The sizzling innovative drug sector has magnetized heavyweight capital inflows. Xingquan Fund recently upped its stake in Hong Kong-listed InnoCare Pharma to 5%, triggering mandatory disclosure requirements. This strategic move epitomizes a broader scramble among mainland institutions for Hong Kong's biotech gems, with E Fund, Ruifu Capital, and private equity firm Shennong Investment all executing similar plays earlier this year. The explosive sector rally has delivered windfall profits: seven of this year's top-ten performing public funds owe their stellar returns to heavy biotech allocations.
Hong Kong Exchange filings revealed Xingquan Fund acquired 1.452 million InnoCare shares at HK$13.766 apiece on July 10, lifting its stake to 5.08%. At July 15's closing price, this position boasted a market value of HK$1.329 billion. Institutional enthusiasm for InnoCare runs deep – 25 mainland funds held its Hong Kong shares by Q1 2025, while 15 funds invested in its A-shares. Star fund manager Xie Zhiyu's InnoCare position in his flagship product ranked eighth among A-share holders.
InnoCare's investment case shines brightly. Co-founded by renowned scientists, the hematology-focused biotech saw its crown jewel Obinutuzimab surge 89.2% year-over-year to generate RMB310 million in Q1 2025 sales – over 80% of total revenue. The company swung to profitability during the quarter, posting RMB179.7 million net income. Unlike cash-strapped peers, InnoCare sits on a formidable RMB6.327 billion war chest, fueling its robust pipeline including the promising CD19 monoclonal antibody tafasitamab.
The biotech gold rush extends beyond InnoCare. Shennong Investment seized a 5.01% stake in CARsgen Therapeutics in March despite widening losses, a bet now yielding 65% paper gains. E Fund aggressively accumulated shares in Joinn Laboratories before paring its position to 4.21% by late April. Ruifu Capital steadily boosted its exposure to traditional Chinese medicine player Gushengtang, lifting its stake to 8.02% in April.
Hong Kong's biotech index has skyrocketed over 70% this year, turbocharging specialized funds. Standouts include Huatai-PineBridge Hong Kong Advantage Selection (up 101.67%), Great Wall Healthcare Industry Selection (94.55%), and BOC Hong Kong Stock Connect Healthcare (85.51%). Their portfolios glitter with biotech rockets: RemeGen soared over 300%, while Kelun-B and Innovent Biologics both doubled.
Fundamentals validate the frenzy. Innovent Biologics narrowed losses dramatically on 51.8% revenue growth in 2024, while breakthrough data for its IBI363 therapy at June's ASCO conference prompted Citigroup to hike its target price 50%. Commercial-stage players like Akeso and BeiGene now generate sustainable revenue streams. With licensing deals hitting record levels – Q1 2025's $36.9 billion nearly matched 2023's total – the capital influx into Hong Kong's biotech arena shows no signs of abating.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.