On April 1st, the innovative drug sector exploded! The Hong Kong Innovative Drug ETF Index surged over 7%, prompting many to ask: What makes innovative drugs so powerful?
In the short term, three major benefits have directly ignited market sentiment:
First, the issuance of long-term care insurance system documents nationwide has released a strong signal that the medical insurance payment side is opening up broader space for innovative drugs, with long-term support only increasing.
Second, the American Association for Cancer Research (AACR) annual meeting will be held from April 17 to 22, and as a barometer for global pharmaceutical R&amp;D, the market expects significant results to be unveiled.
Third, CRO pharmaceutical company WuXi AppTec disclosed that four innovative drugs are expected to receive FDA approval decisions in April, raising expectations for overseas expansion.
Compared to short-term news, the following industry trends provide stronger support for the market!
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Chinese innovative drugs are exploding overseas!
After Kangfang Biologics' dual-antibody head-to-head trial defeated Merck's &#34;king of drugs&#34; Keytruda, Chinese innovative pharmaceutical companies are increasingly granting external licenses, becoming darlings of capital.
On May 20 last year, Pfizer invested $6 billion in a bet on 3SBio's innovative cancer drug, setting a record for external licensing of domestic innovative drugs.
Less than two weeks later, on June 2, Bristol-Myers Squibb (BMS) invested $11.1 billion to collaborate with BioNTech to develop and commercialize the anti-tumor drug BNT327, which is a drug originally developed by the Chinese startup Pumice that BioNTech acquired for less than $1 billion.
It seems that domestic innovative drugs are sold at a loss, but investors worldwide see that China has a gold mine, and Chinese innovative drug developers are conquering more difficult treatment areas. In a few years, they will compete comprehensively with the United States on all levels.
<img src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/news_bt/OdqkacRQMQvqEfRvQgEWSxvEgqzmqJu3WWMPoOOq6igJwAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/news_bt/OdqkacRQMQvqEfRvQgEWSxvEgqzmqJu3WWMPoOOq6igJwAA/641"/>
Source: Artery Network
Numbers do not lie. In 2025, the total value of external licensing transactions for Chinese innovative drugs is expected to exceed $135 billion.
<img src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/news_bt/Ol-aVuwwCR3wPr7KTVSOcbpXzA0GqbLsGo50T1PaeWtMQAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/news_bt/Ol-aVuwwCR3wPr7KTVSOcbpXzA0GqbLsGo50T1PaeWtMQAA/641"/>
Source: Artery Network
In the first three months of 2026, the total value of external licensing (BD) transactions has already surpassed $60 billion, approaching half of the total for the entire year of 2025. Chinese pharmaceutical companies now account for over 70% of global pharmaceutical pipeline transactions, with both average upfront payments and total amounts reaching historic highs
In the past, when mentioning Chinese innovative drugs, people might say, &#34;Aren't they just doing 'me-too' (copying and improving) and 'fast-follow' (quickly following)?&#34;
However, in the past five years, more and more Chinese pharmaceutical companies have begun to move towards the goals of &#34;First-in-Class&#34; (global first innovative drugs) and &#34;Best-in-Class&#34; (best in class)!
BeiGene's Zebrutinib is the first cancer drug independently developed in China to receive approval from the U.S. FDA, and it is selling well in the global market! Legend Biotech's CAR-T therapy Carvykti has also been approved by the FDA, becoming a benchmark for the internationalization of domestic cell therapies! Innovent Biologics' PD-1 has successfully gone abroad and signed a high-value licensing agreement with Eli Lilly.
In addition, in cutting-edge technology fields such as gene editing, ADC (antibody-drug conjugates), bispecific antibodies, and RNA, Chinese pharmaceutical companies are accelerating their layout, with many projects already entering clinical stages, competing on the same stage as international giants!
Chinese innovative pharmaceutical companies are transitioning from burning cash to generating profits!
In the past, the R&amp;D investment of innovative drugs often reached tens of billions, causing many innovative pharmaceutical companies to remain in a state of loss for years. However, now leading Chinese innovative pharmaceutical companies have achieved profitability (such as BeiGene and Innovent Biologics), which means that Chinese innovative pharmaceutical companies are no longer solely relying on external funding but have truly entered a virtuous cycle of &#34;self-generating profits.&#34;
Looking at the upstream CXO (pharmaceutical R&amp;D and manufacturing outsourcing services) sector, WuXi AppTec and Kelun Biotech have announced their performance for 2025, showing good revenue and profit performance, both achieving double-digit growth. This not only proves their strong order acquisition capability but also indicates the deep reliance of global pharmaceutical R&amp;D on the Chinese supply chain.
In the past few years, the core issue for CXO companies was a U.S. biosecurity law that restricted U.S. companies from procuring CXO services from China. However, after this law was not passed in 2024, this risk has gradually dissipated! The doubts in the capital market are being replaced by the certainty of performance.
<img src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/news_bt/ONzkCSxP6TLgOzsErL51Vf041JQfNmAMuH-P--vr-j-yQAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/news_bt/ONzkCSxP6TLgOzsErL51Vf041JQfNmAMuH-P--vr-j-yQAA/641"/>
Policy benefits continue to increase!
The rise of an industry cannot be separated from the soil of policy.
As early as July 2024, the State Council reviewed and approved the &#34;Implementation Plan for Supporting the Development of Innovative Drugs Across the Entire Chain,&#34; providing comprehensive support for the development of innovative drugs from various aspects, including R&amp;D, accelerating and optimizing review and approval, improving diversified payment capabilities (medical insurance support, special funds, etc.), and investment and financing support.
In July 2025, the National Healthcare Security Administration and the National Health Commission jointly issued &#34;Several Measures to Support the High-Quality Development of Innovative Drugs,&#34; further increasing support through a full-chain approach, including R&amp;D support, accelerated access, payment innovation, clinical application guarantees, and international cooperation, systematically promoting the high-quality development of the innovative drug industry
Among them, there are two details worth special attention:
First, a sound dynamic adjustment mechanism for the medical insurance catalog will be established, with the medical insurance catalog being adjusted once a year to ensure that about 80% of innovative drugs can be included in the medical insurance payment catalog within two years of being launched.
Second, in addition to the medical insurance catalog, a &#34;commercial health insurance innovative drug catalog&#34; will be added, creating a multi-tiered payment system to open up broader market space for innovative drugs.
In addition, the innovative drug industry will also benefit from the Federal Reserve's interest rate cut cycle.
Innovative drugs are a typical capital-sensitive industry. The average cycle from research and development to commercialization for a new drug takes up to 10 years, requiring continuous funding investment. Therefore, it heavily relies on public financing, bond issuance, and bank loans to maintain cash flow.
Many of these borrowings are in Hong Kong dollars or US dollars. In recent years, the Federal Reserve's aggressive interest rate hike cycle has burdened many innovative drug companies with heavy debt interest, but the situation is reversing.
Starting in September 2024, after the Federal Reserve initiated its first interest rate cut in three years, US Treasury bond yields began to decline. This means that the financing costs for innovative drugs are decreasing, directly improving the financial conditions and valuation levels of innovative drug companies.
According to the MedAlpha new drug investment and financing database, in 2025, the total financing for China's innovative drugs reached USD 14.684 billion, with a total of 505 financing events. In terms of total financing amount, this figure is close to the level of the last innovative drug bull market in 2019.
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Capital is profit-seeking and sensitive.
The rise of China's innovative drugs has become incredibly clear.
It is no longer merely a concept hype but is built on substantial research breakthroughs, explosive overseas licensing, a continuously improving policy environment, and the multiple resonances of capital return.
This is not just the rise of an industry; it concerns the health and well-being of each of us. In the future, we hope to access globally leading quality drugs at lower prices.
It also relates to China's position in global technological competition. In the crown jewel field of biomedicine, China's strength is shifting from &#34;participant&#34; to &#34;rule maker.&#34;
Chinese innovative drugs are ushering in their golden age. And the curtain of this era has just begun to rise.
★ Statement: The above only represents the author's personal stance and is for reference, learning, and communication purposes only

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On April 1st, the Chinese innovative drug sector experienced an explosion, with the Hong Kong innovative drug ETF index rising over 7%. Three favorable factors drove market sentiment: the implementation of the long-term care insurance system, the upcoming American Association for Cancer Research annual meeting, and the expected FDA approval decision from WuXi AppTec. The trend of Chinese innovative drugs going overseas is evident, with increased attention from the capital market, and it is expected that the total amount of outbound licensing transactions will reach USD 135 billion by 2025, having already surpassed USD 60 billion in the first three months of 2026

腾讯新闻 - 财经

China Merchants CSI Biotechnology Theme ETF

GF CSI HK Innovative Drugs Industry ETF(QDII)

Penghua SSE STAR Biology and Medicine ETF

WUXI APPTEC

China Southern Hang Seng Biotech ETF(QDII)

E Fund CSI Biotechnology Theme ETF

Invesco Great Wall CSI Hong Kong Connect Innovative Drug ETF

ChinaAMC SSE Health Care ETF Initiating Fund

WUXI XDC

Fullgoal Hang Seng SCHK Innovative Drug & Healthcare ETF

Yinhua CNI HK Connect Innovative Drugs ETF

E Fund Hang Seng SCHK Innovative Drug ETF

WuXi AppTec

CAM HSBIOTECH

Guotai CSI Bio-medicine ETF

Hwabao WP CSI Pharmaceuticals ETF

Hwabao WP Hang Seng SCHK Innovative Drug Select ETF

ChinaAMC Hang Seng Biotechnology Technology ETF(QDII)

Huaan Hang Seng Biotech ETF

ICBCCS SSE STAR Biology and Medicine ETF

Huatai-PB Hang Seng Innovative Drugs Industry ETF(QDII)

Founder Fubon CSI Medicine and Medical Device Innovation ETF

China Universal CNI HK Connect Innovative Drugs Industry ETF

Bosera Hang Seng Health Care ETF(QDII)

Tianhong CNI BIOMEDICINE ETF

Bosera Hang Seng SCHK Innovative Drug Select ETF

Minsheng Royal CSI Biotechnology Theme ETF

ChinaAMC SSE STAR Biology and Medicine ETF

Yinhua CSI Innovative Drugs Industry ETF

ChinaAMC CSI Biotechnology Theme ETF

E Fund CSI 300 Health Care ETF

Ping An CSI Medicine and Medical Device Innovation ETF

Penghua CSI HK Connect Health Care Composite ETF

This sector has gone completely crazy! China's innovative drugs are ushering in a golden era!