China's First and Only! Semaglutide Wins Another Blockbuster Indication in China; HK Innovative Drug ETF Index Drops Over 3%

Novo Nordisk's Wegovy has become the first and only GLP-1 receptor agonist approved in China for the treatment of metabolic dysfunction-associated steatohepatitis (MASH). The National Medical Products Administration (NMPA) granted approval on September 10 for semaglutide injection to treat MASH with moderate-to-severe liver fibrosis (F2-F3 stages) in non-cirrhotic adult patients, marking a significant expansion of the blockbuster drug's indications in the world's second-largest pharmaceutical market.

The approval announcement came as Hong Kong's innovative drug sector faced headwinds. The benchmark index for the HK Stock Connect Innovative Drug ETF Huitianfu (ticker: 159570), which bills itself as having "100% innovative drug purity," fell more than 3% on the day, marking its second consecutive decline. The broader Hang Seng Index dropped over 1%, while the Hang Seng Tech Index shed more than 2%.

Among the index's key constituents, Everest Medicines tumbled over 8%, while Duality Biotherapeutics fell more than 7%. Hansoh Pharma declined over 4%, and CSPC Pharmaceutical Group, Innovent Biologics, and Sunshine Guojian Pharmaceutical each dropped more than 3%. Sino Biopharm lost over 2%, with Akeso and Kelun-Biotech down more than 1%, and BeiGene slipping nearly 1%.

The market pullback occurred against the backdrop of China's 2026 National Reimbursement Drug List (NRDL) negotiations, which concluded their competitive bargaining phase. A total of 124 drugs not previously on the formulary entered the negotiation and bidding process, with innovative therapies in oncology, rare diseases, chronic conditions, and pediatric medications among the key areas under discussion. In parallel, the commercial insurance innovation drug catalog adjustment saw 12 products enter on-site price negotiations. The updated formulary is expected to be released in November 2026 and take effect on January 1, 2027.

In company news, Jiangsu Hengrui Pharmaceuticals, China's largest pharmaceutical company by market capitalization, has filed a new indication application for its reparutide injection. The September 9 filing, accepted by the Center for Drug Evaluation (CDE), seeks approval for glycemic control in adults with type 2 diabetes mellitus (T2DM). The move underscores Hengrui's continued push to expand its pipeline in the lucrative metabolic disease space.

Looking ahead, the World Conference on Lung Cancer (WCLC) 2026, scheduled for September 12-15, is expected to provide significant catalysts for the sector. The conference will spotlight next-generation immunotherapies, particularly IO 2.0 approaches centered on PD-1/VEGF bispecific antibodies, and antibody-drug conjugates (ADCs). The first-line non-small cell lung cancer (NSCLC) treatment paradigm is on the cusp of a major shift, with PD-1/VEGF bispecifics accumulating evidence of superiority over monoclonal antibodies, and IO 2.0 plus ADC combinations approaching proof-of-concept stage. Chinese companies currently lead globally in the development of bispecific antibodies and ADCs.

Zhongtai Securities, in a September 9 research note titled "Review of Moderna Event, Outlook for Major Global Innovative Drug Catalysts in Sep-Dec 2026," highlighted several key catalysts to watch. These include Pfizer's mevrometostat in the MEVPRO-1 Phase 1 trial, which showed promising data when combined with enzalutamide—median radiographic progression-free survival of 14.3 months versus 6.2 months (HR 0.51), with PSA50 response rates of 34.1% versus 15.4%—potentially challenging XTANDI, a therapy with approximately $6 billion in sales facing patent expiry in 2027. The firm also flagged Dianthus Therapeutics' claseprubart, whose CIDP Phase 3 interim analysis triggered with 30 out of 40 patients (75%) achieving response, potentially positioning it to capture share from VYVGART, which generated $4.151 billion in 2025 sales with 90% growth.

CITIC Securities, in a September 10 report titled "Innovative Drug Going Global Enters a Sweet Spot, Sector Reaches Earnings Inflection Point," painted an optimistic picture of China's innovative drug industry. The brokerage noted that Pharma sector revenues grew 9.00% year-over-year in the first half of 2026, while net profit surged 26.25%, with gross margins expanding to 72.03% and net margins reaching 22.73%. The Biotech and Biopharma segment showed even more dramatic improvement, with revenue growth accelerating to 47.71% (up from 14.12% in H1 2025), and the sector swinging to profitability with net margins of 15.21% compared to a loss of 7.86% a year earlier.

Several Chinese innovative drugs have achieved significant commercial milestones. Furmonertinib, a third-generation EGFR inhibitor, generated 3.138 billion RMB in domestic sales during H1 2026, up 33% year-over-year. Toripalimab, Juno Therapeutics' PD-1 antibody, reached 1.299 billion RMB in sales, up 36%, while lucanthone/SHR-A1811 (an ADC) posted 526 million RMB in sales, surging 74%. In the autoimmune and metabolic space, sparsentan/SKB264 sales jumped 132%, and mazdutide is driving the metabolic and weight-loss category into the Biotech commercialization growth mainstream.

On the globalization front, Chinese innovative drug companies are accelerating international expansion. Kelun-Biotech's sac-TMT has launched 17 global Phase III studies, Akeso's core products have 9 or more overseas registration or Phase III studies, and Ascentage Pharma has 9 registration Phase III trials underway worldwide. The industry is evolving beyond simple licensing deals toward global clinical development, co-development, and NewCo structures, CITIC noted.

The brokerage recommended investors focus on three themes: leading internationalized innovative drug companies poised for global value realization; top-tier firms entering new growth phases driven by product launches; and pipeline assets with global potential accelerating international monetization. With major conferences including WCLC, ESMO, and ASH expected to deliver dense data readouts in the second half of 2026, CITIC believes that leading Biopharma companies with domestic commercialization capabilities, sustainable cash generation, and global clinical development expertise are well-positioned to establish further competitive advantages on the world stage.