Eli Lilly inks $2.75B AI deal with Insilico, bets on China biotech

Global pharmaceutical major Eli Lilly has signed a drug discovery agreement with Insilico Medicine that could be worth up to $2.75 billion.

The deal underscores the growing role of artificial intelligence and China’s biotech ecosystem in shaping the future of drug development.

The deal, announced on Sunday, will see Insilico receive an upfront payment of $115 million, along with potential milestone payments that could significantly increase the total value.

The company is also eligible for tiered royalties on any future commercialised products emerging from the collaboration.

AI-led drug discovery gains traction

Under the agreement, Eli Lilly will secure exclusive global rights to manufacture and commercialise a range of oral therapies discovered using Insilico’s proprietary artificial intelligence platform, Pharma.AI.

The partnership will span multiple therapeutic areas, with both companies jointly advancing research programmes based on targets selected by Lilly.

The collaboration builds on an existing relationship between the two firms that began in 2023, and follows a smaller AI-focused deal announced last year.

It reflects a broader shift among global drugmakers towards integrating machine learning tools into early-stage drug discovery to accelerate timelines and reduce costs.

Shares of Insilico, which is listed in Hong Kong, rose sharply following the announcement, gaining as much as 15% in early trading before trimming gains to close about 4.4% higher.

China emerges as innovation hub

The agreement is the latest in a series of moves by Eli Lilly to deepen its presence in China’s rapidly expanding pharmaceutical research landscape.

The company has already committed $3 billion to expand its supply chain capabilities in the country and has entered into multiple partnerships with local biotech firms.

Among them is a major collaboration with Innovent Biologics, focused on developing treatments for cancer and immune-related diseases, with a potential value of up to $8.5 billion.

China’s rise as a centre for drug innovation has prompted a wave of licensing deals from global pharmaceutical companies seeking access to cost-effective and cutting-edge research.

Industry analysts note that Chinese firms are increasingly producing first-in-class drug candidates at a faster pace than peers in the United States, Europe, and Japan.

Competitive pressure drives dealmaking

Other global players have also stepped up investments in the region.

AstraZeneca has outlined plans to invest $15 billion in China and recently signed a licensing agreement with CSPC Pharmaceuticals worth up to $18.5 billion.

Meanwhile, Takeda Pharmaceutical struck a deal with Innovent valued at up to $11.4 billion.

Analysts say such partnerships are being driven by both innovation and economics.

Access to Chinese-developed assets can help multinational drugmakers address pricing pressures while expanding their pipelines more efficiently.

Insilico, which operates across North America, Greater China and the Middle East, focuses on combining artificial intelligence with automation to streamline drug discovery.

The company raised around $291 million through its Hong Kong initial public offering last year, attracting backing from investors including Tencent and Temasek.

The latest deal highlights how AI-driven platforms are becoming central to the pharmaceutical industry’s next phase of growth, as companies seek faster and more scalable approaches to developing new treatments.