Hansoh Pharma Gains New Indication Approval for Core Product; Sinopharm's Rovatinitib Successfully Lands Global Deal – HKEX Connect Innovative Drug ETF (159570) Dips Nearly 2% Amid Over RMB 2 Billion Inflows

Today (March 9), the Asia-Pacific markets generally fell, and Hong Kong pharmaceuticals retreated again,Innovative Drug Purity 100%: The Hong Kong Stock Connect Innovative Drug ETF (159570) Dips Nearly 2%! Intraday Trading Volume Quickly Breaks Through 2.2 Billion Yuan, with Significant Net Subscription of 210 Million Yuan! Latest Scale Exceeds 23.1 Billion Yuan, Leading the Pack in Its Category!

In terms of news, the high-level meeting for the first time designated innovative drugs as "emerging pillar industries," proposing to accelerate the development of commercial insurance and promote the high-quality development of innovative drugs.Soochow SecuritiesIt is believed that this year's important work report in China explicitly positions the biopharmaceutical industry as an "emerging pillar industry," marking the transition of the biopharmaceutical sector from a development phase into a new stage as a strategic pillar and driver of economic growth. Regarding commercial insurance, the report emphasized the need to accelerate the development of commercial health insurance.

In terms of new drugs,On March 5, according to the official website of the Center for Drug Evaluation (CDE) of the National Medical Products Administration, the marketing application for Hansoh Pharma's Aumetinib Mesylate Tablets has been accepted.Based on the acceptance time and the company's R&D pipeline, this submission is expected to be for the marketing application of a new indication for this product. Aumolertinib Mesylate Tablets (brand name: Almelo®), independently developed by Hansoh Pharma as China’s first third-generation EGFR-TKI, have been approved for five indications in China since its initial approval in March 2020. Just last month, the product successfully gained marketing approval in the EU.

In addition, on March 7,Hansoh PharmaAnnouncing itsThe First Weight-Loss Drug: GLP-1R/GIPR Dual Agonist OlezumabPhase III Study (HS-20094-301) Conducted in Overweight or Obese Population in China Successfully Met Primary Endpoint:After 48 weeks of treatment, the average body weight reduction reached up to 19.3%, and nearly 97.2% of participants achieved clinically significant weight loss.More impressively, its gastrointestinal tolerability performance showed an average incidence of nausea of less than 10% and vomiting of less than 5%, significantly better than the already marketed drugs targeting the same point.

BD: On March 4, Sino Biopharm announced an exclusive licensing agreement with Sanofi for Rovaxistinib, a first-in-class (FIC), novel, potent oral small molecule JAK/ROCK inhibitor.The company is entitled to receive up to $1.53 billion in payments, including a $135 million upfront payment as well as potential development, regulatory, and sales milestone payments, along with tiered royalties in the high double digits.

HK Connect Innovative Drug ETF (159570) Underlying Index: Most Popular Stocks Retreat3SBio falls 5%, Akeso Biopharma drops over 4%, Innovent Biologics,BeiGeneDown more than 3%, CSPC Pharmaceutical Group, Kelun-Biotech-B down over 2%, Sino Biopharm slightly down. On the upside, Hansoh Pharma rose slightly against the trend due to new drug benefits.

Note: The weight stocks of the underlying index are for display only and are not individual stock recommendations.

【Institution: Short-term fluctuations in innovative drugs do not change long-term growth】

Orient SecuritiesIt is believed that due to the previous concentrated performance of expectations and sentiment in the innovative drug sector, the sector has continued to fluctuate since the beginning of this year. In the short term, as market sentiment is still recovering and the capital structure is still adjusting, volatility may continue. However, Orient Securities believes that the long-term trends of globalization acceleration, innovative technology breakthroughs, and industrial upgrading have not fundamentally changed.The Underlying Logic of the Medium- to Long-Term Positive Outlook for Innovative Drugs Remains Unshaken. ConsideringValuations of high-quality leading companies have entered a reasonable range.After the emotional fluctuations stabilize, it is recommended to actively focus on investment opportunities with low-position layouts, mainly concentrating on the following three main themes:

1. The focus has shifted from "whether it can go global" to "progress after going global."

In the past period, the market paid more attention to the upfront payment and total package amount of foreign licensing. When specific figures were difficult to surpass market expectations, short-term trading opportunities had been fully exploited.The core of the current innovative drug export has shifted from "whether it can be exported" to the progress of overseas clinical deployment, key data readings, and milestone achievements. The extent of "export realization" will become particularly crucial in the future.For example, Pfizer recently stated that it will continue to advance the global Phase III enrollment of SSGJ-707, expand multiple indications, and conduct clinical trials in combination with ADC. Summit also updated the progress of the HARMONi-3 trial at its earnings briefing. Enrollment for the squamous subgroup is expected to be completed in the second half of this year, with the potential for interim PFS data analysis and final PFS data readout anticipated in the first half of next year. Overall, the performance of China-produced drugs overseas has become a focal point of industry attention.

2. Cutting-edge technologies have been continuously breaking through, with the hope of taking the lead overseas.

Chinese companies are gradually taking the lead in novel therapy fields such as small nucleic acids and cell therapy, and are expected to become core global transaction assets with superior clinical data.1) The Year of Breakthrough for Small Nucleic Acids, has long since broken through the limitations of rare diseases and metabolic disorders. Breakthroughs in delivery technologies are enabling its systematic application in more chronic disease treatment scenarios, offering tremendous commercial value. For instance, companies such as Hengrui, Bowang, and Ruibo are actively developing delivery technologies for fat, the central nervous system, and kidneys.2) In vivo CAR-T clinically preliminarily validated as effective, technical pathway certainty improved, with the advantages of simpler production and usage processes and lower costs, is expected to become the mainstream direction. Against the backdrop of strong demand from MNCs, there is hope for multiple deals to be reached in the future.

3. Excellent commercial performance, with the breakeven point arriving ahead of schedule.

Leading innovative drug companies are entering a "product growth-reinvestment in R&D" positive cycle.As the core products of innovative drug companies gradually reach the commercialization cycle, rapid volume expansion is expected with the help of medical insurance and commercial insurance, and performance is likely to exceed market expectations. Orient Securities believes,This year is expected to be a key window for the sector to reverse losses, and the earnings season in March-April will become an important verification point.Leading companies have outstanding commercialization capabilities, and some innovative drug companies have high growth potential in performance, with their value expected to be re-evaluated. (Source: Orient Securities 20260306 "Short-term Fluctuations Do Not Change Long-term Growth")

【Innovative Drug BD Exceeds Expectations, Global Collaboration Drives Value Restructuring】

BD in Early 2026 Exceeds Expectations, Major Deals Land Intensively. From January to February 2026, the total amount of BD transactions for innovative drugs in China reached 53.276 billion US dollars, with 44 deals in total., the transaction volume in just the first two months of the year has exceeded that of any single quarter in 2025 and is approaching the full-year level of 2024. The consideration for individual transactions continues to rise, with the average upfront payment for BD deals from January to February 2026 reaching $172 million, a significant increase of 230% compared to $52 million in 2022. The continuous rise in transaction amounts indicates that a global trust system for collaboration on the value of China's innovative assets is gradually being established.

In specific transaction projects, Shiyao and Innovent have reached platform-level strategic cooperation with AstraZeneca and Eli Lilly respectively on multiple early-stage projects, achieving in-depth binding with multinational MNCs; Yilian and RemeGen have reached out-licensing agreements with Roche and AbbVie respectively on core ADC and bispecific antibody products, exploring a new paradigm of "IO+ADC" first-line cancer treatment; Sino Biopharm's and Ribo's siRNA products have successfully gone overseas, achieving a "from 0 to 1" breakthrough in the cutting-edge technology field of small nucleic acids.

A New Paradigm of Cooperation Drives the Value Reconstruction of China's Innovative Drugs.As the trading activity continues to rise, China's innovative drug export cooperation models are also evolving from single-product licensing to platform-level strategic partnerships. The establishment of two major early-stage research collaborations — one between CSPC and AstraZeneca, and the other between Innovent and Eli Lilly — marks a new phase in which Chinese innovative drug companies and multinational corporations (MNCs) enter into "early binding, risk-sharing, and value co-creation" partnerships.

1. Advance the cooperation phase:MNCs Shift from Late-Stage Involvement to Early Lock-In, Highly Recognizing Chinese Innovative Drug Companies' Early-Stage R&D Capabilities.

2. Deeply Binding Cooperation:Chinese pharmaceutical companies are shifting from single-product licensing to co-developing multiple early-stage pipelines with MNCs by leveraging their own innovative technology platforms, forming long-term strategic partnerships.

3. Change in Cooperation Division:From MNC-led full-process operations to Chinese pharmaceutical companies taking full charge of early-stage R&D, with MNCs undertaking global late-stage development, registration, and commercialization, an industry ecosystem of "Early Research in China + Global Transformation" is being built. It is expected that more Chinese innovative drug companies will achieve platform-level strategic cooperation in the future, deeply binding with multinational MNCs and quickly integrating into the global system to maximize global benefits and drive the reconstruction of the valuation system.

(Source:China GalaxySecurities 20260304 "Innovative Drug BD Exceeds Expectations, Global Cooperation Drives Value Restructuring"

【Focus on China's Hardcore Innovative Drug Power, Representative of New Quality Productivity, Recognize Hong Kong Stock Connect Innovative Drug ETF (159570)】

HK Connect Innovative Drug ETF (159570) Index 100% Invested in Innovative Drugs! As of February 27, the top ten constituent stocks account for 73.54% of the weight, capturing the essence of HK Connect innovative drugs!