Group 1 - The innovative drug sector has emerged as a significant "dark horse" in the growth track since 2025, with the Hong Kong innovative drug ETF (513120) showing a year-to-date increase of over 60% as of June 10, reflecting strong market interest in the sector [1] - The recent surge in the innovative drug market is attributed to a combination of clinical breakthroughs, major business development deals, and favorable policies, with a notable example being the $12.5 billion collaboration between 3SBio and Pfizer [2][3] - The global competitiveness of domestic innovative drugs is on the rise, with China expected to account for 40% of clinical trials in the oncology field by 2024, up from 5-10% a decade ago, indicating a significant shift in the market landscape [3] Group 2 - Recent policy support includes the issuance of a commercial health insurance directory for innovative drugs, aimed at enhancing multi-tiered medication security for the public [4][5] - The new policy is expected to address key pain points in the innovative drug sector by promoting the distribution of high-quality medical resources to grassroots levels and establishing a multi-tiered payment system combining basic medical insurance and commercial insurance [5] - The commercial health insurance directory is seen as a more operationally feasible innovation compared to the anticipated "Class C" insurance directory, providing a buffer for new drugs to validate their clinical efficacy and value in real-world settings [6]

Core Viewpoint - The article discusses the impact of the recent reciprocal tariff policies between the U.S. and China on the innovative pharmaceutical industry, highlighting that the tariffs have minimal effect on China's innovative drug exports and may even benefit domestic companies in the long run [2][12]. Industry-Level Impact - The innovative drugs from China are exempt from the new tariffs, making the industry relatively insulated from the trade conflict, thus acting as a safe haven [5]. - Even if tariffs were to be applied in the future, the high gross margin of around 95% for innovative drugs means that any potential tariff impact on gross margins would be negligible, estimated at only 2-3% [5]. - The cost differences between China and the U.S. for innovative drug production are not significant, and companies like BeiGene have established substantial production capabilities in the U.S., further minimizing the impact [5]. - For imported innovative drugs, if China does not exempt U.S. imports, the impact on pricing and competition will be limited, especially for drugs already included in the insurance system [6][8]. - The potential price increase for non-reimbursed drugs due to tariffs could benefit domestic competitors, enhancing their market position [7][8]. Financing Environment Impact - The U.S. tariff policy is expected to negatively affect small innovative drug companies in the U.S. by tightening the financing environment, as they rely heavily on funding for research and development [9]. - In contrast, China's low import ratio and high export ratio mean that the tariff policy will not raise inflation levels in China, potentially leading to lower financing rates and a more favorable environment for domestic pharmaceutical companies [10]. Valuation Impact - The global market downturn is likely to affect the valuation levels of innovative drug companies in China, leading to short-term declines in stock prices [11]. - However, it is believed that this will be temporary, as stock prices will ultimately reflect the underlying fundamentals of the companies [11]. Summary - Overall, the reciprocal tariff policies have a minimal impact on China's innovative drug exports, and may improve the competitive landscape and financing conditions for domestic companies. The innovative drug sector is expected to remain one of the most promising growth areas for China in the future [12].