Hengrui makes headway with novel drugs but investors bide their time

A cancer drug developed by the Chinese firm has entered the European regulatory process and Novo Nordisk has bought rights to a potential weight-loss therapy

Key Takeaways:

• Hengrui Pharma’s cancer drug fuzuloparib is being reviewed by EU regulators but approval and sales remain uncertain
• Even with a lift from licensing revenue, profit growth is being capped by R&D spending and falling sales of generic drugs

By Molly Wen

One of China’s top drugmakers is struggling to reverse a stubborn decline in its share price, despite making progress towards launching its innovative therapies in the European market. 

Shares in Jiangsu Hengrui Pharmaceuticals Co. Ltd. (600276.SH; 1276.HK) could not shake off their long-standing malaise even as the company announced early this month that its independently developed cancer drug fuzuloparib had been accepted for review by European regulators.

The Oct. 8 statement said the drug was being evaluated for marketing approval to treat a form of prostate cancer, based on an international Phase Three study. The drug, which belongs to a category known as PARP inhibitors, has been available in China since 2020 to treat ovarian and breast cancer by blocking a tumor cell’s ability to repair its own DNA.

The drug is the company’s second innovative product to be submitted for EU approval, Hengrui Pharma said.

But investors appeared unimpressed. Hengrui’s shares fell for two straight sessions after the news and are nursing losses on both Shanghai and Hong Kong markets for the year to date.

On Oct. 9 Hengrui’s H-shares shed 0.91% to close at HK$48, after trending lower since May. After touching an intraday high of HK$76.75 on May 12 the stock has fallen about 37.5%. Positive moves in recent months regarding drug research, overseas licensing and share buybacks have yet to drive a sustained recovery.

Fuzuloparib has the distinction of being the first home-grown PARP inhibitor to be approved for use in China. But competition in the European and U.S. markets for this  class of drug is already rifle, with olaparib, jointly developed by AstraZeneca and Merck, and niraparib from GSK already on sale. According to data cited in Hengrui’s announcement, global sales of drugs in this category totaled about $4.56 billion in 2025. Still, getting its application validated by the European Medicines Agency marks only the first step in a formal regulatory review for Hengrui’s PARP challenger. The prospects for approval and commercial returns in Europe remain uncertain.

Hengrui also recently struck a lucrative licensing deal with global weight-loss giant Novo Nordisk for its own metabolic drug. The firm announced on Sept. 29 it had granted Novo Nordisk exclusive rights outside Greater China to develop, manufacture and commercialize its internally developed GLP-1/GIP dual receptor agonist HRS-1596. The agreement gives Hengrui $300 million upfront and up to $2.3 billion linked to development, regulatory and commercial milestones, as well as royalties on future sales.

The drug candidate has the potential to become a once-a-week weight-loss pill, offering a more convenient dosing schedule than current oral options. But it remains in early clinical development, having been cleared to begin Phase One trials. The efficacy, safety and commercial prospects require further validation.

Underlying profit slips

Hengrui’s business has yet to fully reflect the progress in developing innovative drugs for overseas sale. Revenue slipped 1.94% to 15.46 billion yuan ($2.31 billion) in the first half of this year. Net profits edged up 0.34% to 4.47 billion yuan, but excluding non-recurring items the bottom line was down 12.71% at 3.73 billion yuan.

Revenue from drug sales rose 1.87% to 13.95 billion yuan from the first half of 2025, while innovative drugs jumped 16.38% to 8.81 billion yuan, accounting for just over 63% of the total. Although novel drugs have become Hengrui’s main revenue source, its legacy generics business continues to weigh on overall sales. Generics sales fell 16% to 5.14 billion yuan in the first half, offsetting growth from new therapies. Hengrui also recognized 1.42 billion yuan in out-licensing revenue during the period, down from 1.99 billion yuan a year earlier.

Hengrui continues to invest heavily to expand its innovative drug pipeline. Its R&D spending reached nearly 4.61 billion yuan in the first half of 2026, up almost 19% and equivalent to nearly 30% of revenue for the period. But new products typically take years to move from development through approval to commercial returns, pressurizing near-term profit growth.

Meanwhile, investors are gradually changing the way they value Hengrui as it shifts from being a traditional pharmaceutical company to an innovative drugmaker. As major licensing deals, new drug applications and clinical advances become part of market expectations, individual announcements may have less power to move the share price.

Hengrui currently trades at a price-to-earnings ratio of about 36, compared with 63 for fellow innovative drugmaker BeOne Medicines (688235.SH; 6160.HK; ONC.US), whose BTK inhibitor zanubrutinib generated first-half sales of nearly 16.13 billion yuan. Hengrui has a broader portfolio of commercialized products in China and has made advances in overseas licensing partnerships. But the company is still building direct sales of its innovative drugs in European and U.S. markets, while growth in its legacy business slows and underlying profits come under pressure.

Investors will be watching to see if overseas licensing revenue can translate into sustained, stable profits and whether Hengrui’s drug discoveries can achieve sales at scale in Europe and the United States.

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