30 Innovative Drug ETFs Rise Over 5% Collectively, How Far Can This Rally Go?

Recently, the A-share market style has switched again to the innovative drug sector.

According to Wind data, as of the close on March 27, the Shanghai Composite Index rose 0.63%. The medical, chemical, and non-ferrous metals sector led the market. Among them, the innovative drug sector surged strongly in the afternoon, lifting more than 5% on the day for over 30 innovative-drug-related ETFs (exchange-traded open-ended index funds).

An interviewee believes that the sharp rise in the innovative drug sector is the result of multiple positive developments converging for the biopharmaceutical industry. From the liquidity perspective, A-share liquidity is clearly better than Hong Kong stocks. When industry sub-sectors generally rebounded, the Sci-Tech Innovation innovative-drug ETF rose more than the Hong Kong innovative-drug ETF.

“Take the top spot” with innovative drug ETFs

The public offering ETF gainers list once again showed the “take-the-top-spot” phenomenon among innovative drug-related ETFs. Both the A-share innovative drug ETF and the cross-border innovative drug ETF are among the leaders on the daily gainers list.

Photo source: Wind

According to Wind data, as of the close on March 27, the medical sector rebounded sharply. In terms of CITIC first-level industry indices, the medical industry index rose 3.69%, leading all industry indices. Looking at sub-sectors, after the open, shares conceptually tied to innovative drugs continued to strengthen, with multiple individual stocks rising more than 10%. For ETFs, more than 30 innovative-drug or medical-related ETFs rose more than 5%.

More specifically, the Sci-Tech Innovation innovative drug ETF (Yifangtianfu) led the entire market of ETFs with a 6.7% gain; the Sci-Tech Innovation innovative drug ETF (Guotai) rose 6.55%. In addition, there were 3 Hong Kong innovative-drug ETFs and 1 Hong Kong Stock Connect medical ETF that each rose more than 6%. In terms of trading value, the Hong Kong innovative-drug ETF (Guangfa) led cross-border ETFs on the day with trading value of 8.046 billion yuan.

Since last September, innovative drug ETFs have been volatile and trending downward; although they saw a small rebound in January, they soon fell again. As of March 27, among the 28 ETFs whose names include “innovative drugs,” the average year-to-date return across the whole market was -0.24%, with the largest gain at 2.07% and the largest decline at 2.56%. Since the beginning of the year, ETFs tracking Hong Kong innovative-drug-related indices have performed slightly better than ETFs tracking A-share innovative-drug indices. However, during this rebound, ETFs tracking the STAR Market Sci-Tech Innovation innovative drug index have been stronger.

Despite ongoing volatility in the innovative drug sector, fund companies are still laying out this track. According to the China Securities Regulatory Commission website, since last September, 7 public fund companies have submitted innovative drug-related ETFs, including the Hong Kong Stock Connect innovative drug ETF, the SSE STAR Market innovative drug ETF, the CSI innovative drug ETF, and the CSI innovative drug industry ETF, among others.

Will the rally continue?

The innovative drug sector belongs to the biopharmaceutical field. Regarding this sudden surge, Zhaopaiwang Wealth’s public fund product operations, Guan Fangfang, told a reporter from the International Finance Daily that this is the result of multiple positive developments converging for the biopharmaceutical industry.

Guan Fangfang analyzed that, on the policy front, biopharmaceuticals have been explicitly defined as an “emerging pillar industry,” and the strategic positioning has been upgraded. On the performance front, leading companies’ innovative drug revenue share has increased and they have achieved a turnaround from loss to profit, bringing the industry into a profitability inflection point. On the overseas expansion front, within this year, the amount of BD (business development) authorizations has already exceeded the total for last year, demonstrating global competitiveness. In addition, events in the near term such as the upcoming ASCO conference have also provided short-term catalysts. With the sector’s earlier adjustment being sufficiently thorough and valuation sitting at historically low percentiles, and with positive factors stacking and driving the move, its strong performance is likely to continue.

E Fund Asset Management (Hong Kong) stated that biopharmaceuticals are a high-visibility sector that combines the attributes of rigid consumption and innovative growth, and the global trend of population aging provides the industry with a long-term demand foundation spanning 10 to 20 years.

At present, it is the 2025 annual report disclosure season, and some pharmaceutical companies’ performance has been outstanding. Even though the innovative drug sector had previously experienced several months of pullback, He Li, general manager of Zhi Zhi Zhi (Zhizhi?) Investment, told the reporter that the fundamental trends of the innovative drug industry have not changed. From the annual reports of some companies that turned from loss to profit, it can be seen that fundamentals are continuing to improve.

“We have long looked favorably on the rise of domestic innovative drug companies globally,” He Li said. In the 2026 Government Work Report, for the first time, biopharmaceuticals were clearly defined as an emerging pillar industry. Compared with the previous wording of “cultivating and strengthening,” it carries more weight—meaning that from the top-level design, innovative drugs are being seen as a new engine for national economic growth.

From an investment perspective, He Li believes that since the pullback last September, the valuations of some innovative drug names have already moved from being somewhat expensive back to reasonable levels, or even somewhat undervalued levels—especially for innovative drugs in earlier-stage pipelines, where the pullback has been more pronounced.

Looking at that day’s performance, some Sci-Tech Innovation innovative drug ETFs were stronger than their Hong Kong innovative-drug counterparts. Guan Fangfang believes this is mainly because their constituent stocks are almost all pure-play source innovative biotechnology companies, with no traditional businesses to dilute the exposure. As a result, they can reflect breakthroughs at the frontier of the industry more directly. In addition, they more heavily and concentratively cover frontier technology fields such as ADC (antibody-drug conjugates) and small nucleic acids. The major R&D progress of related companies often transmits quickly into share prices, so they have more distinct growth elasticity and faster responsiveness.

From the liquidity perspective, He Li believes that A-share liquidity is clearly better than Hong Kong’s. When sector themes generally rebound, Sci-Tech Innovation innovative drug ETFs rise more than Hong Kong innovative-drug ETFs.

Reporter: Xia Yuechao