(Yicai) Aug. 26 -- The research and development push being made by China’s established pharmaceutical firms has begun to bear fruit, with the first-half earnings reports of leading businesses showing revenue from innovative drugs now exceeding that from generics.

Income from novel drug sales and patent licensing at Hengrui Pharmaceuticals was CNY9.6 billion (USD1.3 billion) in the six months ended June 30, accounting for nearly 61 percent of its entire revenue, according to the firm’s latest results. Innovative drug sales amounted to CNY7.6 billion, nearly half of the total.

It is a similar story at Simcere Pharmaceutical Group. The firm reported a 15 percent jump in revenue to CNY3.6 billion, with income from the novel medicines business surging 26 percent to CNY2.8 billion, accounting for over 77 percent of the total.

China’s traditional drugmakers long relied on the production of generic treatments as their main source of income, but under pressure from foreign competitors and the government’s drugs bulk-buying program aimed at reducing prices they have pivoted toward innovation for better margins.

Hengrui Pharma poured almost CNY3.9 billion into R&D in the first half, bringing its total outlays to CNY48 billion (USD6.7 billion). The company had more than 100 independently created products in clinical development and more than 400 ongoing clinical trials both in China and abroad.

Hansoh Pharmaceutical Group’s financial report showed that revenue from novel drugs and externally licensed or introduced products was about CNY6.1 billion, up 22 percent from a year ago and accounting for 83 percent of its total revenue. These medicines have become the core driver of the firm’s sustainable growth, it noted.

Over the past decade, Simcere Pharma has invested over CNY10 billion in R&D and has built an innovative drug pipeline of more than 60 projects, according to the company's financial statement.

Drugmakers’ revenues from innovative treatments mostly come from the domestic market at the moment, but that may change soon as several have already granted the overseas marketing rights for their novel drugs still in the research or clinical trial stages to international peers through licensing agreements. 

For example, Hengrui Pharma has entered into 15 out-licensing deals. The company's innovative drugs will leverage international leading partners to accelerate their entry into overseas markets, integrate into the global drug innovation network, and maximize product value, its earnings report said.

Simcere Pharma has licensed three self-developed drugs overseas, it noted, adding that this will become a new and sustainable source of growth for the company.

Editors: Tang Shihua, Futura Costaglione