5-minute limit-up! Billion-dollar giant completely ignites! The entire sector surges collectively.

Today it’s the turn of innovative drugs!

Yesterday it was lithium batteries, today it’s the turn of innovative drugs. On the morning of March 27, the innovative drug concept continued to rise, with Meheco hitting the daily limit five minutes after the opening, Kintor Pharmaceutical reaching a 20% limit up, Wanbangde, Lianhuan Pharmaceutical, and Shuanglu Pharmaceutical also hitting the limit, while Hotgen Biotech and InnoCare Pharmaceuticals surged over 10%. The innovative drug sector in A-shares soared by 3%.

On the Hong Kong stock side, there was also a reaction, with Innovent Biologics achieving full profitability for the first time, and significant strategic cooperation accelerating the realization of global value for its pipeline, leading to a peak increase of over 7% for the stock. This has completely ignited the entire biopharmaceutical sector. Additionally, the core compound patent for semaglutide from Novo Nordisk expired in China. This product, known as the “king of global pharmaceuticals,” has broken the long-standing monopoly, triggering market enthusiasm for Chinese weight loss drug concepts.

Innovative drugs collectively soar

On the morning of March 27, innovative drugs surged over 3%. Wanbangde climbed to the limit, Lianhuan Pharmaceutical previously hit the limit, Meheco achieved its fourth consecutive limit up, Hotgen Biotech rose over 15%, and over ten stocks including InnoCare Pharmaceuticals, HEC Pharm, Shutai Shen, Heng Rui Pharmaceutical, and Baile Tianheng rose over 6%.

In the Hong Kong market, innovative drugs also soared collectively. The sector’s increase approached 3%, and Innovent Biologics once rose over 7%. On March 26, Innovent Biologics released its 2025 annual report, showing total revenue of 13.042 billion yuan for the year, a year-on-year increase of 38.4%; it achieved a net profit attributable to shareholders of 814 million yuan, a year-on-year increase of 959.72%, marking the company’s first full-year profitability. In the announcement, Innovent Biologics stated that 2025 is an important milestone in the company’s development history, achieving historic breakthroughs in business scale, profitability, and global innovation across three dimensions.

Analysts believe that Innovent Biologics is based in China and is expected to become a top-tier global biopharmaceutical company by 2030. Among its 18 marketed products, 12 are included in the medical insurance system, with rapid growth in CVM field products like mazhutide and PCSK9 monoclonal antibodies, and new indications for PD-1 monoclonal antibodies in the oncology field being included in insurance, driving product revenue growth of 44.6%. The upfront cash payment for cooperation in 2025 exceeded 1.6 billion U.S. dollars, with a total transaction amount exceeding 22 billion U.S. dollars. By building independently and through strategic cooperation (such as the Co-Co model with Takeda), it is expanding its global team and enhancing international R&D, registration, and commercialization capabilities. Innovent Biologics’ turnaround is of milestone significance, with substantial value, breaking the market’s stereotype of innovative drug companies as “high investment, low output,” and is an important catalyst for the valuation repair of the innovative drug sector.

Additionally, the core compound patent for semaglutide from Novo Nordisk expired in China. Semaglutide is a novel long-acting GLP-1 analog developed by Novo Nordisk, topping the global prescription drug sales list due to its significant weight loss and blood sugar-lowering effects, and is the core engine driving Novo Nordisk’s performance growth. According to a report by ZhiShi Consulting, the domestic GLP-1 drug market has considerable potential. It is expected that by 2032, the market size for type 2 diabetes treatment will reach 68.8 billion yuan, and for obesity treatment will reach 42.7 billion yuan, with the total for these two core indications exceeding 100 billion.

Expectation differences still exist

Stock price increases are often due to expectation differences. Huatai Securities believes that Chinese innovative drugs are at the beginning of a long cycle, with high-quality assets being globally exported, and potential not fully reflected in A/H share pricing.

The number and amount of BD (business development) transactions for Chinese innovative drugs going overseas have reached new highs, with a significant increase in global share, and continuous growth in BD is highly predictable. There is a substantial expectation difference regarding the ongoing contribution of cash flow from BD. During the AACR, ASCO, ADA, and other major conferences from April to June, a considerable amount of clinical data will be disclosed; the release of significant data will bring a positive impact to the market as a whole; platform companies continuously generating BD will bring ongoing high cash flow, and this “Chinese model” has not yet been fully valued.

Innovative drug assets are relatively undervalued in A/H shares, mainly due to the systemic underestimation of domestic innovative drug companies’ overseas revenue and errors in future overseas cash flow predictability judgments. BD of platform companies is sustainable and will become the main business model.

It is worth noting that the government work report for 2026 proposed “building emerging pillar industries such as integrated circuits, aerospace, biomedicine, and low-altitude economy.” Compared to the 2025 report’s expression of “cultivating and expanding emerging industries and future industries,” the industrial positioning of biomedicine has clearly risen, being placed at the level of “emerging pillar industries” for the first time, further strengthening its strategic significance.

Guosheng Securities believes that for the pharmaceutical sector, this means that the policy positioning for biomedicine is upgrading from “nurturing new tracks” to “an important pillar direction for economic growth and industrial upgrading,” with innovative drugs as the most core and high-value-added segment of the biopharmaceutical industry, particularly benefiting from this shift.

(Source: Securities China)