While the global pharmaceutical pipeline has recorded its first decline in more than three decades, industry analysts say the drop reflects a structural shift toward higher-quality development rather than a downturn in innovation, with China emerging as a key growth engine for global drug research, according to a Citeline report.

According to the latest Pharma R&D Annual Review 2026 by Citeline, the number of drugs in development worldwide fell to 22,940 as of January 2026, down by 3.9 percent from 23,875 in 2025, marking the first contraction since the mid-1990s.

Citeline, which has tracked global drug development since the 1980s, has witnessed decades of growth in the number of drugs in development. The figures cover everything from new molecules in preclinical testing to approved products being evaluated in additional indications.

The company attributes the drop to a combination of technical reporting adjustments and a changing geopolitical landscape across the sector.

Citeline said a temporary shift in Pharmaprojects reporting may have inflated the 2025 total and depressed 2026 numbers. When the adjustment is taken into account, the overall global pipeline size appears to have remained broadly stable in recent years.

More fundamentally, pharmaceutical companies are streamlining early-stage portfolios and focusing resources on late-stage clinical development, reflecting rising research and development costs and investor pressure for clearer commercialization prospects. The report shows the preclinical pipeline dropped 14 percent to 10,929 candidates, while Phase II and Phase III pipelines grew by 9.1 percent and 8.8 percent, respectively.

External factors are also reshaping the research landscape. The report notes that cuts to academic research funding in the United States and broader geopolitical instability could dampen early-stage discovery, adding uncertainty to the future growth of the global pipeline.

Taken together, Citeline said the trends suggest the industry is moving toward what analysts describe as "fewer but better" drug programs, with companies prioritizing candidates with stronger clinical and commercial potential.

Even as the global pipeline stabilizes, China is rapidly increasing its role in pharmaceutical innovation.

Chinese companies accounted for 19 percent of all firms involved in drug R&D in 2026, up from 17 percent in 2025, according to the report. The US remains the largest hub, with its share rising slightly to 41 percent from 39 percent, but China's growth rate continues to outpace other regions.

The report highlights that China has officially overtaken the US in first-time new drugs, underscoring the country's transition from a model that once relied heavily on generic replication to one increasingly driven by original research.

China now accounts for about 30 percent of global novel drug development, ranking second behind the US, according to China's official estimates.

The National Medical Products Administration approved 76 innovative drugs in 2025, a record high and up from 48 in 2024.

Among the newly approved novel drugs are 47 chemical drugs, 23 biological products and six traditional Chinese medicine products. About 80 percent of these chemical drugs and more than 90 percent of the biological drugs are manufactured by domestic companies.

"The number of new approvals issued last year was the highest globally and surpassed that of the US," Zhou Le, deputy director of the administration's drug regulation department, said in an interview with China Daily.

Europe, by contrast, showed signs of stagnation outside a few major markets such as France, Germany and the United Kingdom, while several other European regions saw declines in R&D activity, according to the report.

The shift is reflected in the expanding global presence of Chinese drugmakers, with several firms now ranking among the world's most active innovators and partnering more frequently with multinational pharmaceutical companies.

Beyond geographic changes, the report highlights several structural shifts in therapeutic focus. Oncology remains the largest therapeutic category, though its pipeline declined 4.6 percent since 2026, slightly steeper than the overall industry drop.

Meanwhile, cardiovascular and immunological therapies showed strong momentum, with pipeline growth of 23 percent and 21 percent, respectively, reflecting renewed industry interest in chronic disease and immune-mediated conditions.

Against this backdrop, analysts said China's rapidly expanding biotech sector will play an increasingly pivotal role in global drug discovery. As the Citeline report concluded, experts remain bullish on pharma's prospects, "especially in China, which has overtaken the US in first-time new drugs and continues to nurture a robust pipeline".

lijing2009@chinadaily.com.cn