China’s innovative drug sector has demonstrated remarkable performance in 2025, with the Hong Kong-listed Innovative Pharmaceuticals ETF (513120) surging over 60% year-to-date as of June 10. The ETF achieved record-breaking daily turnover exceeding 13 billion yuan, maintaining its position as the most actively traded ETF and reflecting heightened market interest in biopharmaceutical innovation.
Analyzing the Sustainability of the Biotech Rally
Industry experts present diverging views on whether the current market enthusiasm represents a short-term phenomenon or a fundamental revaluation. “This rally results from converging factors including clinical breakthroughs, major business development deals, and favorable policies,” said Lu Likang, Director at CIC Burning Rock Consulting, noting previous valuation mismatches between market prices and clinical value.
The sector gained significant momentum after 3SBio’s landmark $1.25 billion collaboration with Pfizer, prompting investors to scrutinize pipelines for the next potential breakthrough candidates. Market attention focuses particularly on assets demonstrating Best-in-Class potential, critical clinical progress, or international licensing opportunities.
Clinical Research Achievements Support Optimism
Recent data reveals China’s growing presence in global drug development. Soochow Securities reports Chinese researchers presented 73 oral presentations at the 2025 ASCO meeting – a historic high. Chinese companies contributed 89 of 184 featured ADC studies (48.4%) and 34 of 69 bispecific antibody researches (49%), with particularly impressive data in solid tumors and hematologic malignancies.
“China’s share in global oncology trials reached 40% in 2024, compared to just 5-10% a decade ago,” Lu noted, suggesting the country’s transition from follower to innovator in drug development. However, concerns persist about whether the rally can withstand challenges including financing constraints, commercialization hurdles, and payment system limitations.
Policy Tailwinds Complement Market Enthusiasm
The sector received additional support on June 9 when China’s central authorities announced plans to reform medical insurance catalog adjustments and establish a commercial health insurance directory for innovative drugs. These measures aim to address critical patient needs while creating more sustainable market access pathways for breakthrough therapies.
Balancing Short-Term Excitement with Long-Term Fundamentals
While acknowledging the current positive momentum, analysts emphasize that sustained growth will require continued delivery of high-quality clinical data. “The initial boost from licensing deals needs validation through ongoing clinical readouts to maintain investor confidence,” Lu cautioned, highlighting the importance of translating scientific innovation into commercial success.
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