For instance, estimates reveal that diabetes prevalence among Singapore residents aged between 18 and 74 was around 8.5% in 2022. At the same time, neurological diseases represent a growing and under-penetrated area of need. These conditions support long-term structural demand for new therapies, but they also raise the bar for what scientific and commercial success must look like.
Asia’s rise in clinical research
Despite longstanding US dominance in biotech innovation, the geography of clinical trial activity is moving in ways that are increasingly evident. World Health Organization (WHO) data show that from January 1999 to June 2025, the US accounted for about 20% of global trials accumulated for the whole period, ahead of China and India. In recent years, however, China and India have taken the lead in the number of new trial registrations, pointing to a clear change in where clinical research is being conducted.
China’s transformation has been notable as it has become a larger part of global drug development on the back of faster trial execution and research capacity expansion. Annual trial activity now exceeds that of the US, and its share of biotech patents has also grown. Clinical activity has continued to rise, with domestic companies taking on a greater role in early-stage development.
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India is also gaining ground as a clinical research hub. Lower operating costs, combined with a large and diverse patient base, have made it an attractive location for trial activity. As global pharmaceutical companies seek to diversify supply chains and research footprints, India is well-positioned to capture a greater share of this work.
Why global pharma is looking East
For large pharmaceutical companies, these developments are fundamentally strategic as they reflect evolution in patent dynamics, licensing activity, and the search for new sources of innovation.
Over the second half of this decade, a wave of patent expirations is expected to impact a large portion of industry revenues. As a result, companies look to external innovation to replenish pipelines, and China has become an important source of licensing opportunities, offering access to differentiated assets at earlier stages of development and at lower cost.
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Most importantly, China’s research focus and capability are also progressing, and this is evident where we can see global pharmaceutical companies increasingly targeting China’s maturing R&D ecosystem for next-generation drug candidates and differentiated early-stage assets.
Focus Intensifies on neurology, heart diseases and immune disorders
The pharmaceutical industry’s therapeutic priorities are being reshaped as new centres of gravity emerge in drug development. According to the ICON 2025 Global Biotech Sector Survey, neurology has overtaken oncology as the most active area of research, marking a notable change after years of dominance.
This reallocation reflects growing focus on neurodegeneration, neuropsychiatry, immunology, and cardiometabolic disease. However, we note that neurodegenerative and neuropsychiatric programmes remain vulnerable to setbacks due to highly complex pathologies, high failure rates, and safety concerns. Oncology, on the other hand, remains a structurally important and commercially attractive therapeutic area with deal activity in early 2025, underscoring its continued strategic weight.
Technology powering the next wave of innovation
Technology is also reshaping the innovation ecosystem and development processes across regions. Advances in artificial intelligence are increasingly enhancing efficiency across the drug discovery pipeline, supporting innovations ranging from target identification to clinical trial design. In China, large datasets and digital infrastructure support faster iteration cycles, which can shorten drug development timelines, bringing them to market more quickly.
Where the money is moving in biotech
Large pharma partnerships and venture capital remain the biotech sector’s two most critical funding pillars, sustaining its high-risk, long-duration R&D cycles. We are seeing capital allocation within biotech shifting noticeably. Early-stage venture funding dipped on the back of weaker public market performance and higher financing costs. Companies without clear clinical validation are finding it harder to raise capital.
At the same time, we note that interest in late-stage assets has strengthened. Investors are placing greater emphasis on programmes with clinical data and defined commercial potential. This shift has driven a rebound in mergers and acquisitions activity, especially for companies with near-commercial or revenue-generating assets. We see significant momentum building in scientifically differentiated fields such as antibody-drug conjugates (ADCs), precision oncology, and immunology.
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Large pharmaceutical companies are adapting their approach as well. Instead of focusing on a single large acquisition, many are building portfolios through smaller, targeted deals. This allows for greater flexibility and reduces concentration risk. Key areas of interest we observed include obesity and metabolic diseases, particularly GLP-1 therapeutics, and platform technologies, such as drug discovery systems.
Balance sheet strength becomes a differentiator
In the current macroeconomic environment, balance sheet strength is crucial. Companies with strong cash flows and established commercial operations are better placed to sustain research spending and take advantage of weaker private markets. This means that they can fund development internally while also acting as consolidators.
For investors, this creates a clearer distinction within the sector. Larger companies typically offer better stability, supported by diversified pipelines and existing revenue streams. Smaller firms can still deliver outsized returns, but selection is key as outcomes are more uneven and closely tied to clinical milestones.
Tomorrow’s therapies are today’s investment opportunities
While investment sentiment in the biotech sector has been cautious in recent years, we believe that conditions are now stabilising, fuelled by the easing of macroeconomic and regulatory headwinds. As financing pressures ease and clinical pipelines advance, attention is returning to fundamentals.
Companies with differentiated assets, particularly in areas such as gene-based therapies and immunology, can provide targeted growth opportunities. Exposure to Asia also warrants consideration. Firms with established partnerships or research footprints in China or India may benefit from faster development cycles and access to new sources of innovation.
The fundamental drivers of success in the pharmaceutical industry — scientific progress and the ability to effectively translate research breakthroughs into commercially viable therapies — remain unchanged. While structural shifts in capital allocation and technological advancements are reshaping operating models, they are ultimately reinforcing these core drivers and are enhancing rather than replacing the path to innovation and value creation.
For investors, the opportunity lies in identifying where these shifts intersect. The companies best placed to capture value will be those that combine scientific depth with financial resilience and clear paths to commercialisation.
Dr Damien Ng is a senior thematic research analyst at Julius Baer
