The innovative drug sector has been gaining significant momentum recently. On July 10th, alongside a strong performance from the sector, the Huatai-PineBridge Hang Seng Innovation Drug ETF (520500) recorded a daily turnover of 33.49 billion yuan, marking its second-highest single-day turnover since listing. Since the beginning of July, the product's average daily turnover has reached 26.49 billion yuan, a substantial increase from the average daily turnover of 8.81 billion yuan in the first half of the year. Concurrently, the fund's recent size has grown to 29.29 billion yuan, representing an increase of nearly 20% over the past month.

The heightened market attention reflects a pivotal trend of accelerating development in China's innovative drug industry. Data released by the National Medical Products Administration on July 12th shows that in the first half of 2026, the agency approved 38 innovative drugs, among which 11 were novel-target and novel-mechanism drugs, all of domestic origin. In the entirety of 2025, only 4 of the 11 approved novel-target and novel-mechanism drugs were domestic, highlighting the accelerating pace of China's progression towards becoming a major player in innovative drug R&D.

International recognition of China's innovative drugs has also seen a significant simultaneous increase. In recent years, the total value of out-licensing (BD) transactions for domestic innovative drugs has grown substantially, evolving from sporadic early deals to a normalized business scale in the tens of billions of US dollars. Data indicates that the total value of domestic innovative drug BD transactions reached 135.655 billion USD for the full year 2025. In the first half of 2026 alone, the total has already approached 110 billion USD, reaching approximately 80% of the 2025 full-year figure.

Positive signals continue to be released from the policy side. On July 9th, the National Health Commission issued the "National Essential Medicine List (2026 Edition)," which for the first time positions innovative drugs as a key direction for essential medicine selection, with several innovative drugs included. Analysis from Soochow Securities suggests this adjustment indicates the National Essential Medicine List is gradually shifting from a price-oriented to a clinical-value-oriented approach. Essential medicines will increasingly focus on optimizing medication structures and improving treatment quality, providing opportunities for innovative drugs to gain volume in primary care markets.

A global wave of innovation in the pharmaceutical sector is unfolding concurrently. In the first half of 2026, there were 33 merger and acquisition events in the global pharmaceutical field, with a total transaction value reaching 134 billion USD, a record high. Among these, there were 9 large-scale M&A deals each exceeding 5 billion USD. With the rapid iteration of cutting-edge technologies, global capital is expected to shift from high-stakes competition in AI computing hardware towards the innovative drug sector, which is supported by clinical validation, product launches, and M&A activity.

It is noted that the Huatai-PineBridge 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 innovative drug companies listed in Hong Kong, primarily focusing on mid-to-upstream segments such as biopharmaceuticals, chemical pharmaceuticals, and active pharmaceutical ingredients. The index aggregates a group of R&D-driven enterprises with strong research capabilities and significant growth potential.

The fund's manager, Huatai-PineBridge Fund, is one of China's earliest ETF managers with over 19 years of experience in index investment. It has developed transparent, convenient, and low-cost index investment tools for investors, such as the Huatai-PineBridge CSI 300 ETF (510300) and the Huatai-PineBridge A500 ETF (563360). As of the end of March 2026, the company's ETFs had generated cumulative profits exceeding 223.4 billion yuan for holders over the preceding two years, making it one of only three public fund companies in the A-share market to achieve cumulative profits over 200 billion yuan during that period.