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Monday (March 30) saw active performance in the innovative drug concept sector, with SanSheng GuoJian surging nearly 14%, while several stocks—including SaiLi Healthcare and LianHuan Pharmaceutical—hit the daily limit.

The innovative drug market size is expected to surpass 20 trillion yuan within the next five years

According to the National Medical Products Administration, in the first three months of this year, the total value of China’s innovative drug licensing transactions abroad exceeded $60 billion, approaching half of the total for 2025. As of March 27, China had already approved 10 innovative drugs for 2026, including 2 imported and 8 domestic. China’s innovative drugs have achieved historic breakthroughs, maintaining strong development momentum and potential.

Previously disclosed data from the authority shows that in 2025, China approved 76 innovative drugs for the full year, setting a record high, and the total value of overseas licensing transactions for innovative drugs also reached a historic high. That year, there were 157 overseas licensing events, with an upfront payment of $7 billion and a total transaction amount of approximately $135.7 billion, doubling the figures from 2024.

Innovative drug business development (BD) is a core business model in which pharmaceutical companies leverage buying, selling, and cooperation to globally integrate innovative drug resources and maximize commercial value. Overseas licensing (Licensing-out) is one of the key components of BD.

According to estimates by PharmaGo (Pharma magazine) and Eastmoney Securities, in 2024, China’s innovative drug market (including in-hospital sales, out-of-hospital sales, BD upfront payments, and milestones) was nearly 550 billion yuan. From 2025 to 2027, driven by BD revenue, the market is expected to explode. It is forecast that by 2030, China’s innovative drug market (including in-hospital sales, out-of-hospital sales, BD upfront payments, milestones, and sales sharing) will exceed 2 trillion yuan, with a compound annual growth rate of 24.1%.

Innovative drug companies with potential for continuous net profit growth

Data from Eastmoney Choice shows that as of the time of this report, the 2025 annual reports indicated net profit growth of over 20%, and a total of 21 companies are predicted by institutions to have consistent net profit growth in 2026.

Shanghai Yizhong ranks first, with over 800% net profit growth in 2025; KeXing Pharmaceuticals ranks second, with over 400% growth.

Stocks such as HaiNeng Technology, RongChang Biologics, Microchip Biotech, BeiGene-U, Chengdu Lead, Tigermed, and Jiankai Technology saw net profit growth rates between 100% and 222% in their 2025 annual reports.

Notably, since late March, domestic pharmaceutical giants such as Hengrui Medicine and China Biopharmaceutical have released their 2025 financial reports, showing rapid growth in the innovative drug segment (excluding BD). Biotech companies like BeiGene, Nuochang Health, and RongChang Biologics have achieved significant profit turnaround. The development model for innovative drugs has shifted from relying solely on financing to a comprehensive approach combining product commercialization, overseas R&D licensing, and financing.

Institutions: Innovative drugs are in a “golden window” of overlapping cycles

JiaoYang International states that, amid demand recovery and reshaping of the competitive landscape, the pharmaceutical industry will enter a new phase characterized by “scale surging and survival of the fittest.” Overseas expansion of innovative drugs will promote industry expansion and structural upgrading. The trend of consolidation among leading firms is accelerating, and AI-driven drug development is expected to reach a turning point in 2026.

CITIC Securities notes that the current innovative drug sector benefits from both macro liquidity and industry fundamentals: U.S. Treasury yields and A-share innovative drug stocks show a significant negative correlation. If geopolitical tensions ease and trigger a return to rate cuts overseas, it could attract global capital back into Chinese markets.

Guinjin Securities highlights that the sector is currently in a “golden window” where three cycles—performance realization, valuation repair, and conference catalysts—are overlapping.

Guosheng Securities states that the 2026 government work report first listed biopharmaceuticals as an emerging pillar industry. For the pharmaceutical sector, this indicates a policy shift from “cultivating emerging tracks” to “an important pillar for economic growth and industrial upgrading.” Among these, innovative drugs, as the most core and high-value segment of the biopharmaceutical industry, are benefiting from clear directional support.

(Article source: Eastmoney Research Center)