The 2025 pharmaceutical annual report releases positive signals, and the sector's development logic may be further solidified.

According to Wind data, as of March 24, among the companies in the Shenwan pharmaceutical and biotechnology industry that have disclosed their annual reports, over 70% achieved profitability, demonstrating a certain recovery momentum. Comprehensive institutional research reports indicate that under multiple driving forces such as performance realization, accelerated R&D, and sector undervaluation, the pharmaceutical and biotechnology sector, particularly the innovative drug track, may continue to highlight its mid-to-long-term attention value. (Data source: Wind, as of 2026.3.24, Shenwan first-level industry classification)

1. Annual Report Insights: Data Validates the Recovery of Pharmaceutical Biotechnology

According to Wind data statistics, as of March 24, 2026, 169 companies in the Shenwan pharmaceutical and biotechnology sector of the A-share market have disclosed their 2025 annual reports. Among them, 121 companies reported positive net profit attributable to the parent company, accounting for over 70%; 77 companies achieved year-on-year growth in net profit attributable to the parent company, and 20 companies had a year-on-year net profit growth rate exceeding 100%, showcasing the coexistence of overall profitability recovery and structural differentiation in the sector. (Data source: Wind, as of 2026.3.24, Shenwan first-level industry classification)

Some institutions have analyzed that the period from March to April this year is the performance disclosure window for innovative drug companies, with many pharmaceutical companies expected to see reduced losses or turn profitable, and more innovative drug companies are anticipated to significantly release profits in 2026. With the turning point for innovative drug companies arriving, combined with a dense release of clinical data throughout the year and smooth overseas clinical progress for pipelines that have been BD (business development) overseas, the institution expressed optimism about the opportunities in the innovative drug sector. (Reference: Guojin Securities “Anchoring ‘Emerging Pillar Industries’, Looking Forward to Investment Opportunities in the New Drug Sector”, 2026.3.8)

2. Intensive R&D Innovation Implementation, Acceleration of Commercialization

Since 2026, the R&D innovation momentum in the domestic pharmaceutical industry has been continuously released, with A-share pharmaceutical companies successively disclosing announcements of R&D progress, announcing phased achievements in obtaining approvals for clinical trials, acceptance of market approval applications, and approval of drug registration certificates, covering multiple therapeutic areas such as anti-infection, hyperlipidemia, analgesia, inflammation, and autoimmune diseases.

Analysis suggests that the successful commercialization of R&D results by pharmaceutical companies has a significant multiplier effect on improving their financial structure and may become a core driver for enhancing corporate performance quality and reshaping valuations. The core value of commercializing R&D results is first reflected in the direct incremental contribution to revenue, which can quickly open up market monetization channels and continuously optimize the company’s revenue structure. Institutions expect that the speed of R&D results landing in the pharmaceutical industry in 2026 may show a dual-track trend of “accelerated innovative drugs and improved generics.”

(Reference: Securities Daily “Listed Pharmaceutical Companies Continue to Intensify R&D, Multiple Pharmaceutical Achievements Approved for Advancement”, 2026.3.19)

3. Innovative Drug Sector Has Ample Capital, Strong Sustainability of R&D Investment

Currently, BD income and post-IPO fundraising provide funding support for innovative drug companies’ R&D. On one hand, according to Wind data statistics, from January 1, 2024, to March 21, 2026, the post-IPO fundraising in the Hong Kong and A-share biomedical sector totaled approximately 7 billion yuan, supporting R&D investment in innovative drug pipelines. On the other hand, as of March 21, 2026, the total package for Chinese innovative drugs going overseas for BD has reached 57.1 billion USD, with BD income becoming an important source of funding for Chinese innovative drug companies.

Some institutions have stated that the current funding situation in the pharmaceutical sector is ample, with the vast majority of companies still maintaining more than one year of R&D funding coverage capability, effectively supporting the subsequent progress of clinical trials, pipeline expansion, and technological innovation, laying a solid financial foundation for the long-term high-quality development of the industry and providing sufficient time windows for technological breakthroughs and commercialization for innovative drug companies.

(Reference: Dongwu Securities “Pharmaceutical and Biotechnology Weekly: BD Volume and Refinancing, Cash Flow of Innovative Drug Leaders is Ample”, 2026.3.22)

4. Emphasis on Cost-Effectiveness in the Innovative Drug Sector May Stand Out

After a round of increases in 2025, the innovative drug sector has undergone more than half a year of adjustment since the end of the third quarter of last year, with valuation risks being sufficiently released. Looking at a longer time frame, according to Wind data, as of March 24, 2026, the current PE (TTM) of the CSI Innovative Drug Industry Index and the CSI Hong Kong Innovative Drug Index is 40 times and 41 times, respectively, ranking at 38.05% and 39.84% from low to high over the past five years, showing a certain level of cost-effectiveness. (Data source: Wind, the rise interval of the innovative drug sector from 2025 to now from January 1, 2025, to September 8, 2025, the adjustment interval from September 9, 2025, to March 26, 2026; the current PE (TTM) percentile statistics interval of the CSI Innovative Drug Industry Index code 931152.CSI, CSI Hong Kong Innovative Drug Index code 931787.CSI)

For investors who are optimistic about the innovative drug track but find it difficult to grasp the fluctuations of individual stocks, it may be worth considering focusing through index tools, which can be a relatively efficient and transparent method. Investors may pay attention to the Hong Kong innovative drug ETF (159567) and its connecting funds (Class A: 023929, Class C: 023930), the innovative drug ETF (159992) and its connecting funds (Class A: 012781; Class C: 012782), striving to share in the long-term growth dividends of the innovative drug industry.

Risk Warning:

Hong Kong Innovative Drug ETF Fee Situation

1. Subscription Fee/Redemption Fee:

When investors subscribe for or redeem fund shares, the brokerage agents for subscription and redemption may charge a commission not exceeding 0.5%, which includes related fees charged by securities exchanges, registration agencies, etc.

2. Management Fee Rate:

The management fee for this fund is calculated at an annual rate of 0.50% based on the previous day’s net asset value of the fund. The fund management fee is calculated daily, accumulated until the end of each month, paid monthly, and after verification by both the fund manager and the fund custodian, the fund custodian will pay the fund manager in a lump sum within five working days from the first day of the next month. If there are statutory holidays, rest days, or force majeure that prevent timely payment, the payment will be delayed until the next available date.

3. Custody Fee Rate:

The custody fee for this fund is calculated at an annual rate of 0.10% based on the previous day’s net asset value of the fund. The fund custody fee is calculated daily, accumulated until the end of each month, paid monthly, and after verification by both the fund manager and the fund custodian, the fund custodian will withdraw the fund assets in a lump sum within five working days from the first day of the next month. If there are statutory holidays, rest days, or force majeure that prevent timely payment, the payment will be delayed until the next available date.

4. Comprehensive Operating Expenses of the Fund:

If investors subscribe for/purchase this fund’s shares, during the holding period, the operating expense rate that investors need to bear is a comprehensive fund operation expense rate (annualized) of 0.72%.

Note: The fund management fee rate, custody fee rate, and sales service fee rate (if any) are the current rates of the fund, and other operational expenses are estimated based on the most recent fund annual report disclosure data.

Reference: Fund Product Summary, as of 2025.12.5

Yinhua Guozheng Hong Kong Innovative Drug ETF Initiation Linkage Fee Situation

1. Subscription Fee:

The applicable subscription fee rate for investors subscribing for Class A fund shares through other sales institutions is as follows: when the subscription amount M < 1 million yuan, the subscription fee rate is 1.00%; when 1 million yuan ≤ M < 2 million yuan, the subscription fee rate is 0.80%; when 2 million yuan ≤ M < 5 million yuan, the subscription fee rate is 0.50%; when M ≥ 5 million yuan, the subscription fee rate is fixed at 1,000 yuan per transaction.

2. Subscription Fee:

This fund charges a subscription fee for Class A fund shares at the time of subscription; Class C fund shares do not charge a subscription fee. The subscription fee for this fund is charged to investors subscribing for Class A fund shares. The subscription fee for Class A fund shares is borne by investors subscribing for this fund and is mainly used for the market promotion, sales, registration, and other expenses of this fund, not included in the fund property. If an investor has multiple subscriptions within one day, the applicable rate is calculated separately for each transaction. Specific situations are as follows: when M < 1 million yuan, the subscription fee rate is 1.20%; when 1 million yuan ≤ M < 2 million yuan, the subscription fee rate is 0.90%; when 2 million yuan ≤ M < 5 million yuan, the subscription fee rate is 0.60%; when M ≥ 5 million yuan, the subscription fee rate is fixed at 1,000 yuan per transaction.

3. Redemption Fee:

The redemption fee for this fund is borne by the holders of the respective fund shares redeeming this fund. The redemption fee is charged when fund share holders redeem the corresponding category of fund shares. The portion of the redemption fee not included in the fund property is used to pay registration fees and other necessary handling fees.

(1) Redemption Fee Rate for Class A Fund Shares:

For investors holding Class A fund shares for less than 30 days, the redemption fee will be fully included in the fund property. The redemption fee rate for Class A fund shares is tiered based on the holding period as follows: when holding period Y < 7 days, the redemption fee rate is 1.50%; when 7 days ≤ holding period Y < 30 days, the redemption fee rate is 0.50%; when holding period Y ≥ 30 days, the redemption fee rate is 0.

(2) Redemption Fee Rate for Class C Fund Shares:

For investors holding Class C fund shares for less than 7 days, the redemption fee rate is 1.50%, and the redemption fee will be fully included in the fund property. The redemption fee rate for Class C fund shares is tiered based on the holding period as follows: when holding period Y < 7 days, the redemption fee rate is 1.50%; when Y ≥ 7 days, the redemption fee rate is 0.

4. Management Fee:

No management fee is charged for the portion of the fund property invested in the target ETF. The management fee for this fund is calculated at an annual rate of 0.50% based on the balance of the net asset value of the fund after deducting the net asset value of the target ETF fund shares held (if negative, it is taken as 0).

5. Custody Fee:

No custody fee is charged for the portion of the fund property invested in the target ETF. The custody fee for this fund is calculated at an annual rate of 0.05% based on the balance of the net asset value of the fund after deducting the net asset value of the target ETF fund shares held (if negative, it is taken as 0).

6. Sales Service Fee:

No sales service fee is charged for Class A fund shares; the sales service fee for Class C fund shares is calculated at an annual rate of 0.10% based on the previous day’s net asset value of Class C fund shares.

Other fees are detailed in the fund prospectus under the “Fund Fees and Taxes” section.

Reference: Fund Product Summary, as of 2025.4.9

Investment involves risks; investors should exercise caution. Funds are a long-term investment tool, primarily designed to diversify investments and reduce the individual risks associated with investing in a single security. Funds differ from financial instruments such as bank deposits that can provide fixed income expectations; when you purchase fund products, you may share in the profits generated by fund investments, but you may also bear the losses resulting from fund investments.

Before making investment decisions, please read the fund contract, fund prospectus, and fund product summary, as well as this risk disclosure document carefully, fully understanding the risk-return characteristics and product features of this fund, seriously considering all risk factors related to this fund, and taking into account your own investment objectives, investment horizon, investment experience, asset situation, and other factors to adequately assess your risk tolerance, rationally judge, and cautiously make investment decisions based on an understanding of the product situation and sales suitability opinions.

According to relevant laws and regulations, Yinhua Fund Management Co., Ltd. makes the following risk disclosures:

1. Based on the different investment targets, funds are divided into various types, including equity funds, hybrid funds, bond funds, money market funds, fund of funds, commodity funds, etc. Investing in different types of funds will yield different expected returns and will also bear varying degrees of risk. Generally, the higher the expected return of a fund, the greater the risk you bear.

2. Funds may face various risks during investment operations, including market risks, as well as the fund’s own management risks, technical risks, and compliance risks, among others. The risk of massive redemptions is a unique risk for open-end funds; that is, when the net redemption applications of the fund exceed a certain proportion of the total shares on a single open day (10% for open-end funds, 20% for periodic open-end funds, except for special products regulated by the China Securities Regulatory Commission), you may not be able to redeem all fund shares applied for in a timely manner, or the payment for your redemption may be delayed.

3. You should fully understand the differences between regular fixed investment and zero deposit fixed withdrawal savings methods. Regular fixed investment is a simple and practical investment method that guides investors to engage in long-term investment and average investment costs, but it cannot avoid the inherent risks of fund investments and does not guarantee that investors will obtain returns, nor is it an equivalent financial management method to replace savings.

4. Special product risk disclosures:

5. Investors should pay attention to the risks of fluctuations in the underlying index and the unique risks of ETF (exchange-traded open-end fund) investments. Connecting funds invest in the underlying ETF; investors should pay attention to the unique risks of connecting funds, such as tracking deviation risk, performance difference risk with the target ETF, risks related to other investments in the target ETF, and risks of not achieving agreed tracking error control targets.

6. The Hong Kong innovative drug ETF and its connecting funds can invest in stocks under the Hong Kong Stock Connect program, which will face unique risks arising from differences in the investment environment, investment targets, market systems, and trading rules under the Hong Kong Stock Connect mechanism.

7. The fund manager promises to manage and utilize fund assets based on the principles of honesty, credit, diligence, and responsibility, but does not guarantee that this fund will definitely make a profit or guarantee a minimum return. The past performance of this fund and its net asset value does not predict its future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of this fund’s performance. Yinhua Fund Management Co., Ltd. reminds you of the “buyer bears the risk” principle in fund investment; after making investment decisions, the investment risks arising from the fund’s operational status and changes in net asset value are borne by you. The fund manager, fund custodian, fund sales institutions, and related entities do not make any commitments or guarantees regarding fund investment returns.

8. This fund is raised by Yinhua Fund Management Co., Ltd. in accordance with relevant laws and regulations and agreements, and has been approved for registration by the China Securities Regulatory Commission (hereinafter referred to as “CSRC”). The fund’s fund contract, fund prospectus, and fund product summary have been disclosed via the CSRC’s electronic disclosure website.

This article is a corporate contribution | Investment carries risks; investors should exercise caution.

(Editor: Xu Nannan)

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