The 76th AASLD Annual Meeting, one of the world’s most authoritative liver disease conferences, recently took place. How did China’s innovative pharmaceutical companies perform at the event? Looking ahead, will the sector’s growth momentum persist?

**How Did Domestic Innovators Fare?** Chinese researchers and teams delivered standout performances, presenting a wide range of breakthroughs in hepatitis B basic research, clinical treatment, novel drug development, liver cancer mechanisms, cirrhosis, and fatty liver disease. Multiple Chinese experts received prestigious honors, while young scholars frequently secured "Young Investigator" awards. Participation from young doctors across domestic hospitals highlighted China’s deep talent pool in hepatology, further elevating the country’s global influence in liver disease research.

**Key Drug Developments and Clinical Data** Several domestic innovators drew significant attention with groundbreaking results. For instance, Hepalatide combined with interferon achieved a "sterilizing cure" for hepatitis B, while AHB-137 demonstrated a 39% sustained viral clearance rate post-treatment—bringing the goal of "clinical cure" closer to reality. Meanwhile, CG-1999 introduced a novel immune modulation strategy to activate virus-specific responses, offering a fresh approach to functional cure.

Analysts note that China’s advancements in hepatitis B treatment could contribute to WHO’s 2030 goal of eliminating viral hepatitis as a public health threat while supporting the "Healthy China 2030" initiative.

**Will the Sector’s Growth Continue?** With another wave of breakthroughs, the innovative drug sector appears poised for sustained growth, backed by several positive trends:

1. **Ongoing Globalization Momentum** Overseas licensing (BD) deals remain a core growth driver. By October 2025, China’s innovative drug sector had secured $104.2 billion in total overseas BD deals, including $8.1 billion in upfront payments—both surpassing full-year 2024 figures. With multinationals typically exhausting BD budgets by year-end, Q4 is expected to see additional transactions, bolstering market confidence.

2. **Strong Q3 Earnings** The biopharma sector reported a 7.67% YoY increase in Q3 net profit to RMB40.51 billion, led by innovative drugs and CXO segments. Accelerated commercialization and robust BD pipelines suggest continued earnings growth.

3. **Policy Tailwinds** The upcoming December医保谈判 (reimbursement negotiations) will introduce a commercial insurance catalog for innovative drugs, addressing affordability for rare diseases, high-value therapies, and first-in-class drugs. This could unlock previously constrained market potential.

4. **Sector Rebound Opportunities** After a three-month correction since August, the innovative drug sector’s fundamentals remain sound. With Q3 earnings disclosed and market sentiment shifting, healthcare may see renewed upside. For 2026, innovative drugs are expected to remain a key investment theme.

Investors bullish on the sector’s long-term prospects can consider instruments like the Innovative Drug ETF (159992) and its feeder funds (Class A: 012781; Class C: 012782) to capitalize on China’s biopharma advancement.