According to a research report published by Southwest Securities, the Hong Kong innovative drug sector achieved an attributable net profit of 1.8 billion yuan in the first half of this year, marking the first time the sector turned from losses to profitability. Currently, the innovative drug industry has entered a new cycle primarily driven by profitability, with fundamentals showing a clear inflection point. Leading companies have achieved profitability through the promotion of commercialized products, while overseas licensing and global clinical breakthroughs are accelerating the transformation of R&D value. This shift in industry trends signifies that a decade of technological accumulation is gradually converting into actual commercial results. The firm maintains a strong bullish outlook on innovative drug investment prospects, believing that companies with differentiated products combined with excellent commercialization capabilities have significant potential. Additionally, the overseas expansion of innovative drugs is expected to become a key breakthrough path for companies seeking valuation premiums.

The firm selected 149 Hong Kong-listed pharmaceutical companies, which generated total revenue of 896.12 billion yuan (+1%) and attributable net profit of 61.99 billion yuan (+29.7%) in the first half of 2025, with adjusted attributable net profit of 13.65 billion yuan (+50.1%). In the first half of 2025, 85 companies achieved positive growth in attributable net profit, accounting for 57%, while 50% (74/149) of companies achieved positive revenue growth.

R&D expenses reached 31.4 billion yuan in the first half of 2025, representing a year-over-year decrease of 7.8%, with the R&D expense ratio declining by 0.3 percentage points. Sales expenses totaled 77.7 billion yuan, down 1.5% year-over-year, with the sales expense ratio decreasing by approximately 0.2 percentage points. Administrative expenses amounted to 58.7 billion yuan, down 7.3% year-over-year, with the administrative expense ratio falling by approximately 0.6 percentage points.

The report emphasizes attention to the commercialization of innovative products by Hong Kong 18A pharmaceutical listed companies and the gradual release of performance elasticity. The firm selected 50 Hong Kong 18A pharmaceutical listed companies, which achieved total revenue of 44.9 billion yuan and attributable net profit of 2.727 billion yuan in the first half of 2025. Revenue growth reached 31.48% in the first half of 2025, while attributable net profit turned from losses to profits overall, with a growth rate of 128.4%. In the first half of 2025, 31 companies achieved positive revenue growth, accounting for 62%, while 28% of companies achieved positive profit growth.

R&D investment totaled 17.5 billion yuan in the first half of 2025, down 1.16% year-over-year. Cash and cash equivalents of Hong Kong 18A companies reached 84.4 billion yuan in the first half of 2025, up 26.99% year-over-year.