Since the start of 2026, the innovative drug index has experienced some adjustments from its initial levels. Some institutions believe this is primarily due to market factors like changing sector preferences. Recently, positive catalysts for the innovative drug industry chain have been accumulating. In the first half of 2026, domestic innovative drug BD (Business Development) out-licensing deals exceeded $100 billion, combined with policy dividends and low valuations. Is the long-term investment value of the innovative drug sector worth seizing? (References: East Money.com, "Multiple Positive Factors Jointly Boost Innovative Drugs, Potentially Ushering in a Value Revaluation Window," 2026.7.1; 21st Century Business Herald, "First-Half BD Deals Break Through $110 Billion, Can Innovative Drugs Usher in Valuation Restructuring?" 2026.7.13)
Industry Fundamentals: A Triple Resonance of Go-Global, Policy, and Capital
Currently, the innovative drug industry is showing multi-dimensional positive trends, which may lay a solid foundation for long-term development.
1. Innovative Drug Go-Global Transactions See Both Volume and Price Increase
Data from the National Medical Products Administration shows that from January to June this year, domestic innovative drug companies completed 81 out-licensing cooperation deals, with a total transaction value of approximately $110 billion. This has already reached 80% of the total for the entire year of 2025, setting a new record for half-year transaction scale. The deals covered 10 therapeutic areas, including oncology, metabolism, immunology, and neurology, with licensees from 20 countries and regions such as the United States, the United Kingdom, France, and Italy. (Reference: 21st Century Business Herald, "First-Half BD Deals Break Through $110 Billion, Can Innovative Drugs Usher in Valuation Restructuring?" 2026.7.13)
Compared to previous years, this year's BD transactions exhibit three distinct characteristics. First, the willingness of multinational pharmaceutical companies to cooperate has significantly increased. Among the top ten global pharmaceutical transactions in the first half of 2026, Chinese companies accounted for eight. Second, transaction values continue to rise. According to statistics from Dongfang Securities, the average upfront payment and average total transaction value for BD deals in 2026 were $60 million and $1.06 billion respectively, representing year-on-year increases of 38% and 22%. Third, cooperation models are becoming increasingly diverse and profound. Beyond the traditional single-asset licensing model, new paths like multi-pipeline "package" deals, co-development and co-commercialization (Co-Co) models, and NewCo models are constantly emerging. (Reference: 21st Century Business Herald, "First-Half BD Deals Break Through $110 Billion, Can Innovative Drugs Usher in Valuation Restructuring?" 2026.7.13)
2. Policy Dividend Releases Continue
Policy catalysts are also a key driving force. Recently, policies have formed a complete support system in areas such as review and approval, clinical implementation, and medical insurance payment, laying a solid long-term foundation for the large-scale and international development of the innovative drug industry. (Reference: Securities Daily, "Triple Logic Supports the Hot 'Go-Global' Trend of Innovative Drugs," 2026.7.16)
On the drug R&D front, the review and approval mechanism has been continuously optimized. In early July this year, the National Medical Products Administration issued a document proposing to include eligible cell and gene therapy drugs in the 30-day fast-track channel for innovative drug clinical trial review and approval, while also optimizing the review and approval process to support key innovative varieties. (Reference: 21st Century Business Herald, "Accelerating the Upgrading of the Health Industry! The National Health '15th Five-Year Plan' Empowers the Development of Innovative Drugs and Devices," 2026.7.14)
The clinical implementation channels for innovative drugs have also seen a significant breakthrough. The "National Essential Drugs List (2026 Edition)," which will take effect on September 1st, has, for the first time, included innovative drugs as a selection direction in its screening mechanism, adding four domestic Class I innovative drugs. Institutions indicate that this move is expected to enhance the clinical accessibility of domestic innovative drugs. (Reference: Huatai Securities, "Essential Drugs List Update to Boost Innovative Drug Accessibility," 2026.7.13)
The payment-side supporting system is also being simultaneously improved. According to the National Healthcare Security Administration, 601 drugs passed the formal review for the 2026 medical insurance catalog adjustment, and 58 drugs passed the formal review for the commercial insurance innovative drug catalog. Analysts suggest that the payment channels for innovative drugs are becoming diversified. The approval rate for this formal review hit a record high of 91%, indicating clearer policy evaluation criteria and more stable industry expectations. (Reference: Xinhua Net, "601 Drugs Pass Formal Review for 2026 Medical Insurance Catalog Adjustment," 2026.7.15)
3. Capital Market Funds Continue to Flow into the Sector
According to Wind data, as of July 15, 2026, 28 innovative drug-themed ETFs across the market had a cumulative net inflow of 36 billion yuan within the year. Simultaneously, the research survey directions of public funds also reflect a phased adjustment in capital allocation focus. In the first five months of this year, institutional research was mainly concentrated on the AI hard-tech track. However, since June, the frequency of public fund research surveys on biomedical companies has significantly increased, indicating a rise in capital's attention to this track. (Data source: Wind, as of 2026.7.15, statistics on all stock ETFs with "innovative drugs" in their name across the market, including QDII; Reference: Securities China, "Leading Public Funds, Southbound Margin Trades on Innovative Drugs! What Signal Does It Send?" 2026.7.12)
Mismatch Between Fundamentals and Valuation Highlights Sector's Investment Value
Some institutions believe that as the global competitiveness of domestic innovative drug companies' clinical pipelines continues to improve, and medical insurance policies and commercial insurance increasingly favor innovative drugs, many innovative drug companies are poised to enter a period of reaping performance gains. The current Chinese innovative drug sector faces a divergence of "improving fundamentals and declining valuations," potentially offering good medium-to-long-term investment value. (Reference: East Money.com, "Multiple Positive Factors Jointly Boost Innovative Drugs, Potentially Ushering in a Value Revaluation Window," 2026.7.1)
For investors looking to invest in the innovative drug sector, thematic ETFs provide a tool for diversifying individual stock risk and grasping industry chain opportunities. The Innovative Drug ETF from Yinhua Fund offers a clear investment theme. Interested investors may consider, within their own risk tolerance: Hong Kong Stock Innovative Drug ETF Yinhua (159567) and its linked funds (Class A: 023929, Class C: 023930): This tracks the CSI Hong Kong Stock Connect Innovative Drug Index, selecting companies listed on the Hong Kong Stock Connect involved in business areas like "innovative drug R&D and production," aiming to capture the favorable wave of AI-empowered innovative drug R&D, domestic innovative drug go-global, and the gradual improvement of commercial health insurance. (Source: Shenzhen Securities Information Co., Ltd.)
Innovative Drug ETF Yinhua (159992) and its linked funds (Class A: 012781; Class C: 012782): This tracks the CSI Innovative Drug Index, which focuses on leading companies in the A-share innovative drug industry chain, gathering global CXO leaders and leading domestic generic-to-innovative drug companies, allowing investors to capture innovative drug investment opportunities with one click. (Source: CSI Index Official Website)
Risk Warning:
Innovative Drug ETF Yinhua Fee Structure: Fee Type: Subscription Fee/Redemption Fee, Charging Method/Rate: Subscription and redemption agent brokers may charge commissions at a standard of up to 0.50%. Management Fee: 0.50%/year, Custody Fee: 0.05%/year, Annualized Comprehensive Fund Operation Cost: 0.58%. Note: The fee structure is detailed in the fund's product information summary, as of 2026.3.27. Please refer to the latest fund announcements and fund legal documents for the most current information.
Yinhua CSI Innovative Drug Industry ETF Feeder Fund Fee Structure: Fee Type: Amount (M)/Holding Period (N), Charging Method/Rate: A-Class Subscription Fee Rate: M < 1 million yuan: 1.20%, 1 million yuan ≤ M < 3 million yuan: 1.00%, 3 million yuan ≤ M < 5 million yuan: 0.60%, M ≥ 5 million yuan: Fixed fee of 1,000 yuan per transaction. A-Class Redemption Fee Rate: N < 7 days: 1.50%, 7 days ≤ N < 30 days: 0.75%, 30 days ≤ N < 365 days: 0.50%, 365 days ≤ N < 730 days: 0.30%, N ≥ 730 days: 0. C-Class Redemption Fee Rate: N < 7 days: 1.50%, N ≥ 7 days: 0. Management Fee: 0.50%/year, Custody Fee: 0.05%/year, C-Class Sales Service Fee: 0.10%/year, Annualized Comprehensive Fund Operation Cost: A-Class: 0.70%, C-Class: 0.80%. Note: The fee structure is detailed in the fund's product information summary, as of 2025.12.19. Please refer to the latest fund announcements and fund legal documents for the most current information.
Hong Kong Stock Innovative Drug ETF Yinhua Fee Structure: Fee Type: Subscription Fee/Redemption Fee, Charging Method/Rate: Subscription and redemption agent brokers may charge commissions at a standard of up to 0.50%. Management Fee: 0.50%/year, Custody Fee: 0.10%/year, Annualized Comprehensive Fund Operation Cost: 0.72%. Note: The fee structure is detailed in the fund's product information summary, as of 2026.3.27. Please refer to the latest fund announcements and fund legal documents for the most current information.
Yinhua CSI Hong Kong Stock Connect Innovative Drug ETF Feeder Fund Fee Structure: Fee Type: Amount (M)/Holding Period (N), Charging Method/Rate: A-Class Subscription Fee Rate: M < 1 million yuan: 1.20%, 1 million yuan ≤ M < 2 million yuan: 0.90%, 2 million yuan ≤ M < 5 million yuan: 0.60%, M ≥ 5 million yuan: Fixed fee of 1,000 yuan per transaction. A-Class Redemption Fee Rate: N < 7 days: 1.50%, 7 days ≤ N < 30 days: 0.50%, N ≥ 30 days: 0. C-Class Redemption Fee Rate: N < 7 days: 1.50%, N ≥ 7 days: 0. Management Fee: 0.50%/year, Custody Fee: 0.10%/year, C-Class Sales Service Fee: 0.20%/year, Annualized Comprehensive Fund Operation Cost: A-Class: 0.61%, C-Class: 0.81%. Note: The fee structure is detailed in the fund's product information summary, as of 2026.6.17. Please refer to the latest fund announcements and fund legal documents for the most current information.
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