WuXi AppTec and WuXi Biologics rose over 6%, the Hang Seng Biotech ETF, Hong Kong Stock Innovation Drug ETF, and Hong Kong Stock Connect Medical ETF surged significantly.

The innovative drug sector led the gains, with WuXi AppTec and WuXi联涨 over 6%, driving the Hang Seng Biotech ETF E Fund, Hang Seng Biotech ETF Southern, Hong Kong Stock Innovation Drug ETF Invesco, Hong Kong Stock Connect Healthcare ETF Huaxia, Hong Kong Stock Connect Innovation Drug ETF Wanjia, and Hong Kong Stock Connect Healthcare ETF Huabao to rise over 3.5%.

On the news front, on the evening of March 23, WuXi AppTec released its 2025 performance report. The report shows that in 2025, the company achieved an operating revenue of 45.46 billion yuan, a year-on-year increase of 15.84%; net profit attributable to shareholders of the listed company was 19.151 billion yuan, up 102.65%; and net cash flow from operating activities was 17.203 billion yuan, an increase of 38.66%.

WuXi联 also announced its 2025 performance. In 2025, WuXi联 achieved an operating revenue of 5.944 billion yuan, up 46.7% year-on-year, with overseas revenue accounting for 85%; adjusted net profit reached 1.559 billion yuan, up 69.9%.

The government work report recently listed biopharmaceuticals as a new pillar industry, signaling clear policy support.

Additionally, the innovative drug sector has ample funding and strong sustainability in R&D investment. Revenue from BD and post-IPO fundraising provides financial support for innovative drug R&D. From January 1, 2024, to March 21, 2026, the biotech sector in Hong Kong and A-shares raised approximately 70 billion yuan after listing to support pipeline R&D. According to Wind data, during this period, A-share biopharmaceuticals raised a total of 11.8 billion yuan through secondary offerings and 2.5 billion yuan via convertible bonds. The Hong Kong biotech sector raised a total of HKD 63.2 billion after listing. Regarding BD revenue, by March 21, 2026, China’s innovative drug outbound BD total package reached $57.1 billion, with an initial payment of $3.3 billion, involving 53 deals. BD revenue has become an important funding source for Chinese innovative drug companies. We evaluate the sector’s financial health by calculating “cash and cash equivalents / annual R&D expenses.” Overall, the pharmaceutical sector currently has ample funds, with most companies maintaining more than one year of R&D funding, effectively supporting clinical trials, pipeline expansion, and technological innovation, laying a solid financial foundation for long-term high-quality industry development, and providing sufficient time for technological breakthroughs and commercialization.

CITIC Securities Hong Kong brokerage research reports indicate that the Hong Kong biotech sector is at a valuation restructuring, performance realization, and accelerated overseas expansion inflection point. In the short term, it is consolidating, with structural recovery expected in the medium term, and a long-term pattern of strong companies remaining strong. In Q2 2026, the sector’s stocks are expected to see a key window of valuation and performance resonance.

Guojin Securities believes that the turnaround point for innovative drug companies is approaching, with intensive clinical data catalysts throughout the year, and smooth progress in overseas clinical trials for pipelines that have already BD’d for overseas expansion. We are optimistic about investment opportunities in the sector. Specific strategies include: (1) focusing on core tracks, continuously monitoring investment opportunities in small nucleic acids, bispecific antibodies, ADCs, and related targets, and capitalizing on industry realization periods; (2) positioning around performance forecast windows to find stocks with unexpected earnings; (3) paying attention to conference updates, such as AACR (April), ASCO (May), and ESMO (October), for major clinical data releases. The medical device sector also shows a positive trend, with continuous innovation in product R&D, steady domestic demand recovery, and accelerated overseas market expansion. Key areas to watch include: 1) innovative medical devices supported by policies, such as brain-machine interfaces and surgical robots; 2) high-end equipment and medical consumables with potential for overseas expansion.