Yesterday, it was lithium batteries; today, it’s innovative drugs.
In the Hong Kong stock market, Innovent Bio achieved its first-ever comprehensive profitability. The significant strategic cooperation accelerated the realization of the global value of its pipeline, causing the stock to surge by over 8%. This ignited a boom across the entire biopharmaceuticals sector. Additionally, the expiration of Novo-Nordisk A/S’s core compound patent for semaglutide in China has disrupted the long-term monopoly of this product, known as the “global blockbuster drug,” sparking market enthusiasm for Chinese weight-loss drug concept stocks.
Collective surge in innovative drugs
On March 27, innovative pharmaceutical stocks in the Hong Kong market collectively soared, with the sector rising by nearly 5%.$CSPC PHARMA (01093.HK)$ Up over 13%, $EVEREST MED (01952.HK)$ The stock surged nearly 12%.$3SBIO (01530.HK)$ Increased by more than 9%, $INNOVENT BIO (01801.HK)$ Surged over 8%.
On March 26, $INNOVENT BIO (01801.HK)$ In its 2025 annual report, the company reported total revenue of 13.042 billion yuan for the year, representing a year-on-year increase of 38.4%, and net profit attributable to shareholders of 814 million yuan, reflecting a staggering year-on-year increase of 959.72%. This marked the company’s first full-year profitability. In its announcement, Innovent Bio stated that 2025 was a pivotal milestone in its development history, achieving historic breakthroughs in business scale, profitability, and global innovation.
Analysts believe that Innovent Bio, with its roots in China, is poised to become a world-class biopharmaceutical company by 2030. Among its 18 marketed products, 12 have been included in the national medical insurance system. In the CVM field, products such as Mazdutide and PCSK9 monoclonal antibodies are experiencing rapid sales growth, while in oncology, the PD-1 monoclonal antibody has gained new indications and been included in the medical insurance system, driving product revenue growth by 44.6%. By 2025, upfront payments from partnerships are expected to exceed $1.6 billion, with total transaction values surpassing $22 billion. Through self-development and strategic collaborations (such as the Co-Co model with Takeda), the company is expanding its global team and strengthening its international R&D, registration, and commercialization capabilities.
Innovent Bio’s turnaround to profitability marks a milestone of significant value, breaking the market stereotype of innovative pharmaceutical companies as ‘high input, low output’ entities. It also serves as a crucial catalyst for valuation recovery in the innovative drug sector.
Additionally, $Novo-Nordisk A/S (NVO.US)$ The core compound patent for Semaglutide has expired in China. Semaglutide, a novel long-acting GLP-1 analog developed by Novo-Nordisk A/S, has topped the global prescription drug sales rankings due to its remarkable weight-loss and glucose-lowering effects, serving as a key driver of Novo-Nordisk A/S’s revenue growth.
According to a report by灼识咨询(CIC), the domestic GLP-1 drug market shows considerable potential. By 2032, the market size for Type 2 diabetes treatment is projected to reach 68.8 billion yuan, while the market for obesity treatment is expected to reach 42.7 billion yuan, with the combined value of these two core indications exceeding 100 billion yuan.
Expectation gaps still exist.
Stock price increases are often driven by expectation gaps. Institutions believe that China’s innovative pharmaceuticals sector is at the starting point of a long growth cycle, with high-quality assets being globally exported, and their potential has not been fully reflected in A/H share pricing.
The number and value of overseas biotech licensing deals (BD) for China’s innovative pharmaceuticals have reached new highs, significantly increasing their global share. The continued growth of BD exhibits high predictability. Expectation gaps regarding the sustainability of BD cash flows are substantial. During major conferences such as AACR, ASCO, and ADA between April and June, a significant amount of clinical data will be disclosed; critical data readings are expected to positively impact the overall market; platform-based companies’ continuous BD generates sustained high cash flow, and this ‘China model’ remains undervalued.
Innovative drug assets are relatively undervalued in the A/H stock markets, primarily due to systematic underestimation by A/H capital markets of domestic innovative pharmaceutical companies’ overseas revenue and errors in forecasting future overseas cash flows. The business development (BD) of platform-based companies is sustainable and will become the dominant business model.
Notably, the 2026 government work report proposed to ‘develop emerging pillar industries such as integrated circuits, aerospace, biomedicine, and low-altitude economy.’ Compared to the 2025 report’s phrase ‘fostering and expanding emerging and future industries,’ the positioning of the biomedical industry has notably advanced, being elevated for the first time to the level of an ’emerging pillar industry,’ further strengthening its strategic significance.
Guosheng Securities believes that, for the pharmaceuticals sector, this signifies that policy orientation toward biomedicine is upgrading from ‘cultivating emerging sectors’ to ‘a key pillar direction for economic growth and industrial upgrading.’ Among these, innovative drugs, as the most core high-value-added segment of the biomedical industry, stand to benefit particularly clearly.
AI Portfolio Strategist Now Live!One-click insights into your portfolio, fully grasp opportunities and risks.
Editor/KOKO
