Some institutions suggest that the overall pricing for innovative drugs is currently at a low point poised for recovery, with supply-side consolidation stabilizing. This could lead to further profit restoration in 2026, driven by robust demand, according to a report from the STAR Market Daily on August 4, 2026.
Three driving forces are converging, potentially pushing the innovative drug trend upward. By examining the industry's core support logic across three dimensions—earnings, policy, and global expansion—the upward trajectory for innovative drugs appears to have a medium-to-long-term foundation.
1. Strong Fundamentals: Accelerated Earnings Fulfillment in Innovative Drugs
At the industry level, Wind data shows that as of August 3, 2026, 104 A-share pharmaceutical and biotech companies had released semi-annual earnings forecasts, with 67 expecting net profit growth (including turning losses into profits or reducing losses). This data is referenced from the Financial Street report on August 4, 2026, and Xinhua News Agency's August 4, 2026 article. Analysts believe the pharmaceutical sector showed structural divergence in the first half of the year, with innovative drug chains performing exceptionally well while traditional segments recovered more slowly. This is primarily driven by a recovery in the investment and financing environment and sustained high growth in business development transactions, as noted by Xinhua Finance on July 31, 2026.
2. Top-Level Policy Framework: Unlocking Institutional Benefits for Innovative Drugs
In late July, the "15th Five-Year Plan for National Health" was officially released, setting the direction for the pharmaceutical industry over the next five years. It explicitly emphasizes "full-chain support for the development and application of innovative drugs and medical devices." On July 31, 2026, the National Healthcare Security Administration announced that the expert review for the 2026 National Basic Medical Insurance Drug List and the Commercial Health Insurance Innovative Drug List had concluded. Drugs with recognized clinical value, significantly enhanced innovation, and coverage gaps have passed the review. The new lists are expected to be formally released in late November. Some institutions argue that the 2026 adjustments further optimize rules on a regular adjustment basis, with innovations like the pre-declaration mechanism, the linkage between commercial insurance and basic medical insurance lists, and clear windows for conditionally approved drugs. These measures fully demonstrate ongoing support for innovative drug development from the medical insurance system. As the new round of list adjustments deepens, the efficiency of innovative drug insurance access could improve, and the incremental payment space from commercial insurance lists is promising. This information is sourced from Guosen Securities on July 19, 2026, the National Healthcare Security Administration on July 31, 2026, and Xinhua News Agency on August 4, 2026.
3. Global Competitiveness: "Innovation Plus Internationalization" as the Core Theme
According to PharmaCube statistics, in the first half of 2026, the total value of out-licensing transactions for Chinese innovative drugs reached approximately $99.7 billion, nearly double the full-year total of $52.2 billion in 2024 and close to 73% of the full-year total of $135.7 billion in 2025. Market expectations are that the scale of innovative drug business development deals this year may hit a new record high. Looking ahead to the third quarter, with major international academic conferences like WCLC, ESMO, ACR, and ASH taking place, data from multiple global Phase III and registration studies will be released. This could lead to a dense period of clinical data readouts for core domestic innovative drug pipelines. Coupled with the gradual realization of overseas commercialization progress, the value of domestic innovative drug assets with global potential may accelerate. This is based on the Xinhua Finance report from July 31, 2026.
Long-Term Logic Intact: The Allocation Value of Innovative Drugs Is Clear
Despite short-term fluctuations due to market rotation, the core logic of the innovative drug sector remains unchanged. Some analysts believe that in the second half of 2026, driven by three positive factors—weighty data readouts, record-high business development transactions, and continuous profit improvement for innovative drug companies—the market trend is likely to sustain its upward momentum. This is according to the Xinhua Finance report from July 31, 2026. For those bullish on the long-term value of the innovative drug industry, within their risk tolerance, ETF tools could be used to invest in the core innovative drug track with one click, capturing the opportunity for industry value reassessment.
Hong Kong-listed Innovative Drug ETF Yinhua (159567) and its linked funds (Class A: 023929, Class C: 023930) track the Guozheng Hong Kong Stock Connect Innovative Drug Index. This selects companies in the Stock Connect universe involved in research, development, and production of innovative drugs. It aims to capture the favorable wave of AI-empowered innovative drug R&D, domestic innovative drug overseas expansion, and the gradual improvement of commercial health insurance. This source is from Shenzhen Securities Information Co., Ltd.
The Innovative Drug ETF Yinhua (159992) and its linked funds (Class A: 012781, Class C: 012782) track the CSI Innovative Drug Index. This index focuses on leading companies in the A-share innovative drug industry chain, gathering global CXO leaders and domestic innovative and generic drug company leaders, offering a one-click opportunity to invest in innovative drugs. This source is from the CSI Index official website.
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