Core Insights - The Chinese pharmaceutical industry is transitioning from "generic" to "innovative" drugs, entering a phase of explosive growth after years of technological accumulation and industry maturation [1][3] - In the first half of this year, China approved 43 innovative drugs, a 59% increase year-on-year, marking a historical high for the same period [1] - Business development (BD) activities have exceeded 50 cases with a total value surpassing $48 billion, indicating strong market interest in domestic innovations [1] Industry Trends - The Chinese innovative drug sector has moved from initial exploration to a mature growth phase, significantly reducing the time gap for drug approval compared to the U.S. from 10 years in 2010 to 3.7 years in 2024 [3] - The industry faces challenges of high homogeneity in drug development, with 29% of all drug applications targeting the top 20 drug development targets [3][4] - Companies are focusing on creating differentiated advantages by targeting unmet clinical needs or developing new products in less explored areas [4] Policy and Capital Support - The Chinese government has introduced a comprehensive support system for innovative drugs, including 16 measures covering research, insurance access, and clinical use [5][6] - Recent regulatory changes have facilitated capital access for innovative drug companies, allowing them to secure funding for research and development [5][6] Globalization and Market Expansion - Chinese pharmaceutical companies are increasingly becoming key contributors to global innovation, with nearly half of the global BD transactions exceeding $50 million involving Chinese firms [2][7] - The trend of "license out" and strategic partnerships is becoming more prevalent as companies seek to expand their international presence [8][9] - The cost advantages in clinical trials in China, where the cost per participant is about one-third of that in the U.S., are enhancing the competitiveness of Chinese biotech firms [9] Technological Innovation - The application of AI technologies is revolutionizing the Chinese innovative drug sector, improving efficiency in drug development and clinical research [9] - Companies are integrating AI into their processes to enhance research efficiency and data value, which is crucial for global competitiveness [9]

近日，恒生港股通创新药指数宣布修订编制方案，并于8月11日正式生效。此次修订明确剔除医药外包 企业（CXO，全称为医药合同外包服务组织），恒生港股通创新药指数将纯粹聚焦创新药核心公司， 是目前ETF跟踪的指数中首批"纯度"达100%的创新药指数。 风险提示：文中提及的指数成份股仅作展示，个股描述不作为任何形式的投资建议。任何在本文出现的 信息（包括但不限于个股、评论、预测、图表、指标、理论、任何形式的表述等）均只作为参考，投资 人须对任何自主决定的投资行为负责。基金投资有风险，基金的过往业绩并不代表其未来表现，基金管 理人管理的其他基金的业绩并不构成基金业绩表现的保证，基金投资须谨慎。 本文源自：金融界 作者：E播报 根据新的编制方案，指数剔除了5家CXO公司，这5家公司原先在指数中的权重合计约为20%，且年内涨 幅均不及指数整体表现。根据剔除CXO后的指数成份股进行回测，2023年指数发布日以来、2024年、 2025年初至今，指数业绩表现均更好，且自2023年指数发布日至今，修订后的指数年化收益率超47%， 夏普比率也更高。 近年来，我国创新药产业发展取得了显著成果，创新成本不断降低、研发效率不断提高，管 ...

Group 1 - The Shanghai Stock Exchange Sci-Tech Innovation Board Biopharmaceutical Index increased by 0.85%, with notable stock performances including Boryung Pharmaceutical up by 15.37% and Junshi Biosciences up by 6.49% [1] - The market activity for the Jiashi Sci-Tech Medicine ETF was robust, with a turnover rate of 18.13% and a transaction volume of 42.47 million yuan, leading in comparable funds [3] - As of August 5, the Jiashi Sci-Tech Medicine ETF achieved a net inflow of 11.73 million yuan, totaling 14.69 million yuan over the last five trading days [3] Group 2 - The top ten weighted stocks in the Sci-Tech Innovation Board Biopharmaceutical Index accounted for 49.14% of the index, with leading stocks including United Imaging Healthcare and Boryung Pharmaceutical [3][5] - A significant business development deal was announced by Crystal Technology Holdings, with a total order size of approximately 47 billion HKD (5.99 billion USD), marking it as one of the largest BD transactions in China's AI pharmaceutical sector for 2025 [5] - According to research from Everbright Securities, the mid-year reporting period in July may lead to positive changes in the performance of some innovative drug companies, potentially catalyzing a new market trend [6]

Group 1 - The Hong Kong Stock Exchange's innovative drug-focused ETF (520690) has officially launched, closely tracking the Hang Seng Hong Kong Stock Connect Innovative Drug Select Index, which focuses on leading innovative drug companies and high liquidity, research-intensive stocks [1] - Key weighted stocks in the index include BeiGene, Innovent Biologics, WuXi Biologics, CanSino Biologics, CSPC Pharmaceutical Group, China National Pharmaceutical Group, 3SBio, Hansoh Pharmaceutical, Zai Lab, and WuXi AppTec [1] - As of July 31, the Hang Seng Hong Kong Stock Connect Innovative Drug Select Index has seen a year-to-date increase of 101.58% [1] Group 2 - Industry experts believe that China's innovative drug industry is undergoing a strategic leap from quantitative to qualitative changes, driven by demographic shifts, policy benefits, and technological breakthroughs [1] - The Chinese pharmaceutical innovation ecosystem is transitioning from "following innovation" to "leading innovation," marking a historic transformation [1] - The Hang Seng Hong Kong Stock Connect Innovative Drug Select Index serves as the first precise index tool focused on this sector, providing investors with an efficient means to participate in this transformation through rigorous compilation rules and dynamic optimization mechanisms [1] Group 3 - With ongoing policy benefits, emerging corporate profit inflection points, and strengthening global competitiveness, the index is expected to become a core allocation target for sharing the dividends of China's pharmaceutical innovation [1]

Group 1 - The innovation drug sector has seen significant stock price increases this year, but many institutions believe there is still room for growth in the future [1][2] - Multiple brokerages are optimistic about the innovation drug market, citing ongoing policy support and the introduction of commercial insurance policies that could provide incremental payment opportunities [1] - The report from Guotai Junan Securities indicates that 2025 is expected to be a crucial year for domestic innovation drugs to expand internationally, with many companies transitioning from generic to innovative drugs over the past seven years [1] Group 2 - The valuation of A-share innovation drugs is relatively high but has not reached extreme levels, while Hong Kong-listed innovation drugs still have significant upside potential [2] - Continuous policy benefits and the international expansion of Chinese companies are expected to support the profitability of the innovation drug sector, with some companies showing signs of performance reversal [2]

Core Viewpoint - The innovative drug sector in China is entering a revaluation cycle due to industry upgrades, technological advancements, and the rebuilding of market confidence, with domestic pharmaceutical companies gaining recognition from international giants, which is expected to be reflected in their performance [3][4][9]. Group 1: Index Optimization - The recent revision of the Hang Seng Innovative Drug Index aims to enhance the purity and representativeness of its constituent stocks, providing investors with a 100% pure innovative drug investment tool [4][5]. - The index adjustment removed five pharmaceutical outsourcing companies, ensuring that all constituent stocks are innovative drug companies, making it one of the first indices with 100% purity in innovative drugs [5][6]. Group 2: Market Dynamics - There is an increasing internal demand for refined classification management of innovative drugs, distinguishing between companies holding core patents and those providing outsourcing services [6]. - Current national policies are more focused on supporting pharmaceutical companies with independent core technology breakthroughs and continuous innovation capabilities, which are key dimensions for evaluating the value of innovative drug companies [6][7]. Group 3: Industry Recovery - The innovative drug sector has shown significant recovery since the second quarter of this year, driven by multiple factors including industry development, valuation adjustments, and renewed market confidence [7][9]. - The downturn experienced since 2019, influenced by public health events and global liquidity conditions, allowed for a recalibration of valuations, enabling the market to recognize companies with genuine R&D capabilities [7][9]. Group 4: Future Outlook - The key to the continued strength of the innovative drug sector lies in the ability of companies to deliver strong financial results in the coming quarters, as the market is increasingly focused on translating technology into actual revenue and profits [10]. - If Chinese pharmaceutical companies can consistently reflect the results of patent sales and international product launches in their financial statements, market confidence will further strengthen, potentially leading to a new upward cycle driven by fundamentals [10].

Group 1 - The report highlights that the recent measures from the National Healthcare Security Administration and the National Health Commission aim to support the high-quality development of China's innovative drug industry, injecting new vitality into the sector through 16 specific initiatives across five areas [8][9][14] - In 2024, the number of approved Class 1 innovative drugs reached 46, which is over five times that of 2018, with nearly 40 approvals in the first half of this year alone [8][9] - The report emphasizes the importance of utilizing healthcare data to guide drug development, helping companies identify research directions and achieve differentiated innovation [8][9] Group 2 - The report notes that as of May 2025, the healthcare fund has paid a cumulative total of 410 billion yuan for negotiated drugs, driving related drug sales to exceed 600 billion yuan, providing strong support for the market promotion of innovative drugs [9] - The commercial health insurance market in China is rapidly growing, with health insurance premium income reaching 977.4 billion yuan in 2024, a year-on-year increase of 8.2%, approaching the overall funding level of resident health insurance [9] - The report indicates that the innovative drugs listed in the healthcare directory will not be subject to the "one product, two regulations" restriction, further enhancing their accessibility [14] Group 3 - The report reviews the performance of the pharmaceutical sector, noting that the chemical pharmaceutical industry and biological products saw significant gains of +6.86% and +3.68% respectively during the week of July 14-18 [15] - The report provides insights into the valuation levels of various sub-sectors within the pharmaceutical industry, with the chemical pharmaceutical sector having a PE ratio of 90.83 and biological products at 72.77 [15][18] - The report tracks the performance of the pharmaceutical industry, highlighting that raw materials and chemical preparations had the highest gains of +7.01% and +6.83% respectively [18]

Core Viewpoint - The CFO of Innovent Biologics emphasized the necessity for innovative drug companies to internationalize in order to demonstrate global competitiveness, leveraging solid clinical data and rapid R&D capabilities [2][3]. Group 1: Industry Insights - The Chinese biopharmaceutical industry has seen a significant improvement in fundamentals, supported by government policies, especially from the second half of 2024 onwards, with increasing capital market attention on innovative drugs [2]. - The innovative drug sector is characterized by long investment timelines and high risks, necessitating patient capital to support industry growth [4]. - The establishment of a diversified payment system for innovative drugs will provide systematic support for patients to access high-quality medications, reinforcing the institutional foundation for high-quality development in China's innovative drug industry [4]. Group 2: Company Development - Innovent Biologics, founded in 2015, has evolved into a comprehensive biopharmaceutical enterprise with capabilities in source innovation, clinical development, production, and commercialization [3]. - The company is currently in its 2.0 rapid development phase, with two products already approved for market, and plans to diversify and internationalize its product offerings [3]. - Innovent aims to expand from hematological oncology into solid tumors and autoimmune diseases, addressing significant medical needs in conditions like atopic dermatitis and vitiligo, ensuring accelerated growth over the next 5 to 10 years [3].

Core Viewpoint - The innovation drug sector is experiencing a positive shift with new policies aimed at supporting high-quality development, which may alleviate payment challenges for high-value innovative drugs and enhance the overall industry landscape [1][2]. Group 1: Policy and Market Dynamics - The National Healthcare Security Administration and the National Health Commission have released measures to support the high-quality development of innovative drugs, marking a transition from point support to a systematic empowerment across the entire chain [1]. - The new policies are expected to provide an additional payment pathway beyond basic medical insurance, potentially breaking previous sales ceilings for innovative drugs [1]. - In Q1 2025, China saw 41 foreign licensing transactions for innovative drugs, totaling $36.9 billion, nearing the total for the entire year of 2023 [1]. Group 2: Financial Performance and Investment Opportunities - Leading innovative drug companies are gradually moving towards profitability, challenging the perception of continuous cash burn in the sector [2]. - For instance, BeiGene reported profitability in Q1 2025 according to U.S. GAAP, with significant improvements in operating cash flow [2]. - The industry is anticipated to shift from capital-driven growth to profit-driven growth, presenting dual opportunities for performance and valuation recovery [2]. Group 3: Market Trends and Future Outlook - The innovative drug sector is expected to remain a key investment theme in the pharmaceutical industry for 2025, driven by accelerated commercialization of innovative products and the release of breakthrough clinical data [2]. - The ongoing acceleration of centralized procurement in various pharmaceutical fields is expected to clear out the impact on certain segments, paving the way for new growth opportunities [2]. - The innovation drug ETFs, such as Guotai (517110) and the Biopharmaceutical ETF (512290), provide exposure to high-quality innovative drug companies across various stages of research, production, and commercialization [2].

Core Insights - The National Healthcare Security Administration and the National Health Commission of China have jointly released measures to support the high-quality development of innovative drugs, marking a shift from point support to a systematic empowerment of the entire innovation drug industry [1] - The policy coincides with an upward trend in internationalization, technological upgrades, and performance realization within the industry [1] - By Q1 2025, China has seen 41 foreign licensing transactions for innovative drugs, totaling $36.9 billion, nearing the total for the entire year of 2023 [1] - Chinese scholars contributed nearly 50% of global advancements in ADC antibodies and bispecific antibodies at the 2025 ASCO annual meeting, with 73 oral presentations [1] - Leading innovative drug companies are beginning to turn losses into profits, indicating a transition from a research investment phase to a performance realization phase [1] - The domestic innovative drug industry is expected to experience a turning point from capital-driven to profit-driven growth by 2025, presenting investment opportunities for both performance and valuation recovery [1] Industry Developments - The innovative drug ETF by Guotai (517110) tracks the CSI Hong Kong-Shenzhen Innovative Drug Industry Index, covering quality innovative drug companies across A-shares and Hong Kong Stock Connect, mitigating risks associated with single technology failures [2] - Investors interested in the innovative drug sector can consider the Guotai innovative drug ETF (517110) for a streamlined investment approach [2]