Insilico Medicine and Eli Lilly did not cross paths for the first time today.

Back in 2023, the two companies signed an undisclosed software licensing agreement. At the time, Lilly paid to use Insilico's Pharma.AI software suite, essentially treating the company as a provider of technological tools.

Simply put, three years ago, Lilly's stance toward AI drug discovery was still one of "wait and see, try it out": a pharmaceutical giant with tens of billions in annual revenue spending a modest sum on a few AI "shovels" to see if they might strike gold.

However, the giant soon discovered that these "shovels" were far from ordinary.

Pharma.AI is an integrated platform covering three core areas: target discovery, molecular generation and optimization, and clinical prediction. According to Insilico's 2025 annual performance report released on March 29, the platform now serves 13 of the world's top 20 pharmaceutical companies, with software business revenue growing 23.8% year-over-year.

In the Biology42 module, the target discovery engine PandaOmics has strengthened its multidimensional screening criteria. In Chemistry42, the multimodal chemistry foundation model Nach01 demonstrates outstanding capabilities in molecular design and scientific reasoning. These technological advancements have enabled Insilico to evolve from an early-stage technology tool provider into a full-fledged R&D engine capable of delivering preclinical candidate compounds.

In November 2025, Eli Lilly and Insilico Medicine signed their first drug discovery strategic collaboration, with a total value exceeding $100 million. The pharmaceutical giant no longer viewed Insilico merely as a tool provider but as a true R&D partner. Under the agreement, Insilico would leverage its Pharma.AI platform to generate, design, and optimize candidate compounds for jointly identified innovative targets.

The March 29, 2026 deal, valued at $2.75 billion, elevated their relationship to an entirely new level.

According to the announcement, Eli Lilly will receive an exclusive global license to develop, manufacture, and commercialize a novel oral therapy for specific indications currently in the preclinical stage, with best-in-class potential. Insilico is eligible for a $115 million upfront payment, with subsequent milestone payments bringing the total transaction value to approximately $2.75 billion, plus tiered royalties.

This signifies that Insilico has not only demonstrated its AI platform's ability to efficiently generate molecules but has further validated that these molecules themselves possess significant global commercial value.

Insilico's 2025 annual performance report stated that the company achieved revenue of $56.24 million for the year. On December 30, 2025, it successfully listed on the Main Board of the Hong Kong Stock Exchange, marking the largest biopharmaceutical IPO in Hong Kong for 2025.

By the end of 2025, Insilico held bank balances and cash totaling $393 million. During the reporting period, the company nominated six preclinical candidate compounds, advanced eight projects to clinical stage, and cumulatively nominated 28 preclinical candidates, with ten projects currently advancing in clinical trials.

More importantly, behind these figures lies a clear logical thread: Insilico has transformed its technological advantage of "completing preclinical development faster" into the commercial capability of "realizing value more predictably."

This is precisely what multinational pharmaceutical companies value most. In an industry environment increasingly pressured by "Eroom's Law" (the inverse of Moore's Law in drug discovery), whoever can deliver high-quality drug molecules faster and at lower cost holds the power to set the terms.

To understand why Eli Lilly has placed such a massive bet on Insilico Medicine, one must first grasp Lilly's current position.

2025 marked the most glorious year in Eli Lilly's history. In the fourth quarter, the company reported $19.3 billion in revenue, a staggering 43% year-over-year increase, with full-year revenue reaching $65.1 billion, a 45% jump.

The driving force behind all this was the GLP-1 "twin stars" — Mounjaro (for diabetes) generated $22.965 billion in annual sales, while Zepbound (for weight loss) brought in $13.542 billion, totaling $36.5 billion, accounting for 56% of the company's total revenue. Tirzepatide surpassed Keytruda to claim the title of "global blockbuster king." In the U.S. market, Lilly's share of new GLP-1 prescriptions exceeded 57%, leaving Novo Nordisk behind. Riding this momentum, the company's market capitalization briefly crossed the trillion-dollar threshold.

Yet this is precisely Lilly's most perilous moment.

History has repeatedly demonstrated that over-reliance on a single product line is the biggest vulnerability for any pharmaceutical company. When a single drug contributes over half of total revenue, any disturbance can shake the foundation.

Competition in the GLP-1 space is heating up rapidly: Novo Nordisk launched its first oral weight-loss drug in early 2026; AstraZeneca struck an $18.5 billion licensing deal with China's CSPC Pharmaceutical Group in January to bolster its GLP-1 pipeline; and more entrants are flooding in. Since the beginning of 2026, Lilly's stock price has fallen nearly 20%.

Eli Lilly CEO David Ricks revealed this underlying anxiety during a January conversation with NVIDIA CEO Jensen Huang. The challenge facing Lilly is how to find its next growth cycle before the current one runs its course. Based on Lilly's actions, AI is clearly being treated as a key "holy grail."

In November 2025, Lilly reached a $345 million agreement with Ailux, a subsidiary of XtalPi, gaining access to its AI platform. Lilly also established an NVIDIA-powered supercomputer at its headquarters and announced in January the creation of a $1 billion research laboratory in San Francisco.

Lilly CFO Lucas Montarce recently disclosed that the company is "investing heavily" in AI R&D, but also acknowledged that advancing AI-discovered drugs from research stage to clinical trials "will take more time."

In its 2025 annual report, Lilly added a new risk warning regarding AI: "AI may enable new competitors to enter the drug discovery space and enhance the capabilities of existing competitors, thereby expanding and intensifying competitive dynamics."

It is against this backdrop of strategic anxiety that Insilico Medicine entered Lilly's field of vision. Founded in 2014 — before OpenAI sparked the AI boom — Insilico has been deeply engaged in AI drug discovery for years, boasting a validated platform and an expanding pipeline. After tasting success in 2023, Lilly deepened its collaboration in 2025, and in 2026, it directly acquired a pipeline asset.

Notably, Lilly's interest in Chinese assets extends far beyond Insilico alone.

In February 2026, Lilly signed a collaboration agreement with its longtime partner Innovent Biologics totaling up to $8.85 billion. Lilly paid a $350 million upfront payment to co-develop new drugs in oncology and immunology, with Innovent retaining rights in Greater China. This marks the seventh collaboration between the two companies in seven years.

Additionally, Lilly's venture capital arm, Lilly Asia Ventures, invested in Shanghai-based biotech startup Excalipoint Therapeutics in March.

Less than three weeks before the Insilico deal was announced, Lilly revealed plans to invest a cumulative $3 billion over the next decade to comprehensively expand its supply chain capacity in China, focusing on localized production of the oral GLP-1 receptor agonist orforglipron. This investment combines internal expansion with external partnerships, leveraging both Lilly's Suzhou plant and collaborations with multiple local manufacturing partners.

These actions outline the contours of Lilly's "China strategy": localizing supply chains to address capacity bottlenecks, expanding R&D collaborations to replenish pipeline assets, and making equity investments to lock in cutting-edge technologies. Together, these three pillars upgrade China's role from a pure sales market to a core node in Lilly's global innovation network.

Eli Lilly is not the only multinational pharmaceutical company "adding to its China position." In just the first three months of 2026, investments and collaborations by multinational pharma in China have already shown explosive growth.

For instance, AstraZeneca announced in January its plan to invest over 100 billion RMB in China by 2030 to expand its drug production and R&D footprint. In March, Novartis announced a continued increase in its investment in China, with an expected commitment exceeding 3.3 billion RMB to expand its Changping plant and Phase II of its Shanghai campus. Sanofi inaugurated its China Innovation and Operations Center in Chengdu and is undertaking a comprehensive strategic upgrade of its Shanghai R&D center, planning to conduct approximately one-third of its global new research projects in China.

On the asset transaction front, the data is even more staggering.

According to statistics from the National Medical Products Administration (NMPA) and the Pharmcube database, the total value of out-licensing deals for China's innovative drugs in 2025 reached $135.7 billion, with upfront payments exceeding $7 billion and a total of 157 transactions — all record highs. This means that, on average, nearly $3 billion in international capital was paying for China-originated innovative drugs each day.

As 2026 progresses, this momentum has not only failed to slow but has instead accelerated: with the first quarter not yet concluded, the total value of out-licensing deals for China's innovative drugs has reached $33.28 billion, with upfront payments already surpassing the highest single-quarter level of 2025.

Looking specifically at acquisition moves by multinational pharmaceutical companies, one jaw-dropping deal after another has emerged.

On March 23, Gilead acquired Ouro Medicines, a NewCo incubated by ConnoMed, for $1.675 billion upfront plus up to $500 million in milestone payments, bringing the total transaction value to $2.175 billion.

Ouro was established just over a year ago, with its core asset CM336 being a BCMA/CD3 bispecific T-cell engager antibody originally developed independently by ConnoMed. As a shareholder, ConnoMed is set to receive approximately $250 million in upfront payments and up to roughly $70 million in milestone payments. This marks the first time a NewCo with Chinese involvement has been wholly acquired by a multinational pharmaceutical company, signaling that the value realization pathways for Chinese innovative drug assets are being redefined.

Shortly thereafter, on March 25, Merck & Co. announced its acquisition of Terns Pharmaceuticals for approximately $6 billion.

Founded by Chinese scientists and headquartered in both California and Shanghai, the company focuses on developing early-stage therapies for chronic myeloid leukemia. Merck is facing significant pressure from the upcoming patent expiration of Keytruda in 2028, and the acquisition of Terns is seen as a crucial step in addressing this "patent cliff" — with the target being a biotech company deeply rooted in Chinese origins.

Even earlier, BioNTech's maneuvers drew considerable discussion.

In 2023, BioNTech acquired overseas rights to Pumis' PD-L1/VEGF bispecific antibody with a $55 million upfront payment. A year later, it acquired Pumis outright for $800 million. Six months after that, BioNTech sold partial rights to this bispecific antibody to BMS for $1.5 billion, not only recouping its costs but also retaining rights to future milestone payments and sales royalties.

These increasingly aggressive actions clearly demonstrate that Chinese innovative drug assets possess not only R&D value but also financial and strategic value.

A J.P. Morgan analysis noted that multinational pharmaceutical companies are increasingly inclined to "source" from China, with the core logic being the "ultimate balance of cost and effectiveness" — acquiring similarly innovative pipelines in China may cost only 30% to 40% of what it would in the United States.

At the same time, China now accounts for 54% of the global pipeline share in cutting-edge fields such as ADCs and 48% in bispecific/trispecific antibodies. This leap in innovation capability is reshaping the decision-making logic of multinational pharmaceutical companies.

Returning to the Insilico-Lilly deal, it symbolizes, in some sense, a turning point of an era: a Chinese AI pharmaceutical company, having traveled the full arc of the multinational trust curve — from "selling software" to "selling pipelines" to "global rights licensing." As for Lilly, the pharmaceutical giant that rose to global prominence on the strength of its GLP-1 drugs, it has chosen to use real capital to integrate China's AI drug discovery capabilities into its global footprint.

As multinational pharmaceutical companies collectively "add to their China positions," as Chinese innovative drug assets evolve from "low-hanging fruit" to "hard currency," and as global capital rushes into those Chinese biotechs with genuine innovation capabilities, the revaluation of Chinese assets is accelerating.

The story of Insilico and Eli Lilly is merely the latest chapter in this grand narrative.