Zai Lab Ltd (ZLAB) shares plummeted 5.05% in pre-market trading on Friday, reflecting a broader downturn in the Hong Kong Stock Connect innovative drug sector. The decline comes on the heels of the company's recently released Q3 2025 earnings report.

The Hong Kong Stock Connect innovative drug sector faced significant pressure, with several key players experiencing notable declines. Zai Lab was particularly hard hit, with reports indicating a nearly 10% drop during Hong Kong trading hours. This sector-wide slump affected other major players, including 3SBio and Innovent Biologics, which saw declines of around 6% and 4%, respectively.

Zai Lab's sharp decline comes despite the company reporting improved financial results in its Q3 2025 earnings release on November 6. The biopharmaceutical firm posted Q3 product revenue of $115.4 million, marking a 13% year-over-year increase. Additionally, Zai Lab's net loss narrowed compared to the same period last year. However, these positive indicators appear to have been overshadowed by the broader market sentiment affecting the innovative drug sector.