The innovative drug sector has undergone a significant correction from its yearly highs, with valuations and institutional holdings now at relatively low levels. As earlier market-suppressing rumors about overseas BD policies have been gradually disproven, coupled with a wave of share buybacks from multiple pharmaceutical companies and the approaching interim report season in July-August, attention on the innovative drug track is heating up.
Related ETF trading activity in the innovative drug sector is robust, reflecting increased investor enthusiasm for positioning. Data from Wind and exchanges shows that the Huatai Bairui Hang Seng Innovation Drug Trading Open Ended Index Securities Investment Fund (QDII) (520500), currently the only ETF in the market tracking the Hang Seng Innovation Drug Index, has seen its latest scale surpass 24.37 billion yuan, with its share count climbing to a record high of 2.037 billion units. This ETF has seen expanding turnover over the last three trading days, attracting over 82 million yuan in net inflows, with its single-day turnover yesterday breaking through 20 billion yuan.
On the news front, the "2025 Annual Report on the Progress of New Drug Registration Clinical Trials in China" released by the National Medical Products Administration on June 22 showed that the total number of drug clinical trial registrations in China that year exceeded 5,000 for the first time, reaching a historic high of 5,215. Among these, new drug clinical trials numbered 2,997, an 18% year-on-year increase, indicating sustained release of industrial innovation vitality.
Simultaneously, several listed companies in the innovative drug and related supply chain have recently announced share repurchase plans, demonstrating confidence in their long-term value with real capital. Since Q2 2026, dozens of A-share and H-share listed pharmaceutical companies have released shareholding increase announcements, with some firms announcing repurchases as many as 40 times, and cumulative repurchase amounts and share numbers continuing to expand.
Zhongtai Securities also noted that the overall valuation of the pharmaceutical sector is currently at a historically low percentile, with limited room for further decline. After several years of adjustment and consolidation, sector bubbles have been cleared. Policy has also shifted from pure cost control to supporting innovation, import substitution, and overseas expansion, fundamentally changing the industry's medium-to-long-term growth logic. Industrial capital has already recognized the investment value with real money.
As the only ETF currently tracking the Hang Seng Innovation Drug Index in the market, the Huatai Bairui Hang Seng Innovation Drug Trading Open Ended Index Securities Investment Fund (QDII) (520500) invests in 40 leading Hong Kong-listed innovative drug companies through a QDII mechanism. Its top five constituent stocks are Innovent Biologics, BeiGene, Kelun-Biotech Biopharmaceutical, Akeso Inc., and Sino Biopharmaceutical. This ETF features a relatively large scale and superior liquidity, and supports intraday T+0 trading. Against the backdrop of a relatively full prior sector adjustment, intensive share buybacks by numerous pharmaceutical companies, and ongoing policy support, it may serve as a convenient tool for investors looking to position for opportunities in Hong Kong-listed innovative drug stocks.
As one of China's first ETF managers, Huatai Bairui Fund has been deeply involved in the index investment field for over 19 years, creating transparent, convenient, and low-cost index tools for investors, such as the Huatai Bairrui CSI 300 ETF (510300) and the Huatai Bairui A500 ETF (563360). As of the end of March 2026, the company's ETFs had cumulatively generated over 223.4 billion yuan in profits for holders over the previous two years, making it one of only three public fund companies in the A-share market to achieve cumulative profits exceeding two hundred billion yuan during that period.