Hengrui Medicine Surges Over 8% on $15.2B Global Deal; HKEX Innovation Pharma ETF Rebounds with Three-Day Inflow

Today (5.12), driven by the news of Hengrui Pharma's large-scale BD deal, Hong Kong pharmaceutical stocks surged significantly in the afternoon. The content of innovative drugs reached 100%.Hong Kong Stock Connect Innovative Drug ETF (159570) Rebounds and Turns Positive, the intraday turnover easily exceeded 1.8 billion yuan. In terms of capital flow,Funds have been pouring in for three consecutive days, with a total inflow of over 1.4 billion yuan in the past 10 days!As of May 11,Scale Exceeds 30.3 Billion Yuan, Pharmaceutical ETFs Lead the Market by a Wide Margin!

In terms of news,Hengrui PharmaAnnounced on May 12, the company has reached a global strategic collaboration and licensing agreement with Bristol-Myers Squibb., jointly advancing 13 early-stage projects covering oncology, hematology, and immunology to accelerate the development of innovative drugs for the benefit of patients worldwide. According to the agreement, BMS will make related payments to Hengrui Pharma of up to 950 million US dollars, including a 600 million US dollar upfront payment, a first anniversary payment of 175 million US dollars, and a second conditional anniversary payment of 175 million US dollars in 2028.The total potential value of the agreement could reach approximately $15.2 billion.In addition, Hengrui has the right to collect corresponding tiered sales royalties from BMS based on the net sales of the product.

According to PharmaCube statistics, the outbound licensing deals of China's innovative drugs remained strong in Q1 2026, with a total value of $59.6 billion, occupying an absolute position in China's innovative drug BD transactions.Key license-out deals in the first quarter of 2026 focus on oncology, followed by metabolism and immunology.

(Medcube "2026Q1 Pharmaceutical Transaction Trends Report")

Sino Biopharm and GSK Reach Exclusive Strategic Cooperation to Jointly Advance the World's First Hepatitis B Cure.On May 11, Sino Biopharm announced that its subsidiary, Zhengda Tianqing, had reached an exclusive strategic cooperation with GSK to accelerate the launch of the first-in-class (FIC) new drug Bepirovirsen in China. Earlier this year, Bepirovirsen submitted a marketing application to the Center for Drug Evaluation (CDE) of the National Medical Products Administration (NMPA) and was included in the priority review list, with the potential to become the first drug to achieve functional cure for chronic hepatitis B.

In addition, according to statistics,Statistics on the acceptance of domestically produced innovative drugs in China for the week of May 10 show: 1 NDA, 26 INDs (covering multiple fields such as ADC, bispecific antibodies, ophthalmology, and oncology)., the regulatory end maintains an efficient review pace for clinical transformation and innovative indications.

The stocks in the index of Hang Seng Hong Kong Stock Connect Innovative Pharmaceutical ETF (159570) by Hui Tianfu showed mixed gains and losses: Hengrui Pharma surged over 8% driven by BD news, Kelun-Biotech rose over 3%, Sino Biopharm gained more than 2%, while Innovent Biologics and 3SBio both increased over 1%.

Note: The constituent stocks are for display only and do not represent individual stock recommendations.

【Why Has the Recent Performance of Innovative Drugs Been Weak?】

The recent performance of Hong Kong pharmaceuticals has been weak, mainly due to threefold market pressure.

Suppression One: AI Becomes the "Global Resonance Main Thread," Innovative Drugs Are Promising in the Medium to Long Term but Easily Marginalized in the Short Term

In overseas stock markets, the S&P Pharma sector weakened, while chips and AI...RobotLed by sectors such as technology, there is a clear tilt in style preference towards technology. At the industry level, the diffusion of AI dominates the trading主线, while innovative drugs are temporarily affected by liquidity diversion and may regain market attention after the AI hype relatively disperses.

Suppression II: Fewer catalysts before the ASCO meeting, performance in a vacuum period

After the early-stage rally in the innovative drug sector driven by expectations from AACR/ASCO unfolded between late March and early April, there was a pullback in mid to late April. Entering May, the market entered a "catalyst vacuum with no significant catalysts," making trading more event-driven.

Pressure Point Two: Certain Clinical Data Fails to Reach Statistical Significance, Amplifying Sector’s "Underperformance" Concerns

SalubrisThe primary endpoint LVEF in Phase II of JK07 for chronic heart failure did not reach statistical significance (although KCCQ and 6MWD showed clinically meaningful improvements), which may increase market sensitivity to uncertainties in innovative drug development in the short term.

[Can the Market Rebound Be Expected? What Are the Catalysts for Innovative Drugs in May?]

Catalyst One: ASCO 2026 becomes the biggest single-point catalyst in May!

In terms of conferences, the 2026 ASCO Annual Meeting will be held in Chicago from May 29 to June 2.。Thirteen studies from 12 Chinese innovative drug companies selected for LBA, hitting a record high; Akeso's Ivolitinib HARMONi-6 becomes the only Chinese study selected for Plenary LBA this year.，Baili Tianheng, Innovent Biologics, Sino Biopharm, and Shiyao/Alphamab Oncology, etc., also have significant studies selected for LBA or oral presentations.

​​Data Focus IO 2.0 and ADC Two Main Lines:Head-to-head Phase III OS/key endpoints (e.g., HARMONi-6), differentiated ADCs (e.g., TROP2/EGFR/HER3, bispecific ADCs), and long-term follow-up data of small molecule targets, if readings exceed expectations, may significantly benefit subsequent BD and the commercialization of innovative drugs abroad.

Note: The constituent stocks are for display only and do not represent individual stock recommendations.

Catalyst Two: Clear Trend of Going Overseas, Normalization of Innovative Drug BD Revenue

China's License-Out Deals Explode in 25 Years, Chinese Innovative Products Become the Global Focus.According to PharmaCube data, in 2025, the number of license-out deals by Chinese companies showed an explosive growth trend, with 158 deals made and the total transaction value exceeding 100 billion USD, reaching 135.7 billion USD (accounting for approximately 50% of the global pharmaceutical transaction value). The total upfront payment reached 7 billion USD (accounting for 37% of the global pharmaceutical transaction upfront payments). In the past three years, the number and total value of deals reached between the TOP20 MNCs and China have significantly increased, with 36 deals (21%) made in 2025 and the total transaction value surging to 69.2 billion USD (+40%). In Q1 2026, the enthusiasm for license-out deals remained high, with the upfront payment and total amount accounting for 45% and 68%, respectively, both reaching new highs.

Catalyst Three: In 2025, financing and investment growth in China's innovative drug sector will outperform overseas markets, concentrating in more mature tracks.

May 20th–21st "Pharmaceutical Investment and Financing Conference" to be held in ShanghaiMore than a thousand BD heads and investors attended the conference, which featured the release of rankings, presentations on high-potential pipelines (CGT, bispecific/multi-specific antibodies, small nucleic acids, NDCs), and precise matchmaking mechanisms. New transaction structures such as overseas expansion, platform-based collaborations, and NewCos were highlighted in discussions, potentially benefiting BD deals and capital alignment.

In 2025, the total number of global innovative drug primary market financing events was 952, a year-on-year decrease of 5.56% from 1,008 events in the previous year.468 financing events in China's innovative drug primary market, up 13.87% year-on-year; Overseas financing events amounted to 484, a year-on-year decrease of 18.93%. In terms of amount, in 2025, the total global primary market investment and financing for innovative drugs reached 34.444 billion US dollars, a year-on-year decrease of 5.61% from 36.489 billion US dollars in the previous year.In 2025, the total amount of financing in China's innovative drug primary market reached 9.234 billion US dollars, increasing by 93.35% year-on-year.; The total amount of overseas financing was 25.21 billion US dollars, a year-on-year decrease of 20.51%.

Catalyst Four: Biotech's Revenue Growing Rapidly,BeiGene, Innovent Biologics and other companies achieve turnaround

Guojin SecuritiesIt was pointed out that the revenue of most biotech companies is still in the rapid growth stage. Some biotech companies have gradually reversed losses over the past two years, and several companies such as BeiGene and Innovent Biologics are expected to turn profitable by 2025. (Source: GF Securities 202605 "Track Differentiation, Innovative Drug Sector Experiencing High Growth")

According to statistics from CPMC Securities,66 H-share Innovative Drug Listed Companies Achieved Revenue of 103.22 Billion Yuan in 25 Years, Up 32.0% YoY; Achieved Continuing Operations Profit of 4.54 Billion Yuan, Turning Around Significant Losses YoY. Specifically,Biopharma's volume is steadily expanding, with key innovative drugs expected to be approved for marketing. Future commercialization will remain the core driver of sector growth.Driving Force。

Catalyst Five: Introduction of Pre-Declaration Mechanism in 2026 National Reimbursement Drug List Adjustment to Further Accelerate Innovative Drug Access

In terms of policy, on May 9, 2026, the National Healthcare Security Administration released the "Work Plan for the Adjustment of the 2026 National Basic Medical Insurance, Maternity Insurance, and Work-related Injury Insurance Drug Catalogue and the Innovative Drug Catalogue for Commercial Health Insurance (Draft for Public Comment)" along with an interpretation of supporting documents, soliciting public opinions. This plan clarifies the objectives, overall approach, main changes, and timeline for the 2026 catalogue adjustment.

CITIC SecuritiesThe securities pointed out that the 2026 National Reimbursement Drug List (NRDL) adjustment work plan, while continuing the routine adjustment mechanism, achieves breakthroughs in the following aspects: First, the "pre-submission" mechanism is introduced for the first time; second, three new conditions for the declaration of drugs outside the directory are added, including commercially insured innovative drugs in the directory, drugs transitioning from conditional approval to full approval, and drugs with the same generic name that were previously removed from the directory due to unsuccessful renewals; third, it is clarified that conditionally approved drugs can enjoy a maximum "5-year + 3-year" declaration window; fourth, the renewal rules are further improved; fifth, a coordination mechanism between the medical insurance payment standards for bidding drugs and their listed prices is established.While maintaining the "basic protection" positioning of basic medical insurance, it fully reflects the policy orientation of "genuinely supporting innovation, supporting real innovation, and supporting differentiated innovation," with positive prospects for related innovative drugs and pharmaceutical companies.。

(Source: CITIC Securities 20260511 "Introduction of Pre-Declaration Mechanism in 2026 National Medical Insurance Catalog Adjustment")

[Focus on China's Hardcore Innovative Drug Power, Representative of New Quality Productivity, Recognize Hang Seng Stock Connect Innovative Drug ETF Huitianfu (159570)]

CSI Innovation Drug ETF (159570) invests 100% in innovative drugs! As of May 6, the top ten constituent stocks account for nearly 73% of the weight, capturing the essence of innovative drugs in the Hong Kong Stock Connect!