BD transactions + performance-driven! Innovative drugs continue to rise, with 17 stocks' 2026 earnings forecasts doubling

Innovative drugs showed strong performance in the early trading session on April 1. Guangsheng Tang, Rui Zhi Pharmaceutical, Run Du Co., Ltd., Lianhuan Pharmaceutical, Angli Kang, Wanbangde, and Neptune Biological all hit the daily limit. Yifang Biotech, Yuan Dong Biotech, Shuotai Shen, Bibet, Baili Biotech and others surged more than 10%. Since March 24, the innovative drugs sector index has risen noticeably, with a cumulative gain of more than 15% over seven trading days.

Innovative drug BD deals are booming

The strength of innovative drugs is related to the continued boom in BD deal activity for innovative drugs in China. According to statistics from Guosheng Securities, as of March 27, the total value of innovative drug BD deals in China since 2026 has already exceeded $60 billion.

Meanwhile, in the past year 2025, China’s total value of innovative drug BD deals increased to $138.8 billion (+135%), while the upfront payment rose to $7.5 billion (+63%); in 2025, the total value of related deals in China accounted for about 50% of the total global deal value.

In addition, the number of innovative drugs under development in China is also ranked first globally. According to statistics from Guosheng Securities, as of December 31, 2025, there are 14,088 innovative drugs globally that are under development and actively in the R&D stage. Of those, Chinese companies have 4,751 originator drug products (33.7%), exceeding the United States (4,019, 28.5%), ranking first. Since 2020, the number of new innovative drugs entering clinical trials in China has grown rapidly. In 2025, 827 originator innovative drugs first entered clinical trials, accounting for 47.4% globally.

Is the earnings inflection point for innovative drugs here?

In addition to China’s rising global standing in innovative drug R&D driving sector popularity, many innovative drug companies have seen high growth in performance or turned profitable, which has also boosted sector sentiment.

Looking at leading stocks, WuXi AppTec achieved attributable net profit of RMB 19.151 billion in 2025, up 102.65% year over year; 3SBio achieved attributable net profit of RMB 8.482 billion, up 305.78%; Innovent achieved attributable net profit of RMB 7.711 billion, up 21.69%; and for leading stocks such as Hansoh Pharmaceutical, WuXi Biologics, Fosun Pharmaceutical, and Sanome Jiaji, their 2025 performance also increased significantly.

There are also some innovative drug companies that turned around materially in performance. For example, in 2025, BeiGene’s net profit was $287 million, while in 2024 the company had a loss of $645 million. In 2025, Innovent Biologics’ net profit was RMB 814 million, while in 2024 it had a loss of RMB 95 million. In 2025, Rongchang Biotech’s net profit was RMB 710 million, while in 2024 it had a loss of RMB 1.468 billion. In 2025, CSPC Qilu’s net profit was RMB 642 million, while in 2024 it had a loss of RMB 441 million. In 2025, Lepu Biotech’s net profit was RMB 261 million, while in 2024 it had a loss of RMB 411 million. In 2025, Simcere Biotech’s net profit was RMB 180 million, while in 2024 it had a loss of RMB 217 million. In 2025, Crystalink Holdings’ net profit was RMB 124 million, while in 2024 it had a loss of RMB 1.517 billion.

Innovation-drug policy position is being elevated

The strength of innovative drugs also comes from policy support. In the 2026 government work report, for the first time, the government proposed building “emerging pillar industries” such as “biopharmaceuticals.” Compared with the earlier wording of “emerging industries and future industries,” the phrasing has been further upgraded, showing that the strategic positioning for the industry has been clearly raised.

On the payment side, in July 2025, the “Several Measures to Support the High-Quality Development of Innovative Drugs” was officially released. It clearly proposed adding an innovative drugs list for commercial health insurance. In December of the same year, the National Healthcare Security Administration and the Ministry of Human Resources and Social Security officially issued the “Innovative Drugs List for Commercial Health Insurance (2025).” The first list included 19 drugs. A multi-tier payment system of “health insurance + commercial insurance” began to be rolled out.

Earnings forecasts for 17 stocks could double

Based on the 2026 earnings growth rates predicted by institutions, Bai Cheng Pharma ranks first, with an expected year-on-year growth of 1704.55% in 2026 performance. Fu Xiang Pharmaceutical follows closely, with an expected performance increase of 1032.14%. HUiYu Pharmaceutical, YINUOXS, CareSense, and YuanDuan Gene and others also have relatively leading expected growth rates. Overall, 17 stocks in the innovative drugs sector are expected to see their 2026 earnings double.

Looking ahead, Yingda Securities believes the healthcare and pharmaceutical sector has significant allocation value. Aging will drive growth in the management of chronic diseases and demand for innovative drugs and medical devices over the long term. Looking into 2026, the fundamentals of the industry are expected to improve. It is recommended to focus on innovative drugs, traditional Chinese medicine, and medical devices—areas that combine both defensive characteristics and growth potential.

Guohai Securities, meanwhile, pointed out that domestic companies’ innovation capabilities are gradually strengthening, and the logic behind innovative drugs and devices has not undergone fundamental changes. Combined with the fact that the healthcare sector’s current valuation is at a historical mid-to-low level, the sector’s allocation value is highlighted. Under the dual drivers of policy support and improved clinical conversion efficiency, Biotech companies with global capabilities are expected to see both earnings and valuation rise.

Source: Eastmoney Research Center