Partners, not sellers: how Innovent's Co-Co deal is reshaping China's role in global pharma

The recent landmark deal provides a tangible blueprint for the next phase of China's innovative drugs going global.

Innovent Biologics' groundbreaking $11.4 billion collaboration with Takeda now stands as the most significant deal achievement by a Chinese biopharmaceutical company. The deal's core assets include IBI363 and IBI343, with Takeda also securing an option for IBI3001 (an EGFR/B7H3 bispecific ADC). Should Takeda exercise its option to license IBI3001 in the future, it would trigger additional upfront and milestone payments.

The most remarkable aspect of this collaboration lies in its Co-Co (Co-development & Co-commercialization) model. Takeda and Innovent will implement this framework in the U.S. market, sharing profits at a 40:60 ratio. Franck Le Deu, Senior Partner at McKinsey & Company, noted that Innovent's secured co-promotion rights in the U.S. market will be crucial for their future value creation.

 Innovent's announcement. Source: the company

The flourishing dealmaking has firmly anchored Chinese innovative drugs within the global industry chain. However, signing agreements merely represents an entry ticket. The true test lies in whether these companies can convert upfront payments into sustainable cash flow, transform overseas channels into internal capabilities, and elevate single-asset successes into a robust platform ecosystem. This transition will ultimately determine whether China's innovative drug sector can evolve into a sustainable and healthy industry.

Perhaps unwittingly, Innovent Biologics may have just pushed open the gateway to this next phase of development.

The "Co-development & Co-commercialization" model signifies a strategic leap in the industrial role of Chinese innovative drug companies.

In traditional licensing agreements, licensors typically assume a passive role characterized by "low royalties and limited involvement." While Chinese biopharma firms have firmly established themselves in this niche within the global pharmaceutical ecosystem, such arrangements offer limited strategic benefits beyond short-term cash flow supplementation. Under the Innovent-Takeda collaboration, the parties share global development costs in a 40:60 ratio and equally split profits or losses in the U.S. market. This Co-Co model not only creates deep alignment around long-term product value but also proves crucial for building global operational capabilities—delivering substantially greater value than the single-digit royalty rates typical of conventional business development deals.

During its recent R&D Day, Innovent Biologics publicly announced its target to achieve 20 billion RMB in product sales revenue by 2027, along with its vision of becoming a world-class biopharmaceutical company by 2030. This deal strongly aligns with these ambitions, demonstrating that Innovent is no longer satisfied with simply out-licensing products but aspires to transform its entire system to compete with global giants. The deal represents not merely a pipeline divestment but a strategic pathway for building its global integrated capabilities in R&D, regulatory affairs, and commercialization.

After years of accumulation, Chinese innovative drug companies have naturally reached a stage of upward strategic transformation. However, the growth paths taken by global pharmaceutical giants during the industry's pioneering era can no longer be directly replicated. Even the relatively successful internationalization of companies like BeiGene resulted from a unique combination of timing and circumstances, offering limited reference value for today's Chinese innovators. They must therefore forge their own distinct path forward.

Compared to straightforward license-out agreements, the Co-Co model places greater emphasis on strategic collaboration between the parties. This framework establishes deep alignment from the drug development stage, with both sides sharing costs, technology, and resources while jointly assuming R&D risks and potential rewards. Most importantly, it involves shared decision-making authority. Through this process, the licensor evolves from a mere supplier into a genuine partner.

While the Co-Co model has been relatively common overseas—as seen in BioNTech's collaboration with Bristol Myers Squibb on the PD-1/VEGF bispecific BNT327 and Daiichi Sankyo's partnership with AstraZeneca on DS-8201—it remains rare in China. The only comparable case is Biokin Pharmaceutical's collaboration with BMS to co-develop an ADC in the U.S. market. These examples collectively illustrate the significant impact the Co-Co model can deliver.

In the Daiichi Sankyo-AstraZeneca collaboration, Daiichi Sankyo described it as a strategic initiative to accelerate the establishment of its own global oncology business framework by leveraging AstraZeneca's mature worldwide sales network. Essentially, by collaborating on the commercialization of the project, Daiichi Sankyo aimed to emulate its partner and construct its own international operational infrastructure.

Through this partnership, Daiichi Sankyo gained firsthand experience in how a global pharmaceutical giant manages global project execution, closely observing and learning from AstraZeneca's organizational approaches to development, commercialization, regulatory navigation, and medical affairs. This proximity provided immense value for enhancing its corporate capabilities. More importantly, the experience offered critical insights into how a leading multinational company formulates and executes long-term product strategy.

Ultimately, whether for Biokin Pharmaceutical in its earlier deal or for Innovent Biologics now, the fundamental enabler of a Co-Co model remains the quality of the pipeline.

Innovent's IBI363 is a multi-faceted therapeutic candidate, having already initiated preliminary studies in two major first-line indications: non-small cell lung cancer (NSCLC) and colorectal cancer (CRC). Future development plans include expansion into additional first-line indications, adjuvant therapy, and combination regimens with ADCs. The candidate has previously received Fast Track designation from the U.S. FDA for the treatment of patients with squamous non-small cell lung cancer, marking its first breakthrough advancement in the lung cancer field.

During an investor call, Innovent Biologics disclosed plans to collaborate with Takeda on clinical studies for IBI363 across multiple indications: first-line NSCLC, IO-resistant squamous NSCLC, IO-resistant non-squamous NSCLC, first-line CRC, and third-line CRC.

Possessing such a core asset with "disruptive therapeutic" potential has provided Innovent with the leverage to bundle its pipeline assets and strategically allocate rights. Equally crucial, however, are its solid financial reserves and self-sustaining capability. Over the past five years, Innovent has consistently delivered year-on-year revenue growth. Full-year 2024 revenue reached RMB 9.422 billion, representing a 51.8% increase, while H1 2025 revenue grew 50.6% to RMB 5.953 billion. The company projects a minimum 35% average annual growth over the next three years, targeting RMB 20 billion in revenue by 2027.

From a financial perspective, the choice between Co-Co and license-out represents a trade-off between high-risk/high-reward and low-risk/low-return strategies. License-out agreements primarily derive value from avoiding further pipeline investment, though they typically yield only single-digit royalty rates. In contrast, the Co-Co model—while requiring shared assumption of subsequent costs and risks—commands significantly higher profit-sharing percentages. This means that as sales increase, the incremental revenue under the Co-Co framework grows substantially.

Strategically, the Co-Co model transcends mere product-level collaboration to become a critical mechanism for building enterprise capabilities, transforming companies from mere suppliers into entities with genuine global operational opportunities. For Chinese innovative drug companies aspiring to elevate their industry role, high-quality pipelines should not be treated merely as financial instruments. Rather, they represent pivotal opportunities to rapidly establish global management platforms at a fraction of the risk and cost required for independent capacity building.

Securing the right partner is critical to succeeding with the Co-Co model.

"Over the past year, Innovent has also reached preliminary business collaboration intentions with other global companies possessing strong oncology capabilities and larger scales. However, after negotiations and comprehensive consideration, Takeda emerged as the optimal partner to help achieve Innovent's strategic development goals." This statement from Innovent's earnings call indicates that their partner selection criteria extended beyond tactical considerations to strategic alignment.

Over the past decade, Takeda has completed its international transformation, evolving from a Japan-focused pharmaceutical company into a global top-15 enterprise by revenue. In 2024, 86% of its revenue came from overseas markets, with the U.S. alone contributing 52%—making it Takeda's single most important market. This proven experience in expanding from Asia into Western markets represents precisely the expertise Innovent needs for its own global expansion.

Moreover, Takeda Pharmaceutical maintains a clear openness to the Co-Co model.

Globally, Takeda currently has over 130 active collaboration projects, with partnered programs accounting for more than 40% of its product portfolio. Throughout its growth, the company has repeatedly practiced co-development frameworks through partnerships with Arrowhead, Protagonist, Denali, and MD Anderson Cancer Center, demonstrating extensive experience in the co-development collaboration model.

For Innovent, the pool of potential partners that can offer both deep involvement in FDA communications and clinical trial design, along with the opportunity to share in multi-billion dollar sales in the world's largest single market, remains remarkably limited.

For Takeda Pharmaceutical, a partner like Innovent is equally critical amid its own business realignment.

In May 2025, Takeda announced a series of pipeline adjustments in oncology. The company discontinued TAK-186 (EGFR) and TAK-280 (B7-H3)—assets acquired through its $525 million acquisition of Maverick Therapeutics in 2021, which had been in Phase 1/2 trials—and also halted development of the STING agonist dazostinag. These decisions reduced the size of Takeda's early-phase oncology pipeline by half, creating an urgent need for replenishment.

Teresa Bitetti, President of Takeda's Global Oncology Business Unit—who previously led the clinical development of Opdivo at Bristol Myers Squibb and is a respected leader in the IO field—described IBI363 and IBI343 in the official announcement as "transformative assets" that are expected to become key growth drivers for Takeda post-2030.

Such direct and affirmative positioning is uncommon in pharmaceutical collaborations, particularly given how the three assets in this deal represent a strategic fit for both parties.

Takeda brings over a decade of accumulated expertise in immuno-oncology, having successfully advanced multiple products to market. The company possesses integrated capabilities spanning multi-continental regulatory strategy, market access, and commercial deployment. With IBI363 approaching global Phase III trials—requiring large-scale studies across the U.S., EU, and other overseas markets—Takeda's established clinical operations and regulatory infrastructure can significantly accelerate its development timeline.

IBI343 targets gastrointestinal cancers such as gastric and pancreatic cancer—a therapeutic area where Takeda holds traditional strength. Its robust commercial network covers over 80 countries worldwide, complemented by extensive experience in regulatory engagements, ensuring both rapid approval and efficient market penetration for the drug.

Takeda's strategic valuation of these two assets surpasses its outlook for the combined potential of its six current late-stage clinical products. For Innovent, this level of commitment is undoubtedly compelling—these are not mere pipeline additions but future cornerstone therapies. Even IBI3001, considered an add-on in this deal, holds high exercise probability given Takeda's current lack of ADC offerings and the growing industry trend toward IO-ADC combinations, which most global pharmaceutical giants are actively pursuing.

Overall, Takeda's flexible deal structure presents strong appeal for Innovent. Moreover, having successfully transformed itself from a Japan-focused company into a global pharmaceutical leader, Takeda possesses deeper insight into the innovation pathways and growth aspirations of Asian biopharmaceutical companies. This shared strategic perspective and cultural affinity promise to facilitate smoother collaboration and more effective partnership execution.

This landmark transaction sets a new benchmark for the globalization of China's innovative drug industry.

Leading Chinese pharmaceutical companies, exemplified by Innovent, are no longer content with serving as mere "intellectual property suppliers." They are now actively pursuing higher positions within the global value chain. The Co-Co model is poised to become a viable new pathway for those Chinese drugmakers possessing top-tier assets and global ambitions.

This deal signals a fundamental shift in the strategic rationale behind China's biopharmaceutical expansion abroad. The focus has evolved from simply "product out-licensing" to a more integrated "capability globalization." It is no longer just about selling products, but about exporting R&D capabilities while simultaneously importing global operational expertise—ultimately constructing a comprehensive international platform through strategic collaboration.

Leveraging the exceptional quality of its core assets, Innovent has earned the right to co-create the rules of engagement with global pharmaceutical giants on equal footing. The company's 40% profit- and risk-sharing arrangement in the United States—the world's most critical pharmaceutical market—serves as powerful recognition of Chinese drugmakers' R&D capabilities and the global value of their innovations. Through years of accumulation, Chinese innovative pharmaceutical companies have developed the capacity to help define global innovation standards and are now transitioning from followers to co-architects of the industry's future.

More importantly, the success of this transaction is fundamentally rooted in Innovent's delivery of truly differentiated and globally competitive pipelines and technology platforms. This achievement will undoubtedly inspire China's innovative drug sector to remain focused on addressing unmet clinical needs worldwide, using robust clinical data to secure greater influence in international partnerships.