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Item 5 — Management's Discussion and Analysis
Hutchmed (china) Limited · 20-F · FY 2025 · Period ended Dec 31, 2025
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You should read the following discussion and analysis of our financial condition and results of operations together with Item 3.A. “Selected Financial Data,” our consolidated financial statements and the related notes and our non-consolidated equity investee’s consolidated financial statements and the related notes appearing elsewhere in this annual report. This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Exchange Act, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” or similar language. All forward-looking statements included in this annual report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. In evaluating our business, you should carefully consider the information provided under Item 3.D. “Risk Factors.” Actual results could differ materially from those projected in the forward-looking statements.
A. Operating Results.
Overview
We are a global commercial-stage biopharmaceutical company focused on the discovery, development and commercialization of targeted therapies and immunotherapies for the treatment of patients with cancer and immunological diseases. We conduct our business through our Oncology/Immunology and Other Ventures operations.
Through our Oncology/Immunology operations, our team of approximately 870 scientists and staff has created, developed and in-licensed a deep portfolio of clinical-stage drug candidates. Aside from China, fruquintinib has been approved in 38 countries including the United States in 2023, and Europe and Japan in 2024. Moreover, tazemetostat has been approved and launched in China including Macau and Hong Kong. Our novel discovery and early-stage development focus on progressing drug candidates from our ATTC next-generation platform, with the first two candidates in global Phase I development. Our success in research and development has led to partnerships with leading global pharmaceutical companies, including AstraZeneca, Eli Lilly and Takeda. We and our collaboration partners have invested approximately $2.2 billion in our Oncology/Immunology operations as of December 31, 2025, with almost all of these funds used for research and development expenses for the development of our drug candidates. Net income attributable to our company from our Oncology/Immunology operations was $51.2 million for the year ended December 31, 2023, net loss attributable to our company from our Oncology/Immunology operations was $24.6 million and $13.7 million for the year ended December 31, 2024 and 2025, respectively.
In addition, we have built large-scale and profitable drug marketing and distribution capabilities. Our Other Ventures includes a 5.0% interest in Shanghai Hutchison Pharmaceuticals, which manufactures, markets and distributes a range of its own brand prescription drug products across mainland China. Net income attributable to our company generated from our Other Ventures operations was $50.3 million, $47.7 million and $25.5 million for the years ended December 31, 2023, 2024 and 2025, respectively. In April 2025, we completed the divestment of an aggregate of a 45% equity interest in Shanghai Hutchison Pharmaceuticals and retained 5% equity interest. A divestment gain, net of tax of $415.8 million was recognized. In addition to helping fund our Oncology/Immunology operations, we utilize the know-how from our Other Ventures to support the commercialization of our internally developed Oncology/Immunology products in China.
Our consolidated revenue was $838.0 million, $630.2 million and $548.5 million for the years ended December 31, 2023, 2024 and 2025, respectively. Net income attributable to our company was $100.8 million, $37.7 million and $456.9 million for the years ended December 31, 2023, 2024 and 2025, respectively.
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Basis of Presentation
Our consolidated statements of operations data presented herein for the years ended December 31, 2025, 2024 and 2023 and our consolidated balance sheet data presented herein as of December 31, 2025 and 2024 have been derived from our audited consolidated financial statements, which were prepared in accordance with US GAAP, and should be read in conjunction with those statements which are included elsewhere in this annual report.
We have two strategic operations, Oncology/Immunology and Other Ventures, that offer different products and services. Shanghai Hutchison Pharmaceuticals is accounted for under the equity accounting method as non-consolidated entity in our consolidated financial statements, and the consolidated financial statements of Shanghai Hutchison Pharmaceuticals were prepared in accordance with IFRS as issued by the IASB and audited under auditing standards generally accepted in the United States and included elsewhere in this annual report. The presentation of financial data for our business units excludes certain unallocated costs attributed to expenses incurred by our corporate head office. For more information on our corporate structure, see Item 4.A. “History and Development of the Company.”
Factors Affecting our Results of Operations
Research and Development Expenses
We believe our ability to successfully develop innovative drug candidates through our Oncology/Immunology operations will be the primary factor affecting our long-term competitiveness, as well as our future growth and development. Creating high quality global first-in-class or best-in-class drug candidates requires significant investment of resources over a prolonged period of time, and a core part of our strategy is to continue making sustained investments in this area. As a result of this commitment, our pipeline of drug candidates has been steadily advancing and expanding. In addition, we are proactively making a strategic shift to focus on the most advanced assets from our internal developed pipeline, that are most likely to drive near-term value. For more information on the nature of the efforts and steps necessary to develop our drug candidates, see Item 4.B. “Business Overview—Our Clinical Pipeline” and “Business Overview—Regulations.”
The drug candidates of our Oncology/Immunology operations are still in development, and we have incurred and will continue to incur significant research and development costs for pre-clinical studies and clinical trials. We expect that our research and development expenses will significantly increase in future periods in line with the advancement and expansion of the development of our drug candidates.
Research and development expenses include:
● employee compensation related expenses, including salaries, benefits and equity compensation expense;
● expenses incurred for payments to CROs, investigators and clinical trial sites that conduct our clinical studies;
● the cost of acquiring, developing, and manufacturing clinical study materials;
● facilities, depreciation, and other expenses, which include office leases and other overhead expenses; and
● costs associated with pre-clinical activities and regulatory operations.
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Research and development expenses incurred by our Oncology/Immunology operations totaled $302.0 million, $212.1 million and $148.3 million for the years ended December 31, 2023, 2024 and 2025, respectively, representing approximately 36.0%, 33.7% and 27.0% of our total consolidated revenue for the respective period. These research and development figures do not include payments made by our collaboration partners directly to third parties to help fund the research and development of our drug candidates.
We have been able to fund the research and development expenses for our Oncology/Immunology operations via a range of sources, including revenue generated from our commercialized drugs, payments received from our collaboration partners, cash flows generated from our Other Ventures including divestment proceeds, dividend payments, the proceeds raised from our initial public offering and follow-on offerings on the AIM, Nasdaq and the SEHK, investments from other third parties and bank borrowings.
This diversified approach to funding allows us not to depend on any one method of funding for our research and development activities, thereby reducing the risk that sufficient financing will be unavailable as we continue to accelerate the development of our drug candidates.
For more information on the research and development expenses incurred for the development of our drug candidates, see “—Key Components of Results of Operations—Cost of Revenue and Operating Expenses—Research and Development Expenses.”
Our Ability to Commercialize Our Drug Candidates
Our ability to generate revenue from our drug candidates depends on our ability to successfully complete clinical trials for our drug candidates and obtain regulatory approvals for them in the United States, Europe, China and other major markets.
We believe that our globally facing strategy of focusing on drug development for novel but relatively well-characterized targets and for validated targets, in combination with our development of multiple drug candidates concurrently and testing them for multiple indications and in combinations with other drugs, enhances the likelihood that our research and development efforts will yield successful drug candidates. Nonetheless, we cannot be certain if any of our drug candidates will receive new or additional regulatory approvals. Even if such approvals are granted, we will need to thereafter establish manufacturing supply and engage in extensive marketing prior to generating any revenue from such drugs. The effectiveness of our marketing will depend on the efforts of our dedicated oncology team in China and our collaboration partners in the rest of the world. The ultimate commercial success of our drugs will depend on their acceptance by patients, the medical community and third-party payors and their ability to compete effectively with other therapies on the market.
To date, surufatinib and savolitinib have been approved for sale in China. Fruquintinib is marketed as Elunate in China by HUTCHMED, and as Fruzaqla outside of China by our partner Takeda. Fruzaqla has received approval in 38 countries to date, including the United States in 2023, Europe and Japan in 2024.
Our manufacturing site in Suzhou produces both clinical and commercial supplies of fruquintinib and surufatinib. Our new drug product facility in Shanghai has fully commenced operations and is expected to increase our novel drug product manufacturing capacity significantly and secure both clinical and commercial drug product supply. The Shanghai facility passed FDA Pre-Approval Inspection with zero observations in January 2026. Both clinical stage and commercial drug product have completed technology transfer, and we expect to manufacture substantially all drug products in Shanghai facility in the future. In the end of 2024, our first commercial batch of savolitinib, which previously relied on third-party manufacturer, was produced in the Shanghai facility and supplied to our partner. We received the NMPA manufacturing approval of surufatinib at the Shanghai facility and started commercial production, and we also received the NMPA manufacturing approval for fruquintinib in December 2025. Beginning in October 2020, we assumed responsibility for the development and execution of all on-the-ground medical detailing, promotion and local and regional marketing activities in China for Elunate. Sulanda is marketed by us in China without the support of a collaboration partner. However, we have a limited history of commercializing our internally developed drug candidates, which makes it difficult to evaluate our future prospects.
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The competitive environment is also an important factor with the commercial success of our potential global first-in-class products, such as sovleplenib, depending on whether we are able to gain regulatory approvals and quickly bring such products to market ahead of competing drug candidates being developed by other companies.
For our drug candidates where we retain all rights worldwide, currently including surufatinib, sovleplenib, fanregratinib, ranosidenib, HMPL-760, HMPL-506, HMPL-295, HMPL-653, HMPL-A83, HMPL-415, HMPL-A251, HMPL-A580 and HMPL-A830, we will be able to retain all the profits if any of them are successfully commercialized and remain unpartnered, though we will need to bear all the costs associated with such drug candidates. Conversely, as discussed below, for our drug candidates which are subject to collaboration partnerships, our collaboration partners provide funding for development of the drug candidates but are entitled to retain a significant portion of any revenue generated by such drug candidates.
Our Collaboration Partnerships
Our results of operations have been, and we expect them to continue to be, affected by our collaborations with third parties for the development and commercialization of certain of our drug candidates. Currently, these include savolitinib (global collaboration with AstraZeneca) and fruquintinib (collaboration with Eli Lilly in China and with Takeda outside of China). In addition to providing us with clinical and regulatory support, the payments received from these collaborations have been critical to our ability to develop and quickly advance the pre-clinical and clinical studies of multiple drug candidates concurrently.
In particular, our partners cover a portion of our research and development costs for drug candidates developed in collaboration with them. In addition, under our collaboration agreements with AstraZeneca, Eli Lilly and Takeda, we received upfront payments upon our entry into such agreements and milestone payments upon the achievement of certain development and regulatory milestones, payments for our provision of research and development services for the relevant drug candidate as well as commercial milestones and royalties. Revenue recognized in our consolidated financial statements from such agreements with AstraZeneca, Eli Lilly and Takeda totaled $482.0 million, $308.0 million and $256.1 million for the years ended December 31, 2023, 2024 and 2025, respectively.
Moreover, we have entered into, and may consider entering in the future, in-licensing arrangements to expand and complement our existing portfolio of novel oncology assets under which we may be obligated to make upfront, milestone and royalty payments. For example, in August 2021, we entered into an in-licensing agreement with Epizyme (a subsidiary of Ipsen Pharma SAS) to collaborate in research, development, manufacturing and commercialization of tazemetostat in Greater China, the licensed territory. In connection with this collaboration, Epizyme received a $25 million upfront payment and another $15 million milestone payment to date and is eligible to receive up to $95 million in additional development and regulatory milestone payments and up to $175 million in additional sales milestone payments. Epizyme is also eligible to receive tiered royalties of mid-teen to low-twenties percent based on annual net sales of tazemetostat in the licensed territory.
The achievement of milestones for our and in-licensed drug candidates, which is dependent on the outcome of clinical studies, is subject to a high degree of uncertainty and, as a result, we cannot reasonably estimate when we can expect to receive or incur future milestone payments, revenue from related product sales, or other relevant income or expenses or at all. If we are unable to achieve development milestones for our drug candidates or if our partners were to terminate their collaborative agreements with us, payments for research and development services could also be affected.
For more information regarding our collaboration agreements, see Item 4.B. “Business Overview—Overview of Our Collaborations.”
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China Government Insurance Reimbursement and Drug Pricing Policies
Our revenue is affected by the sales volume and pricing of our current and future internally developed drug candidates, if approved. Eligible participants in the government-sponsored medical insurance programs in China are entitled to reimbursement for varying percentages of the cost for any medicines that are included in applicable reimbursement lists. Factors that affect the inclusion of medicines in China’s NRDL and any other applicable reimbursement list may include whether the medicine is consumed in large volumes and commonly prescribed for clinical use in China and whether it is considered to be important in meeting the basic healthcare needs of the general public. For more information, see Item 4.B. “Business Overview—Coverage and Reimbursement—PRC Coverage and Reimbursement.” The inclusion of a medicine in the NRDL or other applicable reimbursement lists can substantially improve the sales volume of the medicine due to the availability of third-party reimbursements. On the other hand, such inclusion may also subject it to centralized procurement processes. The National Healthcare Security Administration has stated that centralized procurement will focus on NRDL-listed and costly-to-procure drugs. Centralized procurement may negatively affect the retail price of our drug candidates. On balance, we believe that, if priced appropriately, the benefit of the inclusion of our drug candidates in the NRDL and other applicable reimbursement lists outweighs the cost of such inclusion. Elunate was added to the NRDL in January 2020 at approximately 60% discount to its initial retail price, renewed for an additional two-year term starting in January 2022 at a discount of 5% relative to the prior NRDL price and renewed again in January 2024 and 2026 on the same terms. Sulanda was included in the NRDL starting in January 2022 at a 52% discount on its main dosage form, relative to its 2021 initial retail price and renewed in January 2024 and 2026 on the same terms. Orpathys was included in the NRDL on March 1, 2023 at a 38% discount relative to the self-pay price, renewed in January 2025 on the same terms for another two years, and further updated starting in January 2026 at a discount of 16.6% relative to the prior NRDL price for one year. In addition, Tazverik was included in the first edition of the National Commercial Health Insurance Innovation Drug List starting in January 2026.
Revenue from our Other Ventures is affected by the sales volume and pricing of third-party prescription pharmaceutical products. The sales volume of the products sold by these businesses is driven in part by the level of Chinese government spending on healthcare and the coverage of Chinese government medical insurance schemes, which is correlated with patient reimbursements for drug purchases, all of which have increased significantly in recent years as part of healthcare reforms in China. The sales volume of pharmaceutical products in China is also influenced by their representation on the NRDL, which determines eligibility for drug reimbursement, as well as their representation on the National Essential Medicines List, which mandates distribution of drugs in China.
The NRDL and the National Essential Medicines List are subject to revision by the government from time to time, and our results could be materially and adversely affected if any of our products are removed from the NRDL or the National Essential Medicines List. For more information, see Item 3.D. “Risk Factors—Risks Relating to Sales of our Internally Developed Drugs and Other Drugs—Reimbursement may not be available for the products currently sold through our Oncology/Immunology and Other Ventures operations or our drug candidates in China, the U.S. or other countries, which could diminish our sales or affect our profitability.”
For more information, see Item 4.B. “Business Overview—Coverage and Reimbursement—PRC Coverage and Reimbursement.”
Ability to Effectively Market Own-Brand and Third-Party Drugs
Our other ventures operations is predominantly our Distribution Business (a 51% held subsidiary and the remaining interests are held by Sinopharm), which provides distribution and commercialization services for prescription drugs licensed from third parties, and we have established our oncology drug sales team which we utilize to market our internally developed and approved drugs throughout China.
If the marketing strategies of the business are not successful, our revenue and profitability may be negatively affected. Moreover, if we are unsuccessful in marketing any third-party drugs, it may adversely affect our ability to enter into commercialization arrangements on acceptable terms, gain rights to market additional third-party drugs or prevent us from expanding the geographic scope of existing arrangements.
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Seasonality
We do not experience material seasonal variations in the results of our operations.
Critical Accounting Policies and Significant Judgments and Estimates
Our discussion and analysis of operating results and financial condition are based upon our consolidated financial statements. The preparation of consolidated financial statements requires us to estimate the effect of various matters that are inherently uncertain as of the date of the consolidated financial statements. Each of these required estimates varies with regard to the level of judgment involved and its potential impact on our reported financial results. Estimates are deemed critical when a different estimate could have reasonably been used or where changes in the estimates are reasonably likely to occur from period to period, and a different estimate would materially impact our financial position, changes in financial position or results of operations. Our significant accounting policies are discussed under note 3 to our consolidated financial statements included in this annual report. We believe the following critical accounting policies are affected by significant judgments and estimates used in the preparation of our consolidated financial statements and that the judgments and estimates are reasonable.
Revenue Recognition— Goods and Services
We generate revenue from (1) sales of goods, which are the manufacture or purchase and distribution of pharmaceutical products and other healthcare products and (2) provision of services, which are the provision of sales, distribution and marketing services to pharmaceutical manufacturers. We evaluate whether we are the principal or agent for these contracts. Where we obtain control of the goods for distribution, we are the principal (i.e. recognizes sales of goods on a gross basis). Where we do not obtain control of the goods for distribution, we are the agent (i.e. recognizes provision of services on a net basis). Control is primarily evidenced by taking physical possession and inventory risk of the goods.
Revenue from sales of goods is recognized when the customer takes possession of the goods. We have determined that this usually occurs upon completed delivery of the goods to the customer site. The amount of revenue recognized is adjusted for expected sales incentives as stipulated in the contract, which are generally issued to customers as direct discounts at the point-of-sale or indirectly in the form of rebates. Sales incentives are estimated using the expected value method. Additionally, sales are generally made with a limited right of return under certain conditions. Revenue are recorded net of provisions for sales discounts and returns.
Revenue from provision of services is recognized when the benefits of the services transfer to the customer over time, which is based on the proportionate value of services rendered as determined under the terms of the relevant contract. Additionally, when the amounts that can be invoiced correspond directly with the value to the customer for performance completed to date, we recognize revenue from provision of services based on amounts that can be invoiced to the customer.
Deferred revenue is recognized if consideration is received in advance of transferring control of the goods or rendering of services. Accounts receivable is recognized if the Group has an unconditional right to bill the customer, which is generally when the customer takes possession of the goods or services are rendered. Payment terms differ by subsidiary and customer, but generally range from 45 to 180 days from the invoice date.
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Revenue Recognition— License and Collaboration Contracts
Our Oncology/Immunology reportable segment includes revenue from license and collaboration contracts, which generally contain multiple performance obligations including (1) the licenses to the development, commercialization and manufacture rights of a drug compound, (2) the research and development services for each specified treatment indication, and (3) other deliverables, which are accounted for separately if they are distinct, i.e. if a product or service is separately identifiable from other items in the arrangement and if a customer can benefit from it on its own or with other resources that are readily available to the customer.
The transaction price generally includes fixed and variable consideration in the form of upfront payment, research and development cost reimbursements, contingent milestone payments and sales-based royalties. Contingent milestone payments are not included in the transaction price until it becomes probable that a significant reversal of revenue will not occur, which is generally when the specified milestone is achieved. The allocation of the transaction price to each performance obligation is based on the relative standalone selling prices of each performance obligation determined at the inception of the contract. We estimate the standalone selling prices based on the income approach and cost - plus margin approach. Control of the license to the drug compounds transfers at the inception date of the collaboration agreements and consequently, amounts allocated to this performance obligation are generally recognized at a point in time. Conversely, research and development services for each specified indication are performed over time and amounts allocated to these performance obligations are generally recognized over time using a percentage-of-completion method. We have determined that research and development expenses provide an appropriate depiction of measure of progress for the research and development services. Changes to estimated cost inputs may result in a cumulative catch-up adjustment. Royalty revenue is recognized as future sales occur as they meet the requirements for the sales-based royalty exception.
Deferred revenue is recognized if allocated consideration is received in advance of the rendering of research and development services or earning royalties on future sales. Accounts receivable is recognized based on the terms of the contract and when we have an unconditional right to bill the customer, which is generally when research and development services are rendered.
Share-based Compensation
We recognize share-based compensation expense on share options granted to employees and directors based on their estimated grant date fair value using the Polynomial and Monte Carlo simulation models. Determining the fair value of share options requires the use of subjective assumptions. These models use various inputs to measure fair value, including the market value of our underlying shares at the grant date, contractual terms, estimated volatility, risk-free interest rates and expected dividend yields. The assumptions in determining the fair value of share options are highly subjective and represent our best estimates, which involve inherent uncertainties and the application of judgment. As a result, if factors change and different assumptions are used, our level of share-based compensation could be materially different in the future.
We recognize share-based compensation expense in the consolidated statements of operations on a graded vesting basis over the requisite service period, and account for forfeitures as they occur.
Impairment of Long-lived Assets
We evaluate the recoverability of long-lived assets in accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets.
We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Indicators that we consider in deciding when to perform an impairment review include significant under-performance of a business or product line in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in our use of the assets.
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If indicators of impairment exist, the first step of the impairment test is performed to assess if the carrying value of the net asset group exceeds the undiscounted cash flows of the asset group. If yes, the second step of the impairment test is performed in order to determine if the carrying value of the net asset group exceeds the fair value. If yes, impairment is recognized for the excess.
Allowance for Current Expected Credit Losses
We estimate our allowance for current expected credit losses (“CECLs”) based on an expected loss model, which requires the consideration of forward-looking economic variables and conditions in the portfolio groups of receivables.
We estimate our allowances for CECLs for accounts receivables by considering past events, including any historical default, current economic conditions and certain forward-looking information, including reasonable and supportable forecasts. The methodologies that the Group uses to estimate the allowance for CECLs for accounts receivables are as follows:
Individually evaluated-we review all accounts receivables considered at risk on a timely basis and perform an analysis based upon current information available about the customers and other debtors, which may include financial statements, news reports, published credit ratings as well as collateral net of repossession cost, prior collection history and current and future expected economic conditions. Using this information, we determine the expected cash flow for the accounts receivables and calculate an estimate of the potential loss and the probability of loss. For those accounts for which the loss is probable, we record a specific allowance.
Collectively evaluated-we determine our allowance for CECLs for collectively evaluated accounts receivables based on appropriate groupings.
We consider forward-looking macroeconomic variables, which may include but not limited to gross domestic product, and consumer price index when quantifying the impact of economic forecasts on our allowance for expected credit losses. Macroeconomic variables may vary based on historical experiences, portfolio composition and current environment. We also consider the impact of current conditions and economic forecasts relating to specific industries and client-credit ratings, in addition to performing a qualitative review of credit risk factors across the portfolio. Forward-looking estimates require the use of judgment, particularly in times of economic uncertainty.
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Provision for Profit Guarantee
We recognize a provision when (1) we have a present obligation as a result of a past event, (2) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and (3) a reliable estimate can be made of the amount of the obligation.
The provision for profit guarantee was estimated based on a discounted cash flow analysis using assumptions including forecasted revenue and discount rate. At each reporting date, we remeasure the provision at fair value based on projected forecasts of the performance of Shanghai Hutchison Pharmaceuticals against the guaranteed yearly net income after tax targets. This estimation process considers various factors including historical financial performance, projected future performance of Shanghai Hutchison Pharmaceuticals, market conditions, and other economic factors that may impact the Shanghai Hutchison Pharmaceuticals’ ability to achieve the profit guarantee targets. Changes in estimates are recognized in the consolidated statements of operations’ gain on divestment of Shanghai Hutchison Pharmaceuticals in the period in which the estimate is revised.
Recent Accounting Pronouncements
See note 3 to our consolidated financial statements included in this annual report for information regarding recent accounting pronouncements.
Key Components of Results of Operations
The following tables set forth our selected consolidated financial data. We have derived the selected consolidated statements of operations data for the years ended December 31, 2025, 2024 and 2023 and the selected consolidated balance sheet data as of December 31, 2025 and 2024 from our audited consolidated financial statements, which were prepared in accordance with US GAAP and are included elsewhere in this annual report. The following selected consolidated financial data for the years ended December 31, 2022 and 2021 and as of December 31, 2023, 2022 and 2021 have been derived from our audited consolidated financial statements for those years, which were prepared in accordance with US GAAP and are not included in this annual report.
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Year Ended December 31,
2025 2024 2023 2022 2021
$’000 (except share and per share data)
Consolidated statement of operations data:
Revenue
Goods—third parties 393,477 401,382 388,924 314,329 266,199
—related parties 1,322 3,854 8,264 5,293 4,256
Services —commercialization—third parties 45,300 52,485 48,608 41,275 27,428
—research and development—related parties — 471 481 507 525
—collaboration research and development—third parties 27,904 57,968 80,397 23,741 18,995
Other collaboration revenue—royalties—third parties 68,419 71,041 32,470 26,310 15,064
—licensing—third parties 12,090 43,000 278,855 14,954 23,661
Total revenue 548,512 630,201 837,999 426,409 356,128
Operating expenses
Cost of goods—third parties (291,360) (294,918) (331,984) (268,698) (229,448)
Cost of goods—related parties (775) (1,861) (4,777) (3,616) (3,114)
Cost of services—commercialization—third parties (44,214) (52,105) (47,686) (38,789) (25,672)
Research and development expenses (148,295) (212,109) (302,001) (386,893) (299,086)
Selling expenses (36,306) (48,617) (53,392) (43,933) (37,827)
Administrative expenses (66,722) (64,296) (79,784) (92,173) (89,298)
Total operating expenses (587,672) (673,906) (819,624) (834,102) (684,445)
(39,160) (43,705) 18,375 (407,693) (328,317)
Gain on divestment of equity investees 476,896 — — — 121,310
Other income/(expense)
Interest income 49,877 40,080 36,145 9,599 2,076
Other income 19,710 10,274 12,949 1,833 2,426
Interest expense (2,865) (2,872) (759) (652) (592)
Other expense (5,767) (4,884) (8,402) (13,509) (12,643)
Total other income/(expense) 60,955 42,598 39,933 (2,729) (8,733)
Income/(loss) before income taxes and equity in earnings of equity investees 498,691 (1,107) 58,308 (410,422) (215,740)
Income tax (expense)/benefit (63,610) (7,192) (4,509) 283 (11,918)
Equity in earnings of equity investees, net of tax 22,651 46,469 47,295 49,753 60,617
Net income/(loss) 457,732 38,170 101,094 (360,386) (167,041)
Less: Net income attributable to non-controlling interests (823) (441) (314) (449) (27,607)
Net income/(loss) attributable to the Company 456,909 37,729 100,780 (360,835) (194,648)
Earnings/(losses) per share attributable to the Company ($ per share)
—basic 0.53 0.04 0.12 (0.43) (0.25)
—diluted 0.52 0.04 0.12 (0.43) (0.25)
Number of shares used in per share calculation
—basic 858,276,608 855,351,683 849,654,296 847,143,540 792,684,524
—diluted 872,891,120 872,829,129 869,196,348 847,143,540 792,684,524
Net income/(loss) 457,732 38,170 101,094 (360,386) (167,041)
Other comprehensive income/(loss)
Foreign currency translation income/(loss) 2,503 (3,753) (6,592) (8,469) 2,964
Total comprehensive income/(loss) 460,235 34,417 94,502 (368,855) (164,077)
Less: Comprehensive (income)/loss attributable to non-controlling interests (1,384) (110) 39 545 (28,029)
Total comprehensive income/(loss) attributable to the Company 458,851 34,307 94,541 (368,310) (192,106)
Year Ended December 31,
2025 2024 2023 2022 2021
$’000
Consolidated balance sheet data:
Cash and cash equivalents 71,330 153,958 283,589 313,278 377,542
Short-term investments 1,295,945 682,152 602,747 317,718 634,158
Total assets 1,753,097 1,274,196 1,279,773 1,029,445 1,372,661
Total current liabilities 315,775 376,562 403,027 353,903 311,658
Total non-current liabilities 186,060 125,781 133,359 38,672 21,489
Total shareholders’ equity 1,251,262 771,853 743,387 636,870 1,039,514
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Revenue
The following table sets forth the components by contract type of our consolidated revenue for the years indicated.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
Revenue
Oncology/Immunology:
Invoiced Goods—Marketed Products(1) 100,637 18.3 128,008 20.3 83,087 9.9
Services:
Commercialization—Marketed Products 45,300 8.3 52,485 8.3 48,608 5.8
Research and Development—related parties — — 471 0.1 481 0.1
License & Collaborations:
Services 27,904 5.1 57,968 9.2 80,397 9.6
Royalties—Marketed Products 68,419 12.5 71,041 11.3 32,470 3.9
Licensing 12,090 2.2 43,000 6.8 278,855 33.3
Manufacturing Supply(1) 31,189 5.7 10,392 1.7 4,718 0.5
Subtotal 285,539 52.1 363,365 57.7 528,616 63.1
Other Ventures:
Invoiced Goods(1) 261,651 47.7 262,982 41.7 301,119 35.9
Invoiced Goods—related parties 1,322 0.2 3,854 0.6 8,264 1.0
Subtotal 262,973 47.9 266,836 42.3 309,383 36.9
Total 548,512 100.0 630,201 100.0 837,999 100.0
(1) Included in revenue from goods – third parties in our consolidated statements of operations.
The following table sets forth the components of revenue from Oncology/Immunology by product type for the years indicated.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
Revenue
Fruzaqla 89,407 31.3 110,764 30.5 7,145 1.4
Elunate 76,894 26.9 86,333 23.7 83,181 15.7
Sulanda 27,014 9.5 48,972 13.5 43,935 8.3
Orpathys 18,571 6.5 24,507 6.7 28,866 5.5
Tazverik 2,470 0.9 958 0.3 1,038 0.2
Oncology Products(1) 214,356 75.1 271,534 74.7 164,165 31.1
R&D services and licensing(2) 71,183 24.9 91,831 25.3 364,451 68.9
Total Oncology/Immunology Revenue 285,539 100.0 363,365 100.0 528,616 100.0
(1) Includes Invoiced Goods—Marketed Products, Commercialization—Marketed Products and Royalties—Marketed Products. For the year ended December 31, 2024, it also includes $20 million commercial milestone under Licensing.
(2) Includes Research and Development—related parties, Services, Licensing and Manufacturing Supply. For the year ended December 31, 2024, $20 million commercial milestone under Licensing is excluded.
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Revenue from Oncology/Immunology primarily comprises revenue from Elunate, Sulanda and Orpathys in China and revenue from Fruzaqla in the United States and other ex-China markets. The revenue we generate from Elunate is primarily comprised of revenue from the sales of Elunate to Eli Lilly which we manufacture and sell at cost, promotion and marketing services to Eli Lilly and royalty revenue. The revenue we generate from Sulanda, an unpartnered drug, is primarily comprised of revenue from sales of Sulanda to distributors. The revenue we generate from Orpathys is primarily comprised of revenue from the sales of Orpathys to AstraZeneca as well as royalty revenue. The revenue we generate from Fruzaqla is primarily comprised of revenue from manufacturing supplies to Takeda as well as royalty revenue. Additionally, Oncology/Immunology revenue includes revenue from license and collaboration agreements for upfront, milestone and research and development services payments for our drug candidates developed in collaboration with Eli Lilly, AstraZeneca and Takeda.
The following table sets forth in-market sales by oncology products for the years indicated. For Fruzaqla, Elunate and Orpathys, they represent total sales to third parties as provided by Takeda, Eli Lilly and AstraZeneca, respectively.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
In-market sales
Fruzaqla 366,200 69.8 290,620 58.0 15,093 7.1
Elunate 100,104 19.1 114,992 22.9 107,518 50.3
Orpathys 28,908 5.5 45,443 9.1 46,096 21.6
Sulanda 27,014 5.1 48,972 9.8 43,935 20.5
Tazverik 2,470 0.5 958 0.2 1,038 0.5
Oncology Products 524,696 100.0 500,985 100.0 213,680 100.0
The following table sets forth the components of revenue of our Other Ventures by product type for the years indicated. In December 2023, we sold our interests in our consolidated joint venture Hutchison Hain Organic and our wholly own subsidiary HUTCHMED Science Nutrition, and their historical financial results and gain on divestment are reflected in our consolidated financial statements.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
Revenue—Other Ventures
Prescription drug products 261,650 99.5 262,850 98.5 295,396 95.5
Healthcare products (incl. consumer health) 1,323 0.5 3,986 1.5 13,987 4.5
Total 262,973 100.0 266,836 100.0 309,383 100.0
Revenue from our Other Ventures primarily comprises revenue from prescription drugs including the commercial services, logistics and distribution business of our consolidated majority-owned subsidiary, Distribution Business.
Revenue from our Other Ventures also comprises revenue from sales of Zhi Ling Tong infant nutrition and other health supplement products manufactured by Hutchison Healthcare and distributed through Shanghai Hutchison Pharmaceuticals, organic and natural products by Hutchison Hain Organic (which was divested in December 2023), and certain third-party consumer products distributed and marketed by HUTCHMED Science Nutrition (which was divested in December 2023).
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Cost of Revenue and Operating Expenses
Cost of Revenue
Our cost of revenue is primarily attributable to the cost of revenue of our Distribution Business and Oncology/Immunology commercialized products. The following table sets forth the components of our cost of revenue for the years indicated.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
Cost of Revenue
Oncology/Immunology:
Cost of Invoiced Goods 38,642 11.5 40,678 11.7 44,040 11.5
Cost of Services 44,214 13.2 52,105 14.9 47,686 12.4
Subtotal 82,856 24.7 92,783 26.6 91,726 23.9
Other Ventures:
Cost of Invoiced Goods 252,718 75.1 254,240 72.9 287,944 74.9
Cost of Invoiced Goods—related parties 775 0.2 1,861 0.5 4,777 1.2
Subtotal 253,493 75.3 256,101 73.4 292,721 76.1
Total 336,349 100.0 348,884 100.0 384,447 100.0
The following table sets forth the components of cost of revenue of our Other Ventures by product type for the years indicated.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
Cost of Revenue—Other Ventures
Prescription drug products 252,714 99.7 254,138 99.2 284,927 97.3
Healthcare products (incl. consumer health) 779 0.3 1,963 0.8 7,794 2.7
Total 253,493 100.0 256,101 100.0 292,721 100.0
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Research and Development Expenses
Our research and development expenses are attributable to our Oncology/Immunology operations. These costs primarily comprise the cost of research and development for our drug candidates, including clinical trial related costs such as payments to third-party CROs, personnel compensation and related costs, and other research and development expenses. The following table sets forth the components of our research and development expenses and the clinical trial related costs incurred for the development of our main drug candidates for the years indicated.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
R&D Expenses
Oncology/Immunology:
Savolitinib (targeting MET) 17,845 12.0 35,325 16.7 37,692 12.5
Tazemetostat (targeting EZH2) 15,708 10.6 15,931 7.5 12,171 4.0
Sovleplenib (targeting Syk) 5,824 3.9 14,518 6.8 14,200 4.7
Ranosidenib (targeting IDH 1/2) 4,352 2.9 7,549 3.5 12,633 4.2
Fanregratinib (targeting FGFR) 2,988 2.0 5,772 2.7 7,532 2.5
Surufatinib (targeting VEGFR/FGFR1/CSF-1R) (3,383) (2.3) 7,506 3.6 24,746 8.2
Fruquintinib (targeting VEGFR1/2/3) (3,046) (2.1) 8,733 4.1 40,384 13.4
Other candidates 4,464 3.0 6,895 3.2 24,375 8.2
Others and government grant 35,320 24.0 33,423 15.8 25,995 8.4
Total clinical trial related costs 80,072 54.8 135,652 63.9 199,728 66.1
Personnel compensation and related costs 58,317 39.3 69,079 32.6 93,030 30.8
Other research and development costs 9,906 6.7 7,378 3.5 9,243 3.1
Total 148,295 100.0 212,109 100.0 302,001 100.0
The following table summarizes our research and development expenses by location for the years indicated.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
PRC 141,398 95.3 177,564 83.7 195,070 64.6
U.S. and others 6,897 4.7 34,545 16.3 106,931 35.4
Total 148,295 100.0 212,109 100.0 302,001 100.0
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We cannot determine with certainty the duration and completion costs of the current or future pre-clinical or clinical studies of our drug candidates or if, when, or to what extent we will generate revenue from the commercialization and sale of any of our drug candidates that obtain regulatory approval. We may not succeed in achieving regulatory approval for any of our drug candidates currently under development. The duration, costs, and timing of clinical studies and development of our drug candidates will depend on a variety of factors, including:
● the scope, rate of progress and expense of our ongoing as well as any additional clinical studies and other research and development activities;
● future clinical study results;
● uncertainties in clinical study enrollment rate;
● significant and changing government regulations; and
● the timing and receipt of any regulatory approvals.
A change in the outcome of any of these variables with respect to the development of a drug candidate could mean a significant change in the costs and timing associated with the development of that drug candidate.
For more information on the risks associated with the development of our drug candidates, see Item 3.D. “Risk Factors—Risks Relating to Our Oncology/Immunology Operations and Development of Our Drug Candidates—All of our drug candidates are still in development. If we are unable to obtain regulatory approval and ultimately commercialize our drug candidates, or if we experience significant delays in doing so, our business will be materially harmed.”
Selling Expenses
The following table sets forth the components of our selling expenses for the years indicated.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
Selling Expenses
Oncology/Immunology 32,212 88.7 44,287 91.1 45,505 85.2
Other Ventures 4,094 11.3 4,330 8.9 7,887 14.8
Total 36,306 100.0 48,617 100.0 53,392 100.0
Our selling expenses primarily comprise selling expenses incurred by our Oncology/Immunology operations by HUTCHMED Limited for sales and marketing expenses and related personnel expenses for our unpartnered drug Sulanda and Tazverik. It also includes sales and marketing expenses and related personnel expenses incurred by our Other Ventures in their distribution and marketing of pharmaceutical and healthcare products.
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Administrative Expenses
The following table sets forth the components of our administrative expenses for the years indicated.
Administrative expenses are also incurred by our corporate head office, which are not allocated to either Oncology/Immunology or Other Ventures.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
Administrative Expenses
Oncology/Immunology 35,946 53.9 36,910 57.4 47,966 60.1
Other Ventures 4,754 7.1 4,996 7.8 5,435 6.8
Corporate Head Office 26,022 39.0 22,390 34.8 26,383 33.1
Total 66,722 100.0 64,296 100.0 79,784 100.0
Oncology/Immunology’s administrative expenses are primarily comprised of the salaries and benefits of administrative staff, office leases and other overhead expenses incurred by HUTCHMED Limited.
Our Other Ventures’ administrative expenses are primarily comprised of the salaries and benefits of administrative staff, office leases and other overhead expenses incurred by our Distribution Business.
Our corporate head office administrative expenses are primarily comprised of the salaries and benefits of our corporate head office employees and directors, office leases and other overhead expenses.
Equity in Earnings of Equity Investees
We have historically derived a significant portion of our net income from our equity in earnings of equity investees, which was primarily attributable to Shanghai Hutchison Pharmaceuticals.
On April 25, 2025, we completed the divestment of an aggregate 45% equity interest out of 50% in Shanghai Hutchison Pharmaceuticals to third parties for cash consideration of approximately $608.5 million.
On July 25, 2025, Inmagene announced it had completed a merger with Ikena Oncology, Inc. and the merged company is listed on the NASDAQ as ImageneBio. ImageneBio will be primarily focused on the development of IMG-007, a monoclonal antibody targeting OX-40 licensed from us. Inmagene’s remaining assets including IMG-004, a non-covalent, reversible small molecule inhibitor targeting Bruton Tyrosine Kinase licensed from us, were spun out to Miragene Co., a new private company. As a result of the merger, our investment in equity security (140,636,592 Inmagene ordinary shares) was exchanged for 429,082 shares in ImageneBio representing a 3.84% equity interest and 7,960,562 shares in Miragene representing a 9.39% equity interest. We have significant influence in both ImageneBio and Miragene since we have a director on both companies’ board of directors. As such, the equity interests in ImageneBio and Miragene are subsequently accounted for as investment in equity investees.
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The following table shows the amount of equity in earnings of equity investees, net of tax, of our equity investees(1) for the years indicated.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
Equity in earnings of equity investees, net of tax
Oncology/Immunology:
ImageneBio (1,902) (8.4) — — — —
Other Ventures:
Shanghai Hutchison Pharmaceuticals 24,553 108.4 46,469 100.0 47,295 100.0
Total 22,651 100.0 46,469 100.0 47,295 100.0
Investments in equity investees(1) mainly consisted of our investment in Shanghai Hutchison Pharmaceuticals and ImageneBio. The fluctuation in the investments in equity investees was primarily due to a divestment of 45% equity interest in Shanghai Hutchison Pharmaceuticals in April 2025.
The following table shows our investment in our equity investees as of the dates indicated.
As of December 31,
2025 2024
$’000
Shanghai Hutchison Pharmaceuticals 5,140 77,765
ImageneBio 5,725 —
(1) The value attributable to Miragene was considered negligible in consideration of the development progress and risk of the assets as of the merger date.
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Results of Operations
The following table sets forth a summary of our consolidated results of operations for the years indicated, both in absolute amounts and as percentages of our revenue. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. Our operating results in any period are not necessarily indicative of the results that may be expected for any future period.
Year Ended December 31,
2025 2024 2023
$’000 % $’000 % $’000 %
Revenue 548,512 100.0 630,201 100.0 837,999 100.0
Cost of revenue (336,349) (61.3) (348,884) (55.4) (384,447) (45.9)
Research and development expenses (148,295) (27.0) (212,109) (33.7) (302,001) (36.0)
Selling expenses (36,306) (6.6) (48,617) (7.7) (53,392) (6.4)
Administrative expenses (66,722) (12.2) (64,296) (10.2) (79,784) (9.5)
Gain on divestment of an equity investee 476,896 86.9 — — — —
Other income, net 60,955 11.1 42,598 6.8 39,933 4.8
Income tax expense (63,610) (11.6) (7,192) (1.1) (4,509) (0.5)
Equity in earnings of equity investees, net of tax 22,651 4.1 46,469 7.4 47,295 5.6
Net income 457,732 83.4 38,170 6.1 101,094 12.1
Net income attributable to our company 456,909 83.3 37,729 6.0 100,780 12.0
Taxation
Cayman Islands
HUTCHMED (China) Limited is incorporated in the Cayman Islands. The Cayman Islands currently levies no taxes on profits, income, gains or appreciation earned by individuals or corporations. In addition, our payment of dividends, if any, is not subject to withholding tax in the Cayman Islands. For more information, see Item 10.E. “Taxation—Overview of Tax Implications of Various Other Jurisdictions—Cayman Islands Taxation.”
People’s Republic of China
Our subsidiaries incorporated in the PRC are governed by the EIT Law and regulations. Under the EIT Law, the standard EIT rate is 25% on taxable profits as reduced by available tax losses. Tax losses may be carried forward to offset any taxable profits for the following five years (extended to ten years for those with HNTE status, with effective from January 1, 2018). HUTCHMED Limited has been successful in their respective applications to renew their HNTE status for three years from January 1, 2023 to December 31, 2025. Accordingly, this entity is eligible to a preferential EIT rate of 15% for the years ended/ending December 31, 2023, 2024 and 2025. HUTCHMED (Suzhou) Limited, a wholly owned subsidiary of HUTCHMED Limited, successfully renewed its HNTE status for another three years from January 1, 2024 to December 31, 2026. Accordingly, it is eligible for a preferential EIT rate of 15% for the years ended December 31, 2024, 2025 and 2026.
For more information, see Item 10.E. “Taxation—Taxation in the PRC.” Please also see Item. 3 “Key Information—Risk Factors—Other Risks and Risks Relating to Doing Business in China—Our business benefits from certain PRC government tax incentives. Any changes to the tax incentives, or our PRC subsidiaries failing to continuously meet the criteria for these incentives, could have a material adverse effect on our operating results by significantly increasing our tax expenses.”
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According to the EIT Law and its implementation regulations, dividends declared after January 1, 2008 and paid by PRC foreign-invested enterprises to their non-PRC parent companies will be subject to PRC withholding tax at 10% unless there is a tax treaty between the PRC and the jurisdiction in which the overseas parent company is a tax resident and which specifically exempts or reduces such withholding tax, and such tax exemption or reduction is approved by the relevant PRC tax authorities. Pursuant to the tax arrangement between PRC and Hong Kong, if a shareholder of the PRC enterprise is a Hong Kong tax resident and directly holds a 25% or more equity interest in the PRC enterprise and is considered to be the beneficial owner of dividends paid by the PRC enterprise, such withholding tax rate may be lowered to 5%, subject to approval by the relevant PRC tax authorities. For more information, see Item 10.E. “Taxation—Taxation in the PRC” and “Taxation—Overview of Tax Implications of Various Other Jurisdictions— Hong Kong Taxation.”
Hong Kong
Our company and certain of its subsidiaries are subject to Hong Kong Profits Tax laws and regulations. Hong Kong has a two-tiered Profits Tax rates regime under which the first HK$2.0 million ($0.3 million) of assessable profits of qualifying corporations will be taxed at 8.25%, with the remaining assessable profits taxed at 16.5%. Hong Kong Profits Tax has been provided for at the relevant rates on the estimated assessable profits less estimated available tax losses, if any, of these entities as applicable.
Period-to-Period Comparison of Results of Operations
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Revenue
Our revenue was $548.5 million for the year ended December 31, 2025, with the largest component being the revenue from Oncology/Immunology of $285.5 million. This compares to $630.2 million for the year ended December 31, 2024, with the largest component being the revenue from Oncology/Immunology of $363.4 million.
Revenue from oncology products within Oncology/Immunology decreased by 21.1% to $214.4 million for the year ended December 31, 2025 compared to $271.5 million for the year ended December 31, 2024, primarily due to:
● A decrease in sales of Fruzaqla from $110.8 million for the year ended December 31, 2024 to $89.4 million for the year ended December 31, 2025, primarily attributable to (i) milestone payment of $20.0 million for commercial sales in 2024 and (ii) a decrease in invoiced sales of goods to Takeda from $51.4 million for the year ended December 31, 2024 to $45.0 million for the year ended December 31, 2025. The decrease has been offset by an increase in royalty revenue from $39.4 million for the year ended December 31, 2024 to $44.4 million for the year ended December 31, 2025, due to an increase in in-market sales made by Takeda;
● A decrease in sales of Elunate (primarily to Eli Lilly) to $76.9 million for the year ended December 31, 2025 (of which $45.3 million was promotion and marketing services, $16.2 million was sales of goods, $15.4 million was royalty revenue) from $86.3 million for the year ended December 31, 2024 (of which $52.5 million was promotion and marketing services, $15.8 million was sales of goods, $18.0 million was royalty revenue);
● A decrease in sales of Sulanda to $27.0 million for the year ended December 31, 2025 from $49.0 million for the year ended December 31, 2024; and
● A decrease in Orpathys revenue (primarily to AstraZeneca) to $18.6 million for the year ended December 31, 2025 (of which $8.7 million was royalty revenue and $9.9 million was sales of goods) from $24.5 million for the year ended December 31, 2024 (of which $13.6 million was royalty revenue and $10.9 million was sales of goods);
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Other revenue from Oncology/Immunology decreased to $71.1 million for the year ended December 31, 2025 from $91.8 million for the year ended December 31, 2024 primarily due to:
● A decrease in revenue from Takeda collaboration to $51.6 million for the year ended December 31, 2025 (which primarily includes $47.5 million revenue recognized from the $400 million upfront payment, $1.3 million related to research and development services and $2.8 million recognized from the Europe and Japan regulatory milestones) from $67.0 million for the year ended December 31, 2024 (which primarily includes $30.9 million revenue recognized from the $400 million upfront payment, $18.9 million related to research and development services and $14.2 million recognized from the Europe and Japan regulatory milestones); and
● A decrease in revenue related to other (non-Takeda) research and development services to $8.5 million for the year ended December 31, 2025 from $13.9 million for the year ended December 31, 2024, offset by $11.0 million milestone revenue recognized from AstraZeneca for the year ended December 31, 2025 following NDA approval in China for Orpathys combined with Tagrisso, compared with $6.0 million milestone revenue recognized from AstraZeneca for the year ended December 31, 2024 following NDA acceptance in China.
Revenue from our Other Ventures remained relatively stable at $263.0 million for the year ended December 31, 2025 and $266.8 million for the year ended December 31, 2024.
Cost of Revenue
Our cost of revenue decreased by 3.6% to $336.3 million for the year ended December 31, 2025 from $348.9 million for the year ended December 31, 2024. This decrease was primarily due to a decrease in sales of our Oncology/Immunology operations.
Cost of revenue from Oncology/Immunology decreased by 10.7% to $82.9 million for the year ended December 31, 2025 from $92.8 million for the year ended December 31, 2024, primarily due to a decrease in sales of oncology products.
Cost of revenue from our Other Ventures decreased slightly to $253.4 million for the year ended December 31, 2025 from $256.1 million for the year ended December 31, 2024, which was primarily due to a decrease in sales of prescription drugs products and Zhi Ling Tong infant nutrition products.
Cost of revenue as a percentage of our revenue increased to 61.3% from 55.4% across these periods, primarily due to lower revenue from upfront and milestones which do not have associated costs.
Research and Development Expenses
Our research and development expenses incurred by Oncology/Immunology decreased by 30.1% to $148.3 million for the year ended December 31, 2025 from $212.1 million for the year ended December 31, 2024, which was primarily due to a $53.1 million decrease in contract research organization and other clinical trial related costs and a $10.7 million decrease in personnel compensation and related costs. The decrease in the expenses was primarily due to the transition from late-stage trials for our first-wave commercial assets to earlier-stage investments in hematology assets and ATTC programs. Research and development expenses as a percentage of our revenue decreased to 27.0% from 33.7%, primarily due to the aforementioned decrease in spending.
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Selling Expenses
Our selling expenses decreased by 25.3% to $36.3 million for the year ended December 31, 2025 from $48.6 million for the year ended December 31, 2024. This was primarily due to a $12.1 million decrease in selling expenses incurred by our Oncology/Immunology operations due to a decrease in sales of oncology products. Selling expenses as a percentage of our revenue decreased to 6.6% from 7.7%, primarily due to the aforementioned decrease in spending.
Administrative Expenses
Our administrative expenses increased by 3.8% to $66.7 million for the year ended December 31, 2025 from $64.3 million for the year ended December 31, 2024. This was primarily due to a $3.6 million increase in oversights costs to support commercial activities. Administrative expenses as a percentage of our revenue increased to 12.2% from 10.2%, primarily due to a decrease in our revenue.
Gain on Divestment of An Equity Investee
We had gain on divestment of an equity investee of $476.9 million for the year ended December 31, 2025, before applicable capital gain taxes, which is related to the completion of the divestment of an aggregate of 45% shareholding interest in Shanghai Hutchison Pharmaceuticals in April 2025. See Item 4.B. “Business Overview—Other Ventures” for details.
Other Income/(Expense)
Our net other income increased by 43.1% to $60.9 million for the year ended December 31, 2025 from $42.6 million for the year ended December 31, 2024, primarily due to a $9.8 million increase in interest income, a $5.9 million increase in government grants and gain of $2.0 million on investment in equity security.
Income Tax Expense
Our income tax expense increased significantly to $63.6 million for the year ended December 31, 2025 from $7.2 million for the year ended December 31, 2024, primarily due to capital gains taxes related to the completion of the divestment of an aggregate of 45% shareholding interest in Shanghai Hutchison Pharmaceuticals in April 2025.
Equity in Earnings of Equity Investees
Our equity in earnings of equity investees, net of tax, decreased by 51.3% to $22.7 million for the year ended December 31, 2025 from $46.5 million for the year ended December 31, 2024, primarily due to lower profit sharing following the decrease in our shareholding interest in Shanghai Hutchison Pharmaceuticals from 50% to 5% in April 2025.
Net Income
As a result of the foregoing, our net income increased from $38.2 million for the year ended December 31, 2024 to $457.7 million for the year ended December 31, 2025. Net income attributable to our company increased from $37.7 million for the year ended December 31, 2024 to $456.9 million for the year ended December 31, 2025.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
For a discussion of our results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, see Item 5.A. “Operating Results” of our annual report on Form 20-F for the year ended December 31, 2024, filed with the SEC on March 19, 2025.
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B. Liquidity and Capital Resources
To date, we have taken a multi-source approach to fund our operations, including through cash flows generated, dividend payments and divestment proceeds from our Oncology/Immunology and Other Ventures operations, service and milestone and upfront payments from our collaboration partners, bank borrowings, investments from third parties, proceeds from our listings on various stock exchanges and follow-on offerings.
Significantly boosted by the partial disposal of equity stake in Shanghai Hutchison Pharmaceuticals, we had net income attributable to the Company of $456.9 million, $37.7 million and $100.8 million for the years ended December 31, 2025, 2024 and 2023 respectively. Our Oncology/Immunology operations have historically not generated significant profits or have operated at a net loss, and we anticipate substantial research and development expenditures for the foreseeable future as creating potential global first-in-class or best-in-class drug candidates requires a significant investment of resources over a prolonged period of time. As a result, we may need additional financing for our Oncology/Immunology operations in future periods. See Item 3.D. “Risk Factors—Risks Relating to Our Oncology/Immunology Operations and Development of Our Drug Candidates—Our Oncology/Immunology operations historically operated at a net loss, and our future profitability is dependent on the performance of our Oncology/Immunology operations which rely on the successful commercialization of our drug candidates.”
As of December 31, 2025, we had cash and cash equivalents of $71.3 million and short-term investments of $1,296.0 million and unutilized bank facilities of $41.2 million. Substantially all of our bank deposits are at major financial institutions, which we believe are of high credit quality. As of December 31, 2025, we had $93.2 million in bank loans, of which $73.0 million was related to a fixed asset loan and $20.2 million was related to a working capital loan. The total weighted average cost of bank borrowings for the year ended December 31, 2025 was 2.73% per annum. For additional information, see “—Loan Facilities.”
Certain of our subsidiaries including those registered as wholly foreign-owned enterprises, and an equity investee in China, are required to set aside at least 10% of their after-tax profits to their non-distributable reserve funds until such reserves reach 50% of their registered capital. Profit appropriated to the reserve funds for our subsidiaries and equity investee incorporated in the PRC was approximately $168,000, $32,000 and $2,380,000 for the years ended December 31, 2023, 2024 and 2025, respectively.
We believe that our current levels of cash and cash equivalents, short-term investments, along with cash flows from operations, dividend payments and unutilized bank borrowings, will be sufficient to meet our anticipated cash needs for at least the next 12 months. We believe that we can meet our need for cash through revenue generated from our marketed products to fund our next wave of innovation including the development of our ATTC program. However, we may require additional financing in order to fund all of the clinical development efforts that we plan to undertake to accelerate the development of our clinical-stage drug candidates. For more information, see Item 3.D. “Risk Factors-Risks Relating to Our Financial Position and Need for Capital.”
Year Ended December 31,
2025 2024 2023
$’000
Cash Flow Data:
Net cash (used in)/generated from operating activities (64,657) 497 219,258
Net cash used in investing activities (29,410) (96,060) (291,136)
Net cash generated from/(used in) financing activities 7,836 (30,667) 48,660
Net decrease in cash and cash equivalents (86,231) (126,230) (23,218)
Effect of exchange rate changes 3,603 (3,401) (6,471)
Cash and cash equivalents at beginning of the year 153,958 283,589 313,278
Cash and cash equivalents at end of the year 71,330 153,958 283,589
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Net Cash (used in)/generated from Operating Activities
Net cash used in operating activities was $64.7 million for the year ended December 31, 2025, compared to $0.5 million net cash generated for the year ended December 31, 2024. The net increase in spending of $65.2 million was mainly due to a capital gain tax payment of $59.5 million for the partial divestment of Shanghai Hutchison Pharmaceuticals in April 2025.
For a discussion of our net cash (used in)/generated from operating activities for the years ended December 31, 2024 and 2023, see Item 5.B. “Liquidity and Capital Resources” of our annual report on Form 20-F for the year ended December 31, 2024, filed with the SEC on March 19, 2025.
Net Cash used in Investing Activities
Net cash used in investing activities was $29.4 million for the year ended December 31, 2025, compared to $96.1 million for the year ended December 31, 2024. The net amounts used for the year ended December 31, 2025 were due to $613.8 million deposited into short-term investments along with $10.0 million regulatory approval milestone payment and $14.1 million for capital expenditures, offset by gross proceeds from the partial divestment of Shanghai Hutchison Pharmaceuticals of $608.5 million. The net amounts used for the year ended December 31, 2024 were mainly due to capital expenditures of $17.9 million and net deposits in short-term investments of $79.4 million.
For a discussion of our net cash used in investing activities for the years ended December 31, 2024 and 2023, see Item 5.B. “Liquidity and Capital Resources” of our annual report on Form 20-F for the year ended December 31, 2024, filed with the SEC on March 19, 2025.
Net Cash generated from/(used in) Financing Activities
Net cash generated from financing activities was $7.8 million for the year ended December 31, 2025, compared to $30.7 million net cash used for the year ended December 31, 2024. The net amounts generated for the year ended December 31, 2025 were mainly due to $6.3 million net amount drawn from bank borrowings to primarily settle the capital expenditures for the Shanghai manufacturing site. The net amounts used for the year ended December 31, 2024 were mainly due to $36.1 million purchases of shares of the Company by a trustee (which are referred to as “treasury shares” in our financial statements and accounted as treasury shares under applicable accounting standards but do not constitute treasury shares under the Rules Governing the Listing of Securities on HKEX (the “Hong Kong Listing Rules”)) for the settlement of equity awards of the Company, offset by $5.6 million net amount drawn from bank borrowings.
For a discussion of our net cash generated from/(used in) financing activities for the years ended December 31, 2024 and 2023, see Item 5.B. “Liquidity and Capital Resources” of our annual report on Form 20-F for the year ended December 31, 2024, filed with the SEC on March 19, 2025.
Contractual Obligations
The following table sets forth our contractual obligations as of December 31, 2025. For more information on bank borrowings and interest on bank borrowings, please see “—Loan Facilities.” Our purchase obligations relate to property, plant and equipment that are contracted for but not yet paid. Our lease obligations primarily comprise future aggregate minimum lease payments in respect of various factories, warehouse, offices and other assets under non-cancellable lease agreements. For more information on purchase obligations and lease obligations, please see “—Capital Expenditures.”
Payment Due by Period
Less Than More Than
Total 1 Year 1‑2 Years 2‑5 Years 5 Years
($’000)
Bank borrowings 93,160 24,971 4,392 39,738 24,059
Interest on bank borrowings 8,947 2,386 1,840 4,077 644
Purchase obligations 692 675 17 — —
Lease obligations 6,860 4,964 1,459 437 —
Total 109,659 32,996 7,708 44,252 24,703
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Loan Facilities
In October 2021, HUTCHMED Limited entered into a 10-year fixed asset loan facility agreement with Bank of China Limited for the provision of a secured credit facility in the amount of $107.4 million (RMB754.9 million) with an annual interest rate at the 5-year China Loan Prime Rate less 0.80% (which was supplemented in June 2022). This credit facility is guaranteed by HUTCHMED Limited’s immediate holding company, HUTCHMED Investment (HK) Limited, and secured by the underlying leasehold land and buildings of HUTCHMED Limited (Shanghai manufacturing facility), and includes certain financial covenant requirements. For the year ended December 31, 2025, $1.5 million (RMB10.4 million) was repaid and cannot be further drawn from the facility. The outstanding bank borrowings was $73.0 million (RMB512.5 million) as of December 31, 2025.
In October 2025, Bank of China Limited extended a short-term unsecured working capital loan facility to our Distribution Business in the amount of $28.5 million (RMB200.0 million) with an annual interest rate at the 1-year China Loan Prime Rate less 0.89%. This credit facility includes certain financial covenant requirements. As of December 31, 2025, $20.2 million (RMB142.1 million) was utilized from the loan facility.
Gearing Ratio
The gearing ratio of our group, which was calculated by dividing total interest-bearing loans by total equity, was 7.4% as of December 31, 2025, a decrease from 10.7% as of December 31, 2024. The decrease was primarily due to the increase in equity from the gain on divestment of Shanghai Hutchison Pharmaceuticals during the year.
Capital Expenditures
We had capital expenditures of $32.6 million, $17.9 million and $24.1 million for the years ended December 31, 2023, 2024 and 2025, respectively. Our capital expenditures during these periods were primarily used for the purchases of plant and equipment for a new large-scale manufacturing facility for innovative drugs in Shanghai, China and $10.0 million intangible asset relating to milestone payment for tazemetostat approval by the NMPA in China in 2025. Our capital expenditures have been primarily funded by cash flows from operations, bank borrowings and proceeds from our initial public and follow-on offerings in Hong Kong and the United States and other equity offerings, as well as from upfront and milestone payments from partners, divestment proceeds and dividends from an equity investee.
As of December 31, 2025, we had commitments for capital expenditures of approximately $0.7 million, primarily for plant and equipment for a new large-scale manufacturing facility for innovative drugs in Shanghai, China. We expect to fund these capital expenditures through cash flows from operations, bank borrowings and existing cash resources.
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C.Research and Development, Patents and Licenses, etc.
Full details of our research and development activities and expenditures are given in the “Business” and “Operating and Financial Review and Prospects” sections of this annual report above.
D.Trend Information.
Other than as described elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, income, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operation results or financial condition.
E.Critical Accounting Estimates.
For information on our critical accounting estimates, please see “Operating Results—Critical Accounting Policies and Significant Judgments and Estimates” section of this annual report above.