Multiple positive factors are converging in the innovative drug industry, leading to a sector rebound since late June 2026. The global clinical and approval timelines for major overseas drug candidates are becoming clearer, with continuous breakthroughs in cutting-edge fields like cell therapy and AI-driven drug discovery. Profit signals from leading pharmaceutical companies are becoming more defined, and combined with factors like intensive share buybacks, market sentiment has noticeably improved, leading to active trading in related ETFs.

The market's only ETF tracking the Hang Seng Innovation Drug Index, the Huatai Bairui Hang Seng Innovation Drug ETF (520500), has seen its daily trading volume exceed 20 billion yuan for four consecutive trading days. Since July, its average daily turnover has reached a high of 25.13 billion yuan. This enthusiastic capital inflow has pushed the ETF's latest unit count and asset size to 2.087 billion units and 28.85 billion yuan, respectively.

China's Dominance in Global Licensing Deals

China's innovative drug out-licensing continued its explosive growth in the first half of 2026, with both the scale and quality of transactions reaching new heights. According to pharmaceutical industry data, the total value of domestic License-out deals in H1 reached 99.7 billion US dollars, with disclosed upfront payments exceeding 6.45 billion US dollars. The average total value per deal increased by over 30% compared to the same period in 2025. Notably, Chinese companies occupied 8 out of the top 10 spots in global License-out transactions. Partners included top multinational pharmaceutical giants such as AstraZeneca, Bristol-Myers Squibb, Pfizer, and Eli Lilly, indicating that Chinese innovative drug assets have become a core source for supplementing the pipelines of global drugmakers.

Global Biopharma Funding Rebound

Global biopharmaceutical investment and financing emerged from a prolonged downturn in 2026, with funding for innovative drug R&D surging both domestically and internationally. According to Guoyuan Securities statistics, as of May 2026, the global biopharma sector completed 108 financing rounds in a single month, with a disclosed total exceeding 7.2 billion US dollars, significantly higher than the same period in 2025. U.S. biotech IPO fundraising reached 4.5 billion US dollars, which is five times the amount from the same period in 2025 (800 million USD) and more than double the 2024 level (1.9 billion USD).

Valuation Recovery Potential

Currently, the healthcare and biotech sector has experienced a significant correction this year, with valuations at historically low levels. Coupled with better-than-expected overseas expansion, policy tailwinds, and a warming financing environment, the sector may have a strong foundation for valuation recovery.

The Huatai Bairui Hang Seng Innovation Drug ETF (520500), which supports intraday T+0 trading, tracks the Hang Seng Innovation Drug Index. This index invests in 40 leading Hong Kong-listed innovative drug companies through the QDII mechanism, primarily focusing on mid-to-upstream segments like biopharmaceuticals, chemical drugs, and active pharmaceutical ingredients. It aggregates a group of R&D-driven companies with strong capabilities and significant growth potential.

About the Fund Manager

Huatai Bairui Fund Management is one of China's pioneering ETF managers, with over 19 years of experience in index investment. It has created transparent, convenient, and low-cost index tools for investors, such as the Huatai Bairui CSI 300 ETF (510300) and the A500 ETF Huatai Bairui (563360). As of the end of March 2026, the company's ETFs had cumulatively generated profits exceeding 223.4 billion yuan for holders over the preceding two years, making it one of only three public fund companies in the A-share market to achieve cumulative profits over 200 billion yuan during that period.