Hong Kong's innovative drug sector opened lower but moved higher on July 27, with the sector's momentum driving robust trading activity in related products. Wind data shows that the Huatai-Bairui Hang Seng Innovation Drug ETF (520500), the only ETF tracking the Hang Seng Innovation Drug Index, recorded an average daily trading volume of 2.857 billion yuan since July, with cumulative net inflows of 579 million yuan as of July 24.

China's innovative drug industry may have entered a long-term performance realization cycle, which could serve as a key support for the sector's sustained upward trend. According to the National Medical Products Administration (NMPA), 38 Class 1 innovative drugs were approved in the first half of 2026 in China, 11 of which were domestically developed first-in-class drugs with novel targets, indicating a significant improvement in the quality and efficiency of independent R&D. Additionally, the normalization of medical insurance negotiations and the expansion of the new edition of the National Essential Drugs List are opening up dual channels for innovative drugs to gain traction in both hospitals and grassroots medical institutions. High-quality pharmaceutical companies are forming a positive cycle of "high R&D investment—rich pipeline—product commercialization—reinvestment in R&D," driving a sustained release of industry profitability.

Currently, China holds a global leading position in pipeline reserves for cutting-edge areas such as ADC, bispecific antibodies, and small nucleic acids. Leveraging advantages in review processes, clinical trials, and cost, the country is deeply embedded in the global pharmaceutical supply chain. Not only is the proportion of global clinical trials conducted in China rapidly increasing, but collaborations between local pharmaceutical companies and multinational corporations (MNCs) are also deepening, providing continuous momentum for industrial synergy. Accelerating the overseas approval of innovative drugs could improve the financial statements of innovative drug companies while, in the medium to long term, pushing the domestic pharmaceutical industry to align with global R&D standards. This may incentivize companies to pursue simultaneous clinical trials in China and the US, accelerating the development of first-in-class (FIC) drugs and empowering the industry's long-term growth.

On the news front, on July 23, a domestically developed Class 1 innovative drug, Sipulocopanate Succinate Tablets, received NMPA approval for market launch. This drug is the world's first once-daily oral complement factor B inhibitor, significantly improving patient compliance compared to existing twice-daily oral formulations. This approval marks a milestone for domestic pharmaceutical companies in the rare disease field of complement targeting, positioning them among the global first tier. It validates the path of "independent R&D plus global commercialization" for domestically developed innovative drugs, boosting market expectations for domestic original innovation and pipelines for rare disease drugs.

As multiple industry catalysts continue to emerge, the Huatai-Bairui Hang Seng Innovation Drug ETF (520500), which focuses on the Hong Kong-listed innovative drug sector, has drawn market attention. It is reported that the Huatai-Bairui Hang Seng Innovation Drug ETF (520500), which supports intraday T+0 trading, tracks the Hang Seng Innovation Drug Index. Through the QDII mechanism, it invests in 40 leading Hong Kong-listed innovative drug companies, primarily focusing on mid-to-upstream areas such as biopharmaceuticals, chemical drugs, and active pharmaceutical ingredients. The index brings together a group of R&D-driven enterprises with strong research capabilities and development potential.

Huatai-Bairui Fund is one of the first ETF managers in China, with over 19 years of deep experience in index investing. The firm has provided investors with transparent, convenient, and low-cost index tools, such as the CSI 300 ETF Huatai-Bairui (510300) and the A500 ETF Huatai-Bairui (563360). As of the end of June 2026, the company's ETFs had generated cumulative profits of over 180.6 billion yuan for holders in the past two years, making it one of only three public fund companies in the entire A-share market to have accumulated profits exceeding 160 billion yuan during that period.