Recently, the pace of sector rotation in the market has accelerated, with the high-profile AI track entering a phase of deep adjustment. As a result, many market funds have begun to adopt a strategy of rotating from high to low positions, gradually shifting their focus to sectors that are within a reasonable valuation range and have a steadily improving fundamental picture. Against this backdrop, the innovative drug sector, which has undergone a relatively full adjustment in the early stage and has a clear long-term growth narrative, has captured market attention.
As the only ETF currently tracking the Hang Seng Innovation Drug Index in the entire market, the Huatai-PineBridge Hang Seng Innovation Drug ETF (520500) has attracted total net inflows of 1.63 billion yuan so far this year. This has propelled the fund's share count and net asset value to climb to 2.344 billion units and 3.291 billion yuan, respectively, representing an increase of 87% and 70% from the beginning of the year. Its liquidity advantage is notably prominent.
The continuous iteration at the industry level is one of the core supports for the recovery in the innovative drug sector's valuation. Since the beginning of 2026, with the continuous optimization and improvement of the domestic drug review and approval mechanism, coupled with the steady enhancement of the overall innovative capacity of the industry, the new research and development direction for local pharmaceutical companies has become "First Chinese Launch, Global Synchronisation, Global Leadership." Consequently, the pace of domestic innovative drugs coming to market has significantly accelerated. According to statistics from PharmaCube, as of July 27, 10 innovative drugs have successfully achieved their first market launch domestically this year. Among them are several original domestic First-in-Class (FIC) drugs with novel mechanisms and new targets, and multiple varieties have also obtained globally exclusive indications, marking a substantial improvement in the core R&D competitiveness of domestic innovative drugs.
As R&D capabilities continue to break through, the international influence and market recognition of domestic innovative drugs are steadily rising. Data from the National Medical Products Administration shows that in the first half of 2026, China's innovative drugs signed a total of 81 out-licensing collaborations, with a total transaction scale of approximately 110 billion US dollars. This figure has already reached 80% of the total transaction value for the entire year of 2025. These collaborations cover ten major core therapeutic areas, including oncology, metabolism, immunology, and neurology, and the overseas partners span 20 countries and regions, including the United States, the United Kingdom, and France.
In addition to the ongoing improvement in industry fundamentals, the intensive rollout of top-level policies is further injecting sustained momentum into the long-term development of the innovative drug industry. On July 13, the State Council issued the "14th Five-Year Plan for National Health," which for the first time formally incorporated the comprehensive support for the development of innovative drugs into a national-level five-year plan. The document mentions the innovative drug industry seven times and places a key focus on frontier innovation fields such as cell and gene therapy, novel antibodies, nucleic acid drugs, radiopharmaceuticals, and AI-driven drug R&D. Prior to this, on July 9, the newly revised edition of the "National Essential Drug List (2026 Edition)" was released after an eight-year interval. It included 16 innovative drugs in bulk for the first time, including 4 domestic Class I new drugs. This breaks the industry convention of the previous essential drug list which excluded high-cost innovative therapies, and effectively promotes the penetration of high-quality innovative drugs into the primary healthcare market, which is expected to open up a broader space for incremental growth for the industry.
The Huatai-PineBridge Hang Seng Innovation Drug ETF (520500) closely tracks the Hang Seng Innovation Drug Index. It invests in 40 leading Hong Kong-listed innovative drug companies through the QDII mechanism, focusing primarily on mid- and upstream segments of the innovative drug sector such as biopharmaceuticals, chemical pharmaceuticals, and active pharmaceutical ingredients. It brings together a group of R&D-driven enterprises with strong research capabilities and significant development potential. This ETF boasts a relatively large scale, good liquidity, and supports on-exchange T+0 trading. Against the backdrop of business development (BD) deal realisation, earnings inflection points, and policy support, it may serve as a convenient tool to help investors capture opportunities in the Hong Kong-listed innovative drug sector.
The manager of the Huatai-PineBridge Hang Seng Innovation Drug ETF (520500), Huatai-PineBridge Fund Management Co., Ltd., is one of the first batch of ETF managers in China. With over 19 years of deep experience in the field of index investing, the company has created index-based tools such as the Huatai-PineBridge CSI 300 ETF (510300) and the Huatai-PineBridge CSI A500 ETF (563360), which offer transparent holdings, convenient trading, and low expense ratios. As of the end of June 2026, the company's ETFs have generated a cumulative profit of over 180.6 billion yuan for their holders over the past two years, making it one of only three public fund companies in the entire A-share market to have accumulated a total profit exceeding 160 billion yuan during this period.