CMB International: Valuation recovery of mainland innovative drug sector will continue, with INNOVENT BIO (01801) as the first recommendation.

Zhaojin International released a research report stating that the fundamentals of China's innovative drug industry are strong, and the scale of BD transactions for innovative drugs going global is growing rapidly. The continuous growth of BD transaction scale in the Chinese innovative drug industry continues to validate its research and development strength. China's extremely high early-stage research and development efficiency, massive clinical resources, and abundant scientific talent constitute the global competitive advantage of the Chinese innovative drug industry. Driven by strong fundamentals, the valuation repair of the innovative drug sector will continue. The recommended targets include Innovent Biologics (09606), CSPC Pharma (01093), 3SBio (01530), and INNOVENT BIO (01801). According to the report, according to PharmaCube statistics, the total amount of China's innovative drug License-out transactions going global since the beginning of the year has reached 109.9 billion US dollars, with 140 transactions, of which the upfront payment amount is 5.9 billion US dollars. The total amount of transactions has reached 79% of the full-year 2025, and the upfront payment has reached 82% of the full-year 2025. It is worth noting that the proportion of upfront payment in BD transactions going global since the beginning of the year accounts for 5.4% of the total transaction amount, which is consistent with the full-year 2025 figure of 5.2%, reflecting that the structure of BD transactions going global is still biased towards early-stage varieties, and most of the value realization will depend on milestones and potential sales sharing. The report points out that this year, multinational corporations (MNCs) have reached large BD cooperation agreements with leading Chinese innovative drug companies for multiple early-stage pipelines. MNCs fully recognize the efficiency and quality of early-stage research and development by Chinese innovative drug companies, so they have reached multiple cooperation agreements for early-stage pipelines to lock in research and development resources. At the same time, MNCs' enthusiasm for seeking late-stage potential pipelines in China will continue to rise.