Innovative drug concept stocks broadly retreated, with InnoCare Pharma (09969) falling 8.38% to HK$13.55, RemeGen (09995) dropping 5.71% to HK$72.7, and 3SBio (01530) declining 4.95% to HK$15.75 as of press time.

On the news front, the absence of southbound capital combined with pressure from elevated U.S. Treasury yields weighed on the innovative drug sector, which had rallied strongly earlier and is now broadly pulling back.

It is worth noting that innovative drugs, as typical "long-duration assets," derive their value from distant future cash flows (a new drug typically takes 8-10 years from research and development to market launch), making their valuations highly sensitive to discount rates (interest rates).

Meanwhile, the pharmaceutical industry has seen a steady stream of positive developments recently. On the policy front, the U.S. Treasury Department's new rules on China investment are expected to preserve the ability of American pharmaceutical companies to reach licensing agreements with Chinese drugmakers. In tandem, China's pharmaceutical industry "15th Five-Year Plan" was released, further reinforcing the positioning of biomedicine as an emerging pillar industry.

Additionally, a wave of major BD deals and strategic partnerships have recently been finalized, covering frontier areas such as oral weight loss, RAS, and bispecific antibodies, with individual transaction values exceeding US$2 billion each.