Up 4%! Hang Seng Biotech leads Hong Kong stocks higher, CXO performance soars + BD goes global, innovative drug recovery window officially opens

Ask AI · How does upgrading BD overseas cooperation models drive a qualitative shift in the industry?

On March 24, sentiment in the Hong Kong stock market steadily recovered; the pharmaceuticals and biotechnology sector led the pack on the upside. The Hang Seng Biotechnology Index rose 4% in a single day. One clear industry trend is that China’s innovative drug industry is achieving a qualitative transformation through the steady growth of its BD business.

CXO leaders deliver above expectations, and high-demand momentum in the segment is firmly backed by hard evidence

This round of strength in the Hong Kong innovative drug sector is primarily supported by the tangible delivery of results from the CXO segment.

As an industry leader, WuXi AppTec disclosed its 2025 full-year operating performance on the evening of March 23: full-year revenue of 45.46 billion yuan, up 15.8% year over year; net profit surged 107.2% year over year, with a leap in profitability scale. Within that, its core TIDES business (peptides/oligonucleotides) even doubled in growth, becoming the key engine driving performance growth.

Even more meaningful in terms of guidance is that WuXi AppTec currently has ample order backlog. Combined with the ongoing rebound in global innovative drug R&D demand, the company has issued an optimistic guidance for 2026 revenue growth of 18%-22%, suggesting that its profitability capability is likely to remain steady. This standout performance not only validates the global competitiveness and order resilience of leading CXO companies, but also directly confirms the high-demand momentum of the global innovative drug R&D outsourcing segment. It provides solid performance fundamentals for the entire Hong Kong innovative drug industry chain.

BD overseas expansion sees explosive growth, and domestically made innovative drugs achieve an industry-wide qualitative shift

In addition to the hard support on the CXO earnings side, the explosive growth of domestic innovative drug BD (business development) going overseas is driving a critical qualitative turning point in industry development.

With China’s domestic pharmaceutical R&D capabilities improving by leaps and bounds, License-out has fully moved on from the fragmented breakthroughs of earlier years. It has upgraded into a mainstream industry trend characterized by scale and platformization. This is also the core lever driving China’s innovative drug industry out of the loss-making situation and toward an upgrade in profitability. Based on industry data: in the first quarter of 2026, the total disclosed transaction amount for overseas BD deals of domestic innovative drugs already reached $57.5 billion, up significantly by 135% year over year, and deal activity continues to climb.

What’s even more worth noting is that the industry’s cooperation model has undergone a leapfrog upgrade. It has long moved beyond the early “low upfront payment, high uncertainty” single-product licensing model, and has gradually shifted to a high-quality cooperation paradigm featuring “high upfront payments + balanced milestone payments + high-percentage revenue sharing.” Some leading pharmaceutical companies have even secured blockbuster deals with upfront payments exceeding $1 billion, locking in stable returns early. They can further generate long-term and continuous revenue sharing through the overseas commercialization of products afterward.

From the perspective of the industry’s development landscape, China’s innovative drug going overseas with BD has also moved from the past “single-product breakthroughs” into a new stage of “platform-based output.” The participating companies are more often platform-style pharmaceutical enterprises with complete R&D pipelines and strong technical reserves. Their R&D efficiency and clinical commercialization landing capabilities have improved markedly. China’s innovative drugs have steadily increased their voice in the global pharmaceutical innovation landscape, completely transforming from being a technology importer in the past to becoming a core participant in global innovative collaborations.

Valuation returns to historic lows, and sector allocation offers standout value

After the earlier sustained pullback, the valuations of Hong Kong’s innovative drugs and biotechnology sectors have fallen back to relatively low historic ranges. The value-for-money in allocation and the payoff/risk ratio continue to stand out. There is a clear industry consensus: although the sector has gone through periodic volatility and consolidation, its core growth logic has not changed. BD overseas expansion continues to scale up and contribute steady incremental earnings; commercialization of core innovative products continues to land steadily; and industry policies keep releasing tailwinds. The three core logics work together to build the foundation for the sector’s long-term upward trajectory. At present, Hong Kong’s innovative drug sector perfectly fits the dual investment logic of short-term performance catalyst delivery and faster long-term industrial upgrading. The room for valuation repair has now been fully opened.