In recent years, competition in the global pharmaceutical industry has intensified, and a "ecologization" transformation led by drug companies is quietly taking place. Both traditional giants and emerging Biotech firms are shifting their focus to establishing in-house CROs, no longer content with relying solely on drug sales for profit. Behind this trend lies the strategic upgrade of Chinese pharmaceutical companies from "going it alone" to "systemic competition." By integrating R&D resources, providing external services, and even collaborating with industry funds, they have built a more controllable and synergistic business closed-loop. This is not only a choice for cost optimization but also a forward-looking layout for the future pharmaceutical innovation ecosystem.
1. Pharmaceutical enterprises build their own CRO
In the global pharmaceutical industry, the establishment of CRO by pharmaceutical companies is gradually evolving from an emerging trend to a key force in reshaping the industry pattern. Behind this phenomenon is the pharmaceutical companies' deep consideration of R&D costs, efficiency and innovation ecology.
Drug development is a high-investment, high-risk marathon. From target discovery to market launch, the process typically takes 10-15 years with billions of dollars invested, and failure rates exceed 90%. To tackle these challenges, pharmaceutical companies initially adopted CRO as a cost-saving solution. By outsourcing specific R&D phases, firms can avoid the steep fixed costs of building in-house teams and facilities. Leveraging CRO's economies of scale and expertise, they reduce R&D expenses by 20%-40% while shortening development cycles by 30%-50%.
However, as industry competition intensifies and innovation demands grow, pharmaceutical companies are no longer limited to cost control when engaging CRO services. Establishing in-house CRO operations has gradually become a strategic choice aimed at building an internal innovation ecosystem. Take Hengrui Pharmaceuticals as an example: Its subsidiary Ruihongdi not only supports internal R&D but also handles external orders to achieve commercial operations. Through external services, Ruihongdi gains access to more cutting-edge projects and technologies. These experiences and resources are then fed back into Hengrui's R&D system, creating a virtuous cycle.
This paradigm shift demonstrates pharmaceutical companies' enhanced capabilities in integrating and controlling innovation resources. By establishing in-house Contract Research Organizations (CROs), these firms can embed strategic considerations into their R&D processes, achieving comprehensive optimization across the entire value chain from project selection and technology development to commercialization. Furthermore, CROs serve as strategic gateways that help companies expand industry networks and strengthen their influence within the global pharmaceutical innovation ecosystem.
Beyond direct R&D support, in-house CRO has opened up new growth avenues for pharmaceutical companies. By leveraging CRO platforms for technology transfer and investment incubation, some firms are transforming R&D capabilities into commercial value, establishing a diversified profit model that integrates "R&D, services, and investments". This approach not only strengthens companies' risk resilience but also provides greater flexibility for their future strategic planning.
II. Dual-track differentiation: export expansion and deepening of internal circulation
At present, there are two typical modes of drug companies to build CRO: the commercialization path of external expansion and the ecological closed loop of internal integration, which represent different strategic choices and development logic respectively.
(1) External service orientation
Represented by Hengrui Ruihongdi and CSPC Pharmaceutical Group's Jushi Biotech, these Contract Research Organizations (CROs) leverage their parent companies' technological strengths to secure external projects after meeting internal needs. Hengrui Ruihongdi, with its expertise in antibody drug development, secured the Phase I clinical trial contract for a bispecific antibody project from Merck & Co. in 2025, becoming the first Chinese self-built CRO to enter a multinational pharmaceutical supply chain. Jushi Biotech specializes in toxin linker development for ADCs, serving over 20 innovative drugmakers including Legend Biotech, with related revenue surging 68% in 2024. The core of this model lies in transforming accumulated internal technical capabilities into market-oriented services, effectively reducing costs while enhancing industry influence.
Through external collaborations, pharmaceutical companies that establish in-house CROs gain access to a broader range of projects and technologies, expanding their technical expertise while enhancing their R&D capabilities. In this model, CROs evolve beyond mere cost centers into new profit engines, driving coordinated development across both R&D and market operations for the pharmaceutical industry.
(2) Ecological internal circulation type
Represented by BeiGene's PiHealth and Fosun Pharma's StarTek, these Contract Research Organizations (CROs) are deeply integrated with industrial investments, forming an "investment-research-industrialization" ecosystem. After divesting PiHealth, BeiGene's digital clinical platform not only manages over 3,000 global trial participants internally but also connects with more than 30 invested companies through its investment fund, enhancing project success rates via unified clinical trial standards. Fosun Pharma's StarTek CRO specializes in gene and cell therapies, providing customized services to Fosun Capital-backed companies like KJ Pharma and Genex Biotech. In 2024, it facilitated three CAR-T projects to enter international multicenter Phase III trials, boosting R&D efficiency by 30% for invested enterprises. This model reduces investment risks through internal resource synergy while establishing deep integration between technology and capital.
In the eco-circulation model, CROs serve as pivotal connectors bridging pharmaceutical companies' investment strategies with R&D execution. By providing professional services to portfolio companies, CROs ensure the technical feasibility and quality of R&D projects while securing steady project pipelines for their own business expansion. This approach achieves a win-win scenario where capital appreciation and technological innovation mutually reinforce each other.
Third, the double test of compliance risk and ecological balance
The rapid expansion of self-established CROs has gradually exposed regulatory and operational risks. First, compliance issues with related-party transactions have emerged—— For instance, CSPC Jushi Biotech was required by the exchange to disclose pricing models in 2024 for providing discounted pricing to related parties. Meanwhile, BeiGene's PiHealth established independent data firewalls when undertaking external projects to prevent conflicts of interest with parent company R&D pipelines. Second, internal resource allocation conflicts arose: Hengrui Pharma faced delays in clinical trial coordinator (CRA) recruitment due to competition with external CROs over talent, ultimately resolved through a shared talent mechanism. For traditional CROs, these "second-generation self-built players" are reshaping industry competition rules. Leading companies like WuXi AppTec and Tigermed saw a 12% decline in orders from top-tier pharmaceutical firms in 2024, forcing them to pivot into niche fields like gene therapy and AI-driven drug design. Meanwhile, small and medium-sized pharmaceutical companies building their own CROs face insufficient technical reserves—— A leading innovator had to rehire external CROs to rectify issues after data management errors in Phase I clinical trials led to supplementary submissions from the Center for Drug Evaluation (CDE).
IV. Future pharmaceutical enterprises: from "product competition" to "ecological game"
With the rise of self-established CROs, the competitive landscape of pharmaceutical companies is undergoing profound changes. Leading drugmakers are gradually transforming into integrated entities combining "investment, R&D, and industrialization". Their core competitiveness no longer focuses on individual products or technologies, but rather on the ability to build and operate entire ecosystem frameworks.
Taking BeiGene as an example, it has built an efficient innovation ecosystem through its full-chain layout of "self-established CRO + global R&D center + production base". As BeiGene's self-established CRO, PiHealth not only supports internal R&D but also achieves efficient management of over 3,000 global trial participants through a digital clinical platform. This platform also connects with more than 30 invested companies under BeiGene's investment fund, enhancing project success rates through unified clinical trial standards. In the production phase, BeiGene has established production bases in Suzhou and Guangzhou, China, and Hopewell, New Jersey, USA, ensuring the safety and stability of the supply chain. This full-chain layout has compressed the drug development cycle from concept to market launch to 6.5 years, 40% faster than the industry average.
Building on the Ruihongdi platform, Hengrui Pharmaceuticals has established an integrated capability spanning "target discovery, process development, and clinical application". In the first half of 2025, the company secured approvals for six new drugs, a milestone achieved through the efficient support of its self-developed CRO services across all stages. By undertaking external projects, Ruihongdi gains access to cutting-edge initiatives and technologies. These accumulated experiences and resources are then fed back into Hengrui's R&D ecosystem, creating a virtuous cycle that drives continuous innovation.
In the global pharmaceutical landscape, this ecological advantage has become increasingly prominent. While multinational drugmakers like Pfizer and Merck still rely on external CROs for clinical trials in emerging markets, BeiGene's PiHealth has established over 200 clinical centers across Southeast Asia and Latin America. Through localized operations managed by its in-house teams, PiHealth has accelerated patient enrollment for PD-1 monoclonal antibodies by 50% in emerging markets, significantly speeding up product commercialization.
In the future, competition among pharmaceutical companies will be a contest of ecosystems. The ability to efficiently integrate internal and external resources and establish sustainable innovation cycles will become the key factor determining whether a company can join the global first-tier. Those enterprises that achieve synergistic development in technology R&D, clinical services, and capital operations will gain an advantage in this ecological competition.
last
The wave of self-built CROs marks that China's pharmaceutical industry is entering a more mature and comprehensive development stage. Pharmaceutical companies are no longer confined to the linear logic of "research, production, and sales," but instead achieve resource reuse, risk diversification, and value appreciation through ecological and platform-based operations. This transformation not only reshapes the business models of enterprises themselves but also drives the entire industry to transition from "following innovation" to "systemic innovation." In the future, only pharmaceutical companies with ecological thinking and platform capabilities can secure a more proactive position in the global pharmaceutical landscape. How to balance openness and collaboration, efficiency and fairness will become a new challenge that all participants must confront.
Source: Public data collated
Disclaimer: This article is only for the purpose of knowledge exchange and sharing, and does not involve commercial publicity, and is not a relevant medical guidance or medication advice. If there is any infringement, please contact us to delete.
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