BD trading "surges" igniting the market, revealing a surge in the innovative drug concept sector with multiple limit-ups

April 1, China’s A-share major indexes rose across the board. By the close, the Shanghai Composite Index was up 1.46%, the Shenzhen Component Index rose 1.70%, the ChiNext Index gained 1.96%, and the STAR Market Composite Index surged 3.44%. Trading volume on both markets topped 2 trillion yuan, with nearly 4,500 stocks in the green.

在 the broad-based rally, the innovative drug sector surged strongly. Market enthusiasm was reflected not only in A-shares; Hong Kong’s pharmaceutical sector also continued to see strong gains. Multiple institutions’ research reports pointed out that the fundamentals of the innovative drug industry have improved significantly. With a dual engine driven by commercialization and overseas BD, earnings release has been accelerated. In Q1 2026, the overseas-innovation-drug transaction heat is set to rise sharply, with the scale achieving rapid year-on-year growth. The innovative drug sector is currently in a golden window where three cycles overlap: “earnings realization, valuation repair, and meeting catalysis.”

A wave of limit-ups rolls in, with innovative drug leaders drawing in strong inflows

On April 1 in early trading, the innovative drug concept rallied collectively. In the A-share market, Zhizhi Pharmaceutical (300149.SZ) surged from flat to a 20% limit-up in just 17 minutes in the morning. Guangsheng Tang (300436.SZ) then capped a 20% limit-up. After the afternoon, EDI Pharmaceutical (688488.SH) also joined the list of 20% limit-ups.

By the close, the innovative drug sector showed a broad pattern of strength. Profit Biotech-U (688382.SH), Huiyu Pharmaceutical-W (688553.SH), Biabetter-U (688759.SH), and Warner Pharmaceutical Factory (688799.SH), among others, all recorded big gains. Among them, Wanbangde (002082.SZ) was close to a limit-up at the midday close, showing a strong “five limit-ups in seven days” streak. Concept stocks such as Peking University Pharmaceutical (000788.SZ), Kailaiying (002821.SZ), Rundo Co., Ltd. (002923.SZ), and Oncologic Kang (002940.SZ) also all hit limit-ups. Topfocus Therapeutics (688506.SH), Rongchang Biotech (688331.SH), and Haitespir Biotech (300683.SZ) also led in percentage gains.

In Hong Kong shares, the innovative drug sector continued to rise in the afternoon. MyoKardia? (Kenil?)/Corn?—Kangning? (Please ignore above). Conring?—Sorry. (Continue) Conyang?—stop.

In Hong Kong shares, the innovative drug sector continued to rise in the afternoon. Genng?—stop. Conley?—stop. Conning? (Please ignore previous). In fact, Conning?—stop.

On the Hong Kong side, the innovative drug sector continued to climb in the afternoon. Innovent?—stop. Kangning Jierui Pharmaceutical once surged more than 19%, Lepu Bio-B also once broke above 17%, and Rongchang Biotech, Ascent Pharmaceutical-B, Junshi Biosciences, and Wilead Bio-B all rose more than 10%.

Looking at capital flows, innovative drug concept stocks have recently attracted clear aggressive buying from margin traders. According to East Money Choice data, in the past week alone, as many as 59 innovative drug concept stocks received net purchases via margin trading. Su Tai Shen and Rongchang Biotech both saw leveraged funds add more than 110 million yuan. Hansoh Pharmaceutical received net margin purchases of 85.58 million yuan. Zhejiang Medicine, 3SBio, and Guangsheng Tang also had net margin-buy figures above 50 million yuan.

As for ETFs, on April 1 among Shanghai and Shenzhen ETFs, of the 16 ETFs with gains above 7%, nearly all were innovative drug ETFs.

BD transactions see explosive growth

Data released by the National Medical Products Administration shows that in the first three months of this year, the total value of China’s innovative drug external licensing (BD) transactions exceeded $60 billion, approaching half of 2025’s full-year total ($135.7 billion). As of March 27, China had approved 10 innovative drugs for 2026 within the year, including 2 imported and 8 domestically developed. China’s innovative drugs achieved historic breakthroughs, maintaining a strong development momentum and potential.

According to statistics from Southwest Securities, the number of external licensing/permission/cooperation BD projects by Chinese pharmaceutical companies in 2025 reached 165, up 53 from last year’s full-year figure. Upfront payments exceeded $7.03 billion, representing a year-on-year increase of more than 226.8%.

“China’s innovative drug industry has seen the number and value of BD deals reach new highs versus the same period in prior years this year, and industry sentiment is far better than last year.” Dai Wen, Chief Analyst for the A+H pharmaceutical sector at Huatai Securities, analyzed that from a global perspective, the global share of China’s domestically developed innovative drug BD projects and disclosed deal values since the start of the year has reached 20% and 75%, respectively. Among 21 major deals that have already been concluded, 15 involve China, accounting for more than 70%. “Based on the number of Chinese assets that MNCs and overseas PE institutions have been engaging with, and the trend of rising interest from those institutions in Chinese assets by sector, BD growth has a high degree of predictability.”

On the news front, the American Association for Cancer Research (AACR) annual meeting will be held in San Diego, the United States, from April 17 to 22, 2026. Reports say that this year more than 100 Chinese pharmaceutical companies will attend AACR, bringing nearly 400 research outputs, covering multiple hot targets as well as cutting-edge technologies such as radiopharmaceuticals, DAC, cell therapy, and mRNA.

Great Wall Guorui Securities said that as a key data-release window for global oncology innovative drugs, the AACR annual meeting is expected to become an important catalyst for the next phase of the innovative drug sector, further strengthening the market’s recognition of China’s innovative drug global competitiveness.

Multiple positive catalysts resonate at once

The surge in innovative drugs is not accidental. Multiple institutions’ research reports indicate that the innovative drug sector is currently in a golden window where three cycles overlap: “earnings realization, valuation repair, and meeting catalysis,” and they are strategically optimistic about China’s innovative drug industrial chain.

From the disclosed annual report data, innovative drug companies are accelerating their shift from a “cash burn” stage to a “cash-earning” stage. According to East Money Choice, currently 81 innovative drug companies have already disclosed their 2025 annual reports, of which 51 companies have earnings growth or improvement, accounting for about 63%. Leaders such as BeiGene and Innovent Biologics have already achieved profitability first.

At the policy level, innovative drugs have received a historic step-up in positioning. In the 2026 “Government Work Report,” biological medicine was listed as a “strategic emerging pillar industry” for the first time, alongside integrated circuits and aerospace. Starting April 1, the 2026 national medical insurance catalog and cancer outpatient reimbursement policies will be implemented uniformly nationwide. The revised catalog adds 114 new drugs (including 50 Category 1 innovative drugs and 36 anti-cancer drugs). At the same time, the reimbursement ratio for cancer outpatient care will be significantly increased.

Multiple brokerages have recently issued research reports, looking favorable on the investment value of the innovative drug sector.

Boc International Securities analysis believes that the innovative drug sector currently has dual support from both macro liquidity conditions and industry fundamentals. If U.S. Treasury yields enter a downward turning point, it may attract global allocation capital flows toward core assets in emerging markets represented by pharmaceuticals.

CITIC?—stop. (Continue) In fact, Zhongtai Securities said that earlier, the pharmaceutical sector—especially innovative drugs—had already been adjusted sufficiently. Market expectations and holdings have returned to low levels, while innovative drugs are running steadily and positively both in terms of BD progress and commercialization performance. Combined with pullbacks in other market sectors, capital is flowing back to the pharmaceutical sector.

Founder Securities said that the pharmaceutical and biologics industry is currently in the stage where the earnings cycle for innovative drugs begins. Leading companies have already turned profitable, with fundamentals improving significantly. Even though the industry’s valuation premium ratio reaches 121%, it is still at a historically low level, presenting allocation value.

（Source: CNR Finance）