According to Wind data, as of April 30th, 132 listed biopharmaceutical companies have disclosed their 2025 annual reports and 2026 Q1 reports. The data indicates that against the backdrop of continuously increasing R&D investment, the biopharmaceutical industry is accelerating its departure from extensive growth patterns and may be entering a "harvest period" centered on profitability realization.

Driven by R&D, Innovative Drugs Enter a New Profit Cycle

Overall Industry Profitability Strengthens A sample of 132 pharmaceutical companies, filtered by the Shenwan industry classification, shows that the sector's overall operating revenue grew by 8% year-on-year in 2025, with net profit attributable to shareholders also increasing by 8%, demonstrating resilient performance. Entering the first quarter of 2026, the sector's profitability saw a significant boost, with revenue and net profit attributable to shareholders growing by 2% and 29% year-on-year, respectively. Analysts further point out that there is a clear divergence within the pharmaceutical sector, with the innovative drug segment maintaining high growth. Multiple factors are catalyzing the rapid increase in core blockbuster products and overall revenue for Biotech companies. Currently, the global competitiveness of domestic innovative drug companies' clinical pipelines continues to improve, and healthcare policy and commercial insurance are increasingly favoring innovative drugs. Several domestic innovative drug companies are expected to continuously enter a period of performance harvest, with many anticipated to turn losses into profits over the next 2-3 years.

R&D Innovation is the Core Driving Force Analysts believe that, in addition to the accelerated pace of innovative drug License-out for international expansion, this robust growth also benefits from the continuous realization of corporate cost-reduction and efficiency-improvement measures. Data also shows that for the aforementioned 132 companies, the sales expense ratio/administrative expense ratio grew by -1%/+2% in 2025, and by +1%/flat in 2026 Q1, indicating overall stable operating expenses. While controlling conventional expenditures, pharmaceutical companies have maintained strategic focus on innovative R&D. R&D expenses grew against the trend by 5% in 2025. Although the growth rate slowed to flat in the first quarter of 2026, the absolute scale of investment remains at a high level. R&D is the core competitiveness of biopharmaceutical companies. High-intensity R&D investment continuously drives the effective implementation of innovative achievements. Further industry analysis points out that after years of deep cultivation, the R&D systems of Chinese pharmaceutical companies have become increasingly mature, with capabilities across the entire chain from target discovery to clinical translation significantly enhanced. Companies are gradually shifting from "heavy R&D spending" to "innovation-driven value creation."

From "Heavy R&D Spending" to "Innovation-Driven Value Creation": What's Happening in Innovative Drugs? Analysis suggests that after a decade of innovative transformation from 2015 to 2025, China's pharmaceutical industry has completed the shift from old to new growth drivers. Innovative drugs, in particular, have significantly opened up new growth trajectories for Chinese pharmaceutical companies. 1. Realization of Commercial Value: Volume Surge of Proprietary Products According to the TOP10 list of innovative drug sales in the Chinese market for 2025 released by Yaozh.com, domestic innovative drugs claimed 9 spots with their strong capabilities, with many Chinese innovative drug companies becoming core players in the domestic market. The domestic innovative drug Ameile (甲磺酸阿美替尼片) ranked first with sales of approximately 5.53 billion yuan. Notably, the top-selling innovative drug blockbusters in 2025 generally possess distinct characteristics: the drugs themselves have outstanding competitiveness, with most bearing labels such as "China's first" or global "Best-in-Class (BIC)." Analysis indicates that many high-quality companies, after experiencing initial market promotion during product commercialization and overseas commercialization practices, have achieved broader patient population coverage, leading to explosive sales growth. A batch of domestic innovative drug "blockbusters" with solid clinical value have emerged competitively and have become the core profit pillars for companies. 2. Breakthroughs in Cutting-Edge Fields, Dense Release of Innovative Achievements In cutting-edge technological fields, Chinese innovative drugs are moving from "following" to "leading." The latest research report from institutions shows that the selection of Chinese innovative drugs for the 2026 ASCO reached a new high, with 13 studies from 12 Chinese innovative drug companies selected for the Plenary Session and Late-Breaking Abstracts (LBA), setting a new historical record. This reflects the continuous improvement in the quality of clinical evidence for Chinese innovative drugs and indicates their increasing participation and influence in global top-tier oncology conferences. 3. Globalization Accelerates, Expanding Growth Space for Innovative Drugs From the beginning of 2025 to the first quarter of 2026, a total of 15 months, the momentum for Chinese innovative drugs going global has continued, with the cumulative scale of out-licensing transactions approaching 200 billion US dollars. Currently, the international expansion of China's innovative drugs mainly follows four paths: out-licensing, NewCo models, strategic partnerships and co-development, and independent overseas operations. At this stage, the partners for domestic innovative drug licensing collaborations are all leading global pharmaceutical companies. Analysis suggests that as domestic innovative drugs continue to appear on the world stage of academic conferences like AACR and ASCO, China's pharmaceutical R&D capabilities are increasingly recognized by the global market. This is expected to lead to more License-out cooperation orders, bringing a new round of positive catalysts for the industry. Overall, driven by multiple positive factors, the operational quality of the innovative drug industry continues to improve, highlighting its long-term investment value. Two clearly positioned innovative drug ETFs from Yinhua Fund provide differentiated investment tools for investors, which may warrant close attention:

Yinhua CSI Innovative Drug Industry ETF (159992) and its feeder funds (Class A: 012781; Class C: 012782): Tracks the CSI Innovative Drug Industry Index (931152.CSI), focusing on the A-share innovative drug industry chain.

Yinhua HK Connect Innovative Drug ETF (159567) and its feeder funds (Class A: 023929; Class C: 023930): Tracks the SZSE-HK Connect Innovative Drug Index (987018.CNI), focusing on listed companies in the innovative drug field within the scope of the Hong Kong Stock Connect.

Risk Warning: (Note: The extensive fee tables from the original text have been omitted here as per the instruction to skip code/HTML snippets. The core financial news content has been rewritten and translated.)