Tracking the concept of Hong Kong stocks | Policy, industry, and capital resonance, innovative drugs usher in a critical window (with concept stocks)

The latest data released by the National Medical Products Administration shows that from January to June this year, a total of 81 cooperation agreements were reached for the licensing of innovative drugs in China, with a total transaction amount of approximately 110 billion US dollars, accounting for 80% of the total for the whole year of 2025, reaching a new historical high. At the same time, the National Medical Products Administration revealed that in the first half of this year, a total of 38 Class I innovative drugs were approved for listing in China, including 11 new target and mechanism drugs, all of which are domestically developed innovative drugs. Driven by the continuous outbreak of overseas BD transactions and performance realization expectations, the concept of innovative drugs in the Hong Kong stock market strengthened in the short term on the 16th, with CLOVER BIO-B (02197) rising by over 11%, while ZAI LAB (09688) and other stocks followed with gains of over 5%. On the policy front, the National Health Commission, the State Administration of Traditional Chinese Medicine, and the National Health Commission jointly issued the "National List of Essential Medicines (2026 Edition)" recently, which will be implemented from September 1, 2026. This adjustment is the latest systematic adjustment since the 2018 edition of the list after eight years. This adjustment to the new edition of the essential drug list is seen by the market as a significant change in the policy environment for the innovative drug industry. Gong Xiangguang, Director of the Drug Policy Department of the National Health Commission, explained at a press conference on July 9 that this adjustment attempts to include innovative drugs in the selection scope, and after strict expert technical consultation and review, a total of 16 innovative drugs were included in the new edition of the list, including four domestic Class I innovative drugs. Gong Xiangguang stated that these innovative drugs have high clinical value, a wide audience, and are suitable for use in medical and health institutions at all levels. CITIC SEC believes that the biggest highlight of this adjustment is the first breakthrough in the convention of excluding high-priced innovative therapies from essential drugs, including domestic Class I innovative drugs, GLP-1, monoclonal antibodies, and targeted anti-tumor drugs in the list. This releases a strong policy signal to support the development of innovative drugs, further broadening the channels for innovative drugs to enter the grassroots and basic drug systems, providing clear policy support and market space for the high-quality development of the domestic innovative drug industry. Furthermore, in the midst of the interim reporting season, the market shows a preference for industries with strong fundamentals. On July 14th, Joinn Laboratories released the 2026 interim performance forecast, with estimated operating income of RMB 669 million to RMB 739 million in the first half of the year, an increase of 0% to 10.5% year-on-year; net profit attributable to shareholders of the company reaching RMB 600 million to RMB 900 million, an increase of 884.9% to 1377.4% year-on-year; and non-net profit attributable to shareholders reaching RMB 561 million to RMB 842 million, a year-on-year increase of 2334.2% to 3551.3%. Joinn Laboratories explained the performance change, stating that during the reporting period, the market prices of biological assets rose, together with the natural growth value of the assets, resulting in positive changes in their fair value, positively contributing to the company's performance. The mentioned biological assets refer to laboratory monkeys used in drug research and development stages. According to the performance brief released by Tasly Pharmaceutical Group, the net profit for the first half of 2026 was RMB 893 million, representing a 15.23% year-on-year increase. As of the end of 2025, the company had a total of 31 innovative drugs in research, with 4 in the NDA/Pre-NDA stage and 17 in the clinical II and III stages. Haisco Pharmaceutical Group expects a net profit of RMB 790 million to RMB 870 million in the first half of 2026, with a year-on-year growth of 513.25% to 575.35%. During the reporting period, the company signed multiple product licensing agreements with external parties, and according to the agreements, received advance payments and other payments in the first half of the year, achieving a substantial amount of product licensing income. With multiple positive variables resonating, the long-term growth logic of innovative drugs continues to repair, and the certainty of valuation recovery and performance realization in the second half of the year continues to increase, boosting market confidence in the long-term growth of the industry. In its research report on July 15, Sinolink stated that on the industrial side, the overseas BD of innovative drugs continues to be prosperous, with ADC and bispecifics leading the way in the global forefront, and Chinese pharmaceutical companies deeply embedded in the global industry chain; on the performance side, the expansion of the domestic pipeline, medical insurance negotiations, and the expansion of the essential drug directory are both empowering, signaling a golden period of performance realization for the industry; and on the capital side, with Hong Kong stock valuations hitting bottom, foreign capital selling nearing its lowest, and an increase in southbound capital allocation, global pharmaceutical sentiment is improving. The institution believes that in terms of investment strategy, it continues to be optimistic about the sustainable growth of domestic innovative drugs going abroad, and advises investors to pay attention to the investment opportunities brought by the commercialization of numerous molecules that have already reached BD prior to 2027; continues to be bullish on the entry of domestic innovative drugs into the golden period of performance realization; continues to be bullish on the potential valuation recovery opportunities brought by structural shifts in the overall Hong Kong stock innovative drug sector, and recommends focusing on opportunities for A/H share price differentials to narrow. Related concept stocks: CARSGEN-B(02171): On July 16, Keji Pharmaceutical announced that according to the announcement of the National Medical Insurance Administration, Kailimei (Shulijiaolun's injection, product number: CT041, a candidate product for autologous CAR-T cell therapy targeting Claudin18.2) has successfully passed the preliminary form review of the 2026 National Commercial Health Insurance Innovative Drug Catalog adjustment. As the world's first marketed solid tumor CAR-T therapy, the product has made a historic breakthrough in cell immunotherapy from hematological malignancies to solid tumors, effectively filling the clinical gap in advanced gastric cancer treatment. Joinn Laboratories(06127): Joinn Laboratories(06127) released an announcement forecasting an operating income of approximately RMB 669 million to RMB 739 million in the first half of 2026, an increase of about 0% to 10.5% year-on-year. It is expected to achieve a net profit attributable to the company's shareholders of RMB 6 billion to RMB 9 billion for the first half of 2026, representing an annual increase of 884.9% to 1377.4%. During this reporting period, the market prices of biological assets rose, combined with their natural growth value, leading to a positive fair value movement and actively contributing to the company's performance. Additionally, the company's laboratory maintained a stable operational state, although the overall industry has recovered, the revenue for this period only showed a slight increase, and the gross profit level is still to be restored due to the lagging impact of intense competition in the earlier period. WUXI BIO(02269): In early July, UBS issued a research report, raising the revenue forecast for WUXI BIO(02269) for the fiscal years 2027 to 2029, increasing its target price from HKD 49.3 to HKD 51.1, based on discounted cash flow (DCF) calculations. The "Buy" rating was maintained. During a healthcare online roadshow hosted by UBS, the company's management reaffirmed the guidance of a 13% to 17% year-on-year revenue growth for 2026, demonstrating confidence in potential demand and operational execution. Following the strong performance from January to April, the momentum of new orders in May and June remained healthy, with sustained growth in European and American markets, as well as a strong recovery trend in the Chinese market. New technological platforms, especially bispecific antibodies, continue to be the main drivers. Pricing trends are becoming more favorable, with new contract prices rising by 5% to 15%, exceeding the historical increase of 3% to 5% in previous years. The higher-priced orders signed earlier this year will support next year's revenue growth and provide support for the company's target of a 20% compound annual revenue growth rate (CAGR) over the next three years, with the production business expected to grow by 30%. The company's production capacity in China may approach full capacity next year, while overseas production capacity construction is progressing smoothly, including in Singapore and Ireland. Hangzhou Tigermed Consulting(03347): In early July, Daiwa released a research report, upgrading the rating for Hangzhou Tigermed Consulting(03347) from "Hold" to "Buy," but slightly reducing the target price from HKD 45 to HKD 44. Hangzhou Tigermed Consulting continues to show strong momentum in new orders and unfinished orders, with expectations for the conversion speed of high-priced orders in the second half of this year to accelerate. Management reiterated a new contract conversion cycle of 6 to 9 months, under the double-digit revenue growth guidance for the 2026 fiscal year, where the bank predicts revenue of approximately RMB 3.6 billion and RMB 4 billion for the first and second halves of this year, respectively. However, due to increased investment in artificial intelligence by Hangzhou Tigermed Consulting, the management lowered the full-year net profit guidance by approximately RMB 100 million (originally between RMB 600 million and RMB 700 million). The company expects AI spending to reach RMB 300 million to RMB 400 million for the year and plans to launch new AI applications in the second half of the year. Given that the adjusted net profit for the first quarter was only RMB 120 million, the updated profit guidance is deemed more achievable. The bank believes that Hangzhou Tigermed Consulting benefits from a stable order conversion rate and continuously improving order structure, with an adjusted non-IFRS EPS growth forecast for 2026 to 2028 of 52%, 36%, and 31%, respectively.