institutions?

FZ: Three factors consistently matter when international biopharma companies look to identify and collaborate with the most promising Asian startups and research institutions: local presence, deep ecosystem integration, and a clear commitment to create mutual value.

First, proximity matters. Accessing Asia’s innovation opportunity increasingly requires being on the ground. For many global players, that means building local teams, establishing partnerships, or spending sustained time in the ecosystem to understand what is emerging and where real momentum is building. Innovation signals in Asia often surface earlier through informal networks and local interactions than through formal processes.

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Second, global companies need to embed themselves more deeply into the local ecosystem. This goes beyond transactional deal making and includes building connectivity with leading venture capital firms, incubators, academic institutions, and industry parks. Raising visibility also matters – hosting R&D days, partnering forums, or joint scientific events with global leaders can be an effective way to engage a broader set of potential partners.

Finally, the most successful collaborations are often intentionally structured to align incentives and create mutual value. This requires a deep understanding of what different ecosystem players truly need - whether that is capital, development capabilities, or access to global clinical, regulatory, and commercialization platforms. Western investors and biopharma companies that can clearly articulate how they address these needs may be better positioned to form more durable partnerships.

BX: What role do government-backed initiatives and funding programs in Asia play in fostering biopharma partnerships?

FZ: Government support has been a consistent underpinning of Asia’s biopharma development. Across markets, we’ve seen sustained capital commitments, targeted policy frameworks, and the build-out of integrated innovation hubs that bring together research, clinical, and manufacturing capabilities. In several countries, biopharma has been designated as a strategic sector, with long-term public funding programs supporting R&D and infrastructure.

This dynamic is also reflected in how capital is deployed. A large share of investment is concentrated in earlier funding rounds, with 87 percent of funding occurring up to Series C, which can make it more challenging for companies to scale through late-stage development. As a result, alternative funding pathways have become more prominent. Out-licensing, for example, has been a significant source of capital, and now accounts for a substantial share of deal activity across the region.

BX: How can companies tap into these resources?

FZ: For companies, this creates a distinct operating environment. Accessing the full potential of these ecosystems often involves engaging not only with startups, but also with public institutions, strategic partners, and alternative financing structures that help bridge early innovation to global development.

BX: What are the most attractive investment opportunities in Asia’s biopharma sector, and how can investors mitigate risks associated with market entry?

FZ: The investment landscape in Asia has broadened significantly, but it is also becoming more nuanced. The region now represents 43 percent of the global innovative pipeline and contributed 68 percent of global pipeline growth between 2023 and 2025, which points to where a large share of incremental innovation is emerging.

Opportunities are particularly concentrated in next-generation modalities. Asia accounts for approximately 44 percent of global Phase I–II assets in next-generation platforms, including cell and gene therapies, multispecifics, and antibody-drug conjugates, reflecting both scale and increasing scientific depth.

At the same time, the capital environment shapes how these opportunities are accessed. While innovation output is high, Asia represents around 10 percent of global PE/VC investment, and funding is often concentrated in earlier stages.

BX: What is the impact of this?

FZ: As a result, investors are increasingly structuring entry through alternative pathways, including out-licensing, which accounts for approximately 40 percent of global deals in 2025, as well as platform-based partnerships and multi-asset collaborations.

What this suggests is that the opportunity in Asia is not only about identifying attractive assets, but about understanding how to access them. Successful approaches tend to combine exposure to early-stage innovation with structures that manage capital intensity and create optionality as assets mature.

BX: What are the key factors driving venture capital and private equity interest in Asia’s biopharma startups, and how can companies position themselves to attract funding?

FZ: Investor interest in Asia is being driven by both structural momentum and evolving performance dynamics. Over the past five years, Asia’s share of the global innovative pipeline has increased from approximately 28 percent to 43 percent, reflecting a meaningful shift in where innovation is originating.

At the same time, faster development timelines and increasingly integrated R&D ecosystems are beginning to influence capital efficiency and time to value. What we tend to observe is that companies attracting sustained investor interest often combine strong underlying science with early signals of global relevance, whether through participation in multi-region trials, cross-border partnerships, or data that is portable across regulatory settings.

These factors are shaping how investors assess opportunities in the region, with increasing alignment to global expectations on both scientific differentiation and execution.

BX: How can biopharma companies evaluate the long-term ROI of investing in Asia’s rapidly evolving healthcare infrastructure?

FZ: Evaluating returns in Asia increasingly requires a broader lens than traditional market entry. What differentiates Asia is not only the scale of innovation, but how that innovation is produced. In several markets, companies can access integrated capabilities within the region across discovery, development, and manufacturing, often within a single ecosystem, with structural advantages in both speed and cost.

This means that returns are not always realized in a single, direct way. In some cases, value comes through participation in specific assets or markets; in others, it comes through how these capabilities are incorporated into broader R&D strategies. In that sense, ROI in Asia is increasingly tied to how companies participate in the system, rather than simply where they invest. The question becomes less about standalone returns in a single market, and more about how engagement in Asia reshapes overall R&D productivity and portfolio outcomes.

BX: What strategies should investors adopt to balance short-term gains with long-term growth in Asia’s biopharma market?

FZ: What we’re seeing among investors and companies is a gradual shift from more linear approaches toward portfolio-based strategies in Asia.

In the near term, mechanisms such as out-licensing and strategic partnerships continue to provide earlier visibility on returns and help manage development risk. At the same time, there is a noticeable increase in larger, cross-border transactions and multi-asset collaborations, reflecting growing confidence in the underlying science.

In parallel, many companies are also building longer-term exposure to the region’s innovation base, whether through establishing R&D presence, expanding clinical development activities, or integrating Asia-based manufacturing and development capabilities into their global networks. This creates a dynamic where short-term monetization and long-term value creation are often pursued in parallel rather than sequentially.

The implication is that Asia tends to reward approaches that combine both horizons, where companies maintain flexibility in how value is realized while staying connected to longer-term innovation cycles, particularly as the region’s role in shaping the global pipeline continues to expand.

Quotes have been lightly edited for clarity.