In early August, a half-year report sent shockwaves through the medical sector. It posted revenue of 28.897 billion yuan, up 38.93% year-on-year, and net profit attributable to shareholders of 11.08 billion yuan, surpassing the 10-billion mark for the first time in the first half. Based on this strong growth, the company significantly raised its 2026 full-year revenue guidance from 51.3 billion to 53 billion yuan to 58.5 billion to 60.5 billion yuan. Who delivered such a stunning performance? The secondary market quickly revealed the answer. On the first trading day after the results (August 4), the same name appeared at the top of the gainers list for A-share and H-share medical stocks. WuXi AppTec A-shares hit the daily limit, while H-shares surged 14%. On August 5, its A-share single-day turnover hit a record 19.74 billion yuan. On August 7, its H-shares jumped 7% to a new high, while A-shares rose 8.49% to a five-year high. For the week, its A-share and H-share gains reached 20.55% and 19.66%, respectively.

Led by the market leader, the entire innovation drug supply chain was ignited. On August 7, nearly 20 A-share and H-share stocks rose over 10%, with popular ETFs such as the Hong Kong Stock Connect Medical ETF (159137), Medical ETF (512170), Hong Kong Stock Connect Innovation Drug ETF (520880), and Pharma ETF (562050) seeing broad gains. Is this short-term sentiment or a long-term trend? For a company with a market cap of around 400 billion yuan, hitting daily limits, record turnover, and new highs cannot be driven solely by short-term speculation; there must be a more solid foundation. Taking a closer look at the financial report, what excited the market more was not the profits already earned, but the future revenue security. As of the end of June 2026, WuXi AppTec had 66.43 billion yuan in orders on hand, up 25.2% year-on-year. Notably, this 66.43 billion yuan in orders on hand already exceeds the full-year new revenue guidance of 58.5 billion to 60.5 billion yuan, meaning that revenue for the coming year may already be locked in.

A single flower does not make spring; a hundred flowers bloom together. Several other CXO companies have already released positive signals, continuously confirming the industry's upward trend. JOINN Lab forecasted a net profit attributable to shareholders growth rate of up to 1377.4% in the first half of the year. Pharmaron saw new contract signings in the first half increase by over 30% year-on-year. Medicilon is expected to turn a profit in the first half of the year. Industry resonance is evident. As the saying goes, "The duck feels the warmth of spring water first." It is well known that CXO has long been called the "shovel seller" for innovation drugs. When global pharmaceutical companies develop new drugs, from molecular design, preclinical research, clinical trials, to production, they almost always rely on CXO services. Thus, the CXO order book acts as a "thermometer" for the innovation drug industry, instantly revealing whether conditions are warming or cooling. Leader WuXi AppTec and several other CXO companies have proven the industry's prosperity with their performance and orders. Can innovation drug companies also use better-than-expected results to complete the two-way verification of industry resonance?

Predictably, innovation drug companies did not disappoint the market. On the evening of August 5, BeiGene announced that its half-year total revenue for 2026 reached 22.22 billion yuan, up 26.8% year-on-year, with a net profit attributable to shareholders of 3.271 billion yuan, up 627.1% year-on-year. The company simultaneously raised its full-year performance guidance, expecting total revenue to reach 44.9 billion to 46.2 billion yuan. On the same day, Innovent Biologics also reported good news: first-half product revenue exceeded 8.2 billion yuan, up over 55% year-on-year, with Q2 product revenue exceeding 4.3 billion yuan, up about 60% year-on-year. Additionally, Rongchang Biosciences and Kangnuoya reported pre-tax profits of 4.7 billion yuan and 1.2 billion yuan, successfully turning around losses. CSPC Pharmaceutical Group forecasted a net profit increase of up to 143% to 6.2 billion yuan. Simcere Pharmaceutical expects a profit of over 800 million yuan, up to 43% year-on-year. Zai Lab reported Q2 net product revenue of $105.8 million, up 11% quarter-on-quarter, with sales of Efgartigimod surging 36% quarter-on-quarter to $23.9 million.

Looking beyond individual companies to the overall industry data, optimism for innovation drugs and their supply chain remains high. Global innovation drug financing is recovering. According to data from Yiyao Mofang, global financing in the first half of 2026 reached $20.177 billion, up 58.5% year-on-year. Domestic financing was $5.81 billion, up 79.1% year-on-year, while overseas financing was $20.94 billion, up 53.6% year-on-year. Active financing in the primary market will provide ample funds for innovation drug companies and also bring orders for CXO companies. Capital expenditure by multinational pharmaceutical companies is high. According to statistics from Essence Securities, since 2023, the top 15 multinational pharmaceutical companies have invested about $200 billion annually in external partnerships. As of July 10, 2026, external capital expenditure by these top 15 companies this year has reached $200.3 billion, close to 73.5% of the 2025 full-year total, establishing a high-prosperity landscape for global pharmaceutical mergers and acquisitions. China's innovation drug BD (business development) continues to explode. According to data from the National Medical Products Administration, in the first half of 2026, China's innovation drug out-licensing achieved 81 cooperation deals, with a total transaction value of about $110 billion, reaching 80% of the 2025 full-year total and setting a new historical high for the same period. Globally, in the top 10 BD transactions in the first half of the year, Chinese innovation drug companies occupied 8 seats as sellers, gaining widespread recognition from the global market.

However, the high industry prosperity has not been fully reflected in stock prices. In the secondary market, since hitting a peak in September last year, the A-share and H-share innovation drug chain has been on a downward trend, with valuations of several core heavyweight stocks falling to levels seen at the end of 2024. It is foreseeable that this mismatch between high prosperity and low valuations will not last long. A reversal is quietly brewing. On June 22, the Hong Kong Stock Connect Innovation Drug ETF (520880) with 100% innovation drug exposure and the Hong Kong Stock Connect Medical ETF (159137) with nearly half allocated to CXO both hit historic lows in market prices. Then, they staged a sharp rebound, showing much greater resilience than the broader market during recent tech volatility. On August 7, led by the strong performance of CXO, the Hong Kong Stock Connect Medical ETF (159137) took the lead in achieving a phased victory, with its market price hitting a three-month high. Many institutions believe that the current position of the innovation drug chain has limited downside and ample upside potential, offering high cost-effectiveness for allocation. CICC's strategy team recently suggested that the current odds and probability of success for Hong Kong-listed innovation drugs are relatively favorable. However, the realization of odds ultimately depends on fundamentals. Only when fundamentals genuinely improve can the probability of success be truly enhanced, opening up room for sustained upward movement. The fundamentals of the innovation drug chain have already been answered above.

In the short-to-medium term, catalysts are abundant. This month’s interim results are likely to continue validating that innovation drugs are transitioning from a "storytelling" phase to a "realization" phase. The second half of the year’s international academic conference data readouts could serve as a key window of opportunity. The progress of Phase III clinical development for already-BD assets and the data realization of high-quality assets will be revealed, with events like ESMO (European Society for Medical Oncology) and WCLC (World Conference on Lung Cancer) worth watching closely. Related ETFs include the Hong Kong Stock Connect Medical ETF (159137), which heavily invests in the innovation drug supply chain, with 48% allocated to CXO and 20% to innovation drugs, including over 30% exposure to the WuXi group. Its underlying assets are Hong Kong-listed stocks, offering high elasticity and T+0 trading. The off-exchange feeder fund is 026922. The Hong Kong Stock Connect Innovation Drug ETF (520880) is 100% focused on innovation drug R&D companies, with 70% of its position in leading innovation drug R&D firms. Its underlying assets are Hong Kong-listed stocks, offering high elasticity and T+0 trading. The off-exchange feeder fund is 025221. The Medical ETF (512170) is the largest medical ETF in the entire market by size, focusing on medical devices and medical services. It covers 8 A-share CXO leaders, with a combined weight of nearly 30%, and also touches on the AI medical concept. Its off-exchange feeder fund is 012323. The Pharma ETF (562050) is the only ETF in the market tracking the pharmaceutical index, with over 70% allocated to A-share innovation drugs and over 20% to traditional Chinese medicine, combining the high growth of innovation drugs with the high dividend yield of Chinese medicine. Its off-exchange feeder fund is 024986. Data is sourced from the Shanghai, Shenzhen, and Hong Kong Stock Exchanges, CSI Index, Hang Seng Index, and Yiyao Mofang. Fund size and weight data are as of July 31, 2026. The Medical ETF (512170) has a size of 26.045 billion yuan, making it the largest medical ETF in the market. Institutional views are from Haitong Securities' July 15, 2026 report and CICC's July 29, 2026 report. Note: ETFs do not charge sales service fees. When investors subscribe or redeem fund shares, the subscription redemption agent may charge a commission of up to 0.5%, including fees charged by the stock exchange, registration authority, and other related parties. Fund fee rates are detailed in each fund's legal documents. Risk Warning: The index constituent stocks in the article are for display purposes only. Individual stock descriptions do not constitute any form of investment advice, nor do they represent the holdings or trading activities of any fund under the management company. The management company assesses the risk level of the Medical ETF, Pharma ETF, and their feeder funds as R3 (medium risk), suitable for balanced (C3) and above investors. The Hong Kong Stock Connect Innovation Drug ETF, its feeder fund, and the Hong Kong Stock Connect Medical ETF are assessed as R4 (medium-high risk), suitable for aggressive (C4) and above investors. Any information in this article (including but not limited to stocks, comments, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are responsible for their own investment decisions. Additionally, any views, analyses, or forecasts in this article do not constitute investment advice to readers, and we are not liable for any direct or indirect losses resulting from the use of this content. The performance of other funds managed by the management company does not guarantee the performance of this fund, and past performance does not represent future results. Fund investment carries risks. MACD golden cross signal formed, these stocks are rising well!