Core Viewpoint - The current innovation drug market is driven by the "local innovation - global monetization" model, with expectations for the Hang Seng Biotechnology Index and leading innovative drug companies to reach new highs since 2021 [1][2]. Group 1: Market Dynamics - The innovation drug market has shifted from a focus on domestic sales to business development (BD) and international expansion, allowing Chinese companies to enter mature markets like Europe and the US [2][4]. - As of the end of 2024, China is projected to have 3,575 active innovative drugs in development, surpassing the US and becoming the second-largest source of quality innovative drug pipelines globally [2][3]. Group 2: Competitive Landscape - The number of first-in-class (FIC) drugs developed by Chinese companies has significantly increased, with 716 drug candidates leading in their respective development tracks, indicating a narrowing gap with the US [3]. - The global innovative drug market is expected to grow from $1.1 trillion in 2024 to $1.5 trillion by 2030, with Chinese companies potentially capturing a 30% market share, equating to $450 billion [4]. Group 3: Investment Outlook - The Hang Seng Biotechnology Index has room to grow approximately 50% to reach its 2021 peak, with leading innovative drug companies expected to achieve similar heights [4][5]. - Short-term outlook remains positive for the innovative drug sector, with significant potential for growth driven by fundamental changes in leading companies and upcoming academic conferences expected to boost business development activities [6].

Group 1 - The Hang Seng Index Company has revised the compilation plan for the Hang Seng Innovative Drug Index, removing companies primarily engaged in the CXO (Contract Research Organization) sector, and the changes will take effect from August 11 [1] - The revised index now focuses solely on the pharmaceutical and biotechnology sectors, enhancing the purity of innovative drug companies and providing a more accurate reflection of the innovative drug industry's development trends [1] - The index has gained southbound trading eligibility, which is expected to enhance liquidity and serve as a valuable tool for investors to capture opportunities in innovative drug investments [1] Group 2 - The innovative drug industry is shifting its core logic towards business development (BD) and international expansion, with more domestic companies seeking to commercialize their innovative drugs in mature markets like Europe and the US through various collaborative methods [2] - The strategic investment value of the Hang Seng Innovative Drug ETF (520500) is expected to further upgrade due to the consolidation of innovative drug development trends and the "purification" of the index compilation plan, allowing investors to easily capture cutting-edge opportunities in the innovative drug sector [2]