On April 1st, innovative drug concepts broke out collectively. GuanShengTang hit the &#34;20cm&#34; daily limit, while PKU Healthcare, Baili-Tianheng, and Asymchem also reached their daily limits. Aidi Pharmaceutical rose over 18%, and InventisBio gained more than 15%.
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Since last week, the innovative drug sector has shown signs of a breakout. The CSI Innovative Drugs Industry Index soared 11% over the past week, reversing the continuous volatile adjustment trend seen since September 2025.
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Multiple brokerages have pointed out that the innovative drug sector is in a favorable stage of &#34;earnings realization, valuation repair, and conference catalysis.&#34;
Specifically, the 2025 annual reports of leading pharmaceutical companies were outstanding. Companies like Hengrui Medicine and BeiGene saw a continuous increase in the proportion of innovative drug revenue, while multiple biopharmaceutical companies such as InnoCare Pharma and Remegen achieved historic turnarounds. Furthermore, the upcoming AACR annual meeting in April and the ASCO annual meeting in May-June, with their dense clinical data disclosures, are expected to provide continuous momentum for valuation repair.
<h2>Qualitative Change in Revenue Structure of Innovative Drug Leaders; Turnaround Becomes the Keyword</h2>
Annual reports for 2025 show that structural changes are occurring in the domestic innovative drug industry.
As a leader in domestic innovative drugs, Hengrui Medicine achieved operating income of 31.629 billion yuan in 2025, a year-on-year increase of 13.02%; net profit attributable to the parent company was 7.711 billion yuan, a year-on-year increase of 21.69%.
The most striking indicator in the financial report was the sales revenue from innovative drugs, which reached 16.342 billion yuan, a year-on-year increase of 26.09%. This accounted for 58.34% of the total drug sales revenue, making innovative drugs the core engine of the company's growth. Additionally, out-licensing of innovative drugs contributed 3.392 billion yuan in revenue, forming a second growth curve following independent sales.
Fosun Pharma's revenue from innovative drugs reached 9.893 billion yuan in 2025, a year-on-year increase of 29.59%, with its proportion of total revenue rising to 23.75%, a year-on-year increase of 5.16 percentage points.
Even more noteworthy is that a group of biopharmaceutical companies achieved turnarounds in 2025. BeiGene's annual report showed revenue of $5.343 billion (approximately 38.7 billion yuan) in 2025, a year-on-year increase of 40.2%. Net profit was $287 million, compared to a net loss of $645 million in the same period last year, marking a historic profit inflection point.
Shenwan Hongyuan Securities pointed out in its pharmaceutical industry weekly report released on March 29th that as of March 29th, 71 pharmaceutical listed companies had released their 2025 annual reports. Among them, 32 companies achieved positive growth in net profit attributable to the parent company, with 10 companies growing at 40% or more, demonstrating a characteristic where overall profit recovery and structural differentiation coexist within the sector.
<h2>BD Transactions Explode: Q1 Out-Licensing Amount Already Exceeds Full-Year 2024</h2>
Another important logical thread for the innovative drug industry is the sustained activity in out-licensing (BD) transactions.
According to statistics from the PharmCube NextPharma database, as of March 25th, there have been 49 out-licensing BD events for Chinese innovative drugs in 2026, with upfront payments exceeding $3.3 billion and a total amount of nearly $57 billion—the transaction scale in the first quarter alone has surpassed the full-year level of 2024 and is close to half of the full-year level for 2025.
This data signifies that the R&amp;D capabilities of Chinese innovative drug companies are gaining global recognition, and overseas licensing is becoming another important source of revenue besides independent commercialization. The 3.392 billion yuan contribution from out-licensing in Hengrui Medicine's 2025 financial report is a microcosm of this trend.
<h2>Valuation Repair Coupled with Policy Support, Innovative Drugs Reach Investment Allocation Window</h2>
Multiple brokerages generally agreed in research reports released this week that the innovative drug sector has reached a favorable time for allocation.
Huaxin Securities pointed out that the development model of innovative drugs has shifted from relying solely on financing-driven growth to a comprehensive drive combining product commercialization, R&amp;D out-licensing, and financing. The allocation window has emerged. Meanwhile, after experiencing an adjustment period of more than half a year since the end of the third quarter of last year, valuation risks for the innovative drug sector have been relatively fully released. Short-term sentiment suppression does not change the industry's fundamental logic of long-term improvement.
On the policy front, the 2026 &#34;Two Sessions&#34; positioned biopharmaceuticals as an emerging pillar industry, alongside integrated circuits and aerospace, and proposed building global competitiveness. This policy positioning has laid a solid foundation for the long-term development of the innovative drug industry.
<h2>AACR and ASCO Meetings Approach, Clinical Data Expected to Catalyze Valuation Repair</h2>
Academic conferences over the next two months are expected to serve as short-term catalysts for the innovative drug sector.
From April 17th to 22nd, the American Association for Cancer Research (AACR) annual meeting will be held. In 2025, a total of 126 Chinese pharmaceutical companies appeared at AACR, presenting nearly 300 new drug research results, including over 80 ADC studies and nearly 40 bispecific antibody studies.
From May 29th to June 2nd, the American Society of Clinical Oncology (ASCO) annual meeting will also take place. In 2025, over 70 Chinese studies were selected for oral presentations, with 11 selected as highly prestigious Late-Breaking Abstracts (LBA).
Guotai Junan Securities believes that key Clinical Data Presentations for core products such as Akeso's PD-1/VEGF bispecific antibody, Kelun-Biotech's TROP2-ADC, DualityBio's B7H3-ADC, CSPC Pharmaceutical Group's EGFR-ADC, and InnoCare Pharma's BCL-2 inhibitor at these meetings are expected to further catalyze valuation repair.

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The CSI Innovative Drugs Industry Index surged 11% over the past week. Brokerages believe the innovative drug sector is in a stage of "earnings realization, valuation repair, and conference catalysis." Multiple biopharmaceutical companies have achieved historic turnarounds, with fundamentals improving. In the first quarter of this year, the total amount of China's innovative drug out-licensing reached nearly $57 billion, already exceeding the full-year level of 2024. The upcoming AACR and ASCO annual meetings, with intensive clinical data disclosures, are expected to provide catalysts

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E Fund CSI WD Biotechnology Index Fund(LOF)-A

ICBCCS CSI Brand Name Drug Industry ETF

Harvest CSI Hong Kong Connect Innovative Drugs ETF

E Fund CSI Innovative Drugs ETF

J.P.Morgan Asset Management CSI Brand Name Drug Industry ETF

Fullgoal CSI Hugangshen Innovative Drugs Industry ETF

Guotai SSE STAR Brand Name Drug ETF

E Fund Hang Seng SCHK Innovative Drug ETF

CCB Principal CSI Innovative Drugs Industry ETF

Wanjia CSI Hong Kong Connect Innovative Drugs ETF

Invesco Great Wall CSI Hong Kong Connect Innovative Drug ETF

Eastmoney Fund CSI SH-HK-SZ Brand Name Drug Industry ETF

Guotai CSI Hugangshen Innovative Drugs Industry ETF

Yinhua CSI Innovative Drugs Industry ETF

Innovative Drugs Break Out Again After Six Months, Leading Companies Enter Intensive Harvest Period; Has the Profit Inflection Point Arrived?