Core Viewpoint - The article discusses the fragility of the current boom in innovative pharmaceuticals, highlighting the impact of geopolitical risks, particularly the U.S. government's potential restrictions on Chinese innovative drug collaborations [2][3][5]. Group 1: Market Dynamics - The innovative drug sector has experienced a significant boom, but recent signs indicate a halt in capital inflow, with the Hong Kong Stock Connect innovative drug ETF reaching a peak of 20 billion but seeing no increase in shares since September 2 [2][3]. - The trading volume of the Hang Seng Biotechnology Index dropped sharply, falling below 20 billion on September 10, marking a new low since August 4 [2]. Group 2: Geopolitical Risks - The U.S. is considering an executive order that would impose stricter scrutiny on drug rights transactions involving Chinese companies, potentially disrupting the flow of innovative drugs from China [6][8]. - The Committee on Foreign Investment in the United States (CFIUS) will play a crucial role in reviewing these transactions, which could significantly impact the U.S. pharmaceutical industry's access to innovative sources [6][7]. Group 3: Chinese Innovative Drug Landscape - Chinese innovative drug business development (BD) transactions account for half of the global total, with 540 deals worth $163.41 billion since 2025, indicating China's growing importance in the global pharmaceutical landscape [8]. - Major multinational pharmaceutical companies are facing a patent cliff and will need to acquire new pipelines worth over $240 billion in the next decade, which may lead them to lobby against decoupling measures [8]. Group 4: Financial Performance and Expectations - Despite the overall growth in the innovative drug sector, many companies are overestimating their BD expectations and domestic sales, with average revenue growth of only 1.6% and a net profit decline of 3.2% among listed pharmaceutical companies [15][16]. - The article highlights the high failure rate of biotech companies, with only 53.1% of those that went public between 2004 and 2018 still in operation, emphasizing the risks associated with the sector [16]. Group 5: Future Outlook - The article suggests that external pressures may accelerate the growth of Chinese innovative drugs, as companies will need to adapt to international standards and increase R&D costs [17][20]. - The potential decoupling could ultimately harm U.S. patients, who may face delays in accessing innovative treatments developed by Chinese companies [17][20].

Group 1 - The core viewpoint of the article highlights the volatility in the Hong Kong innovative drug sector, with significant declines in stocks such as Hansoh Pharmaceutical, BeiGene, and CSPC Pharmaceutical, alongside a notable drop in the Hang Seng Medical ETF [1] - A report from The New York Times indicates that the Trump administration is considering stricter restrictions on innovative drugs from China, particularly experimental drugs, which may have limited substantive impact on domestic innovative drug companies [1] - Data from Huatai Securities shows that since 2025, there have been 540 global innovative drug business development transactions with a total disclosed amount of $163.41 billion, of which Chinese innovative drugs accounted for 83 license-out transactions totaling $84.53 billion, indicating the irreversible rise of Chinese innovative drugs [1] Group 2 - The article notes that foreign companies have faced a patent cliff since 2020, necessitating the acquisition of pipelines to fill a market gap exceeding $240 billion over the next decade, leading to increased lobbying efforts [2] - Long-term trends suggest that the aging population in China will drive steady growth in health consumption demand, forming a core logic for investment in the pharmaceutical sector [2] Group 3 - The Hang Seng Medical ETF (159892) is highlighted as a representative of the global pharmaceutical industry, with a decline of 3.3%, and its top ten weighted stocks include several innovative drug companies [3] - The Hong Kong Stock Connect Medical ETF (520510) focuses on CXO and AI healthcare, with a decrease of 1.88%, featuring leading companies such as WuXi Biologics and MicroPort Medical [3]