The recent period has seen a notable correction in the previously high-flying technology sector, leading to increased market volatility. In contrast, following its last round of adjustments, the innovation drug sector remains in a historically low valuation range. As of July 20, 2026, the Hang Seng Innovation Drug Index's latest price-to-earnings ratio stands at 43.70 times, positioning it at the 31.96th percentile over the past five years. A confluence of positive factors—including overseas licensing deals, a recovery in investment and financing, breakthroughs in cutting-edge research, major pharmaceutical firms signaling profitability, and frequent share buybacks—has propelled the sector into a gradual rebound since late June 2026, with related ETFs seeing active trading.

From an industry perspective, the trend of innovation drugs going global continues to gain momentum. Data from the National Medical Products Administration shows that from January to June this year, the total value of China's outbound licensing deals for innovative drugs reached approximately $110 billion, accounting for 80% of the 2025 annual total and setting a new historical record. In the first half of the year, China recorded 81 outbound licensing transactions, covering 10 therapeutic areas including oncology, metabolism, immunology, and neurology, with major licensees hailing from over 20 countries and regions such as the United States, the United Kingdom, and France. Recently, the global rights for Sunvozertinib were licensed to AstraZeneca by Dizal Pharmaceutical, with an upfront payment of $600 million, plus up to $400 million in clinical development milestones, $500 million in sales milestones, and low double-digit sales royalties, further validating the global competitiveness of domestic innovative drugs.

Simultaneously, the global investment and financing environment for biopharmaceuticals continues to show signs of recovery. Research reports indicate that since 2025, global primary market funding for innovative drugs has significantly rebounded. In the first half of 2026, the total amount of primary market financing for global innovative drugs reached $26.75 billion, marking a 58.5% increase from the $16.88 billion recorded in the first half of the previous year, with continued strong growth in Q2 2026. The active financing transactions provide innovative drug companies with ample capital to expand their clinical pipelines, accelerate commercialization efforts, and subsequently generate substantial early-stage research and later-stage commercial production orders for the entire innovation drug supply chain.

Analysts further point out that as global biopharmaceutical investment and financing continue to recover, and with new molecular pathways such as peptides/GLP-1, ADCs, and small nucleic acids maintaining high activity, the performance of the innovation drug industry chain is being realized. Several companies have released their H1 2026 earnings forecasts, showing generally impressive results. Innovation drug companies are benefiting from the continuous scaling of their self-developed products and the gradual realization of overseas licensing revenue, leading to sustained high revenue growth and accelerated profit release.

HUATAI BAIRUI HANG SENG INNOVATION DRUG TRADING OPEN ENDED INDEX SECURITIES INVESTMENT FUND (QDII) (ASX: 520500), currently the only ETF in the market tracking the Hang Seng Innovation Drug Index, has seen its daily turnover exceed 2 billion yuan for 13 consecutive trading days. Since July, its average daily turnover has reached as high as 2.98 billion yuan, with a cumulative net inflow of 621 million yuan. This enthusiastic capital deployment has pushed the ETF's latest share count and fund size to 2.394 billion units and 3.408 billion yuan, respectively.

It is reported that this ETF, 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 like biopharmaceuticals, chemical pharmaceuticals, and active pharmaceutical ingredients. The index aggregates a group of research-driven enterprises with strong R&D capabilities and significant growth potential.

The fund's manager is one of China's first ETF management companies, with over 19 years of experience in the index investment field. It has built a range of transparent, convenient, and low-cost index tools for investors, such as the Huatai-PineBridge CSI 300 ETF and the Huatai-PineBridge CSI A500 ETF. As of the end of June 2026, the company's ETFs had cumulatively generated profits exceeding 180.6 billion yuan for investors over the preceding two years, making it one of only three public fund management companies in the A-share market to achieve cumulative profits over 160 billion yuan during the same period.