The Zhitong Finance App learned that Guojin Securities released a research report saying that Hong Kong stock innovative drugs were suppressed by overseas liquidity in the early stages, and the valuation fell back to a low level. The capital level showed a structural shift: foreign capital holdings were reduced close to the bottom, the share of southbound capital holdings increased, and the sector pricing logic gradually became driven by domestic fundamentals+flexibility in overseas expectations; at the same time, the US Stock Biotech Index was mergers and acquisitions, and the FDA (US Drug Administration) policy was favorable, and global pharmaceutical sentiment picked up. Recently, trading activity in the innovative drug sector of Hong Kong stocks has rebounded from the bottom. There is room for repair in A/H valuation spreads, and high-quality targets with pipelines and commercialization barriers have ushered in allocation opportunities.
On the industrial side, the BD (business cooperation) boom in innovative pharmaceuticals going overseas is rising, and current valuation mismatches have brought layout opportunities.
Domestic innovative drugs have gone through investment and financing, technology iteration, leading the world in pipeline reserves on cutting-edge sub-tracks such as ADC (antibody-conjugated drugs), double antibodies, and small nucleic acids. Combined with the Chinese innovative drug industry's triple advantages in regulatory review, clinical efficiency, and development costs, Chinese innovative pharmaceutical companies are deeply embedded in the global pharmaceutical industry chain: the layout of global clinical trials within China continues and rapidly rises; moreover, there is inertial momentum for local pharmaceutical companies to continue to deepen cooperation after binding with MNC (multinational pharmaceutical companies). However, there is currently a lack of valuation of BD in the market, and Guojin Securities believes that the pipeline will support long-term iteration of the pharmaceutical industry: in the short to medium term, the benefits of BD cooperation will significantly optimize the financial fundamentals of innovative domestic pharmaceutical companies; in the medium to long term, it will drive the domestic pharmaceutical industry to meet global standards and reshape the R&D capabilities of pharmaceutical companies, forcing domestic pharmaceutical companies to carry out more clinical reports between China and the US and accelerate FIC (First-In-Class) molecular research and development.
Finally, Guojin Securities is optimistic that overseas beta will continue to be sustainable. Many large patent expiration gaps continue to force MNC external pipeline investment into a long-term upward cycle. According to statistics, TOP15 MNC will invest about 200 billion dollars in capital expenses every year for external cooperation starting in 2023. As of July 10, this year, TOP15 MNC's external capital expenditure has reached 2003 billion US dollars, close to 73.5% of the total for the full year of 2025. The boom in mergers and acquisitions in the global pharmaceutical industry has basically been established. Furthermore, biomedical capital expenditure is sustainable: mature business models can provide cash flow to maintain demand-side growth of capital expenditure; at the same time, continuous iteration of global biomedical technology provides diversified supply for capital expenditure. Starting in 2027, many molecules that have already reached BD will begin the commercialization cycle overseas.
Performance side: The late-stage pipeline is expected to focus on marketing+policy empowerment in both directions, and the innovative pharmaceutical industry will enter a golden period of performance realization.
Currently, the number of back-end pipelines for innovative drugs in China, including clinical phase III, NDA (application for listing), or approval for marketing, continues to expand, adding channels such as priority review and conditional approval to accelerate the implementation of new indications, and the supply side supports the continuous expansion of the domestic innovative drug market. Health insurance negotiations have been normalized to absorb innovative varieties and continue to open up space for distribution in innovative pharmacies; moreover, the new version of the basic drug catalogue has recently been expanded, greatly broadening the grass-roots terminal channels for innovative drugs. Guojin Securities believes that leading domestic pharmaceutical companies are forming a positive cycle of “high R&D investment - rich pipeline - product commercialization - backfeed R&D”, the share of innovative drug revenue is steadily increasing, and the overall profit flexibility of the industry continues to be released, ushering in a multi-year performance realization window.