Innovation Pharma Sector Valuation Correction Underway, Hong Kong Stock Connect Innovation Pharma Presents Layout Opportunities

How do the three main drivers of AI, Hong Kong stock innovative drug valuation recovery, work together?

On March 24, the pharmaceutical sector saw a broad rally. By the close, the Hong Kong Stock Connect Innovative Drug ETF E Fund (159316) rose 4.21%. Among individual stocks, Concordia-B (02162.HK), InSilico Intelligent (03696.HK), Vilezibo-B (09887.HK), Kelun Botech Biotech-B (06990.HK), Kangfang Biotech (09926.HK), Xinda Biotech (01801.HK), Yasheng Medicine-B (06855.HK), and others led the gains. Trading activity remained high, and investor interest in the sector was evident.

At the industry level, dual catalysts continue to boost sector confidence. Leading CXO company WuXi AppTec (02359.HK) reported impressive earnings on the evening of March 23. For 2025, revenue is expected to reach 45.46 billion yuan, a 15.8% increase year-over-year, with net profit soaring by 107.2%. The core TIDES business (peptides/oligonucleotides) doubled in size. The company also has abundant orders, with a revenue growth guidance of 18%-22% for 2026, demonstrating strong profitability resilience and confirming the high sector prosperity of the CXO track. Additionally, the trend of innovative drug BD going global continues to heat up. In Q1 2026, the total value of domestic innovative drug export orders reached $57.3 billion, a 135% YoY increase. The export logic has shifted from single-product licensing to platform output and global rights bundling, further expanding industry growth potential.

After a deep correction earlier, the valuation of Hong Kong’s innovative drug sector has fallen to relatively low levels historically, increasing the attractiveness of allocations. The fundamental growth drivers remain unchanged: increased BD exports, commercialization of core products, and supportive policies. These three drivers jointly underpin the sector’s valuation recovery.

To seize the opportunity of Hong Kong stock innovative drug valuation recovery, it is recommended to choose the Hong Kong Stock Connect Innovative Drug ETF E Fund (159316), which has a management fee of 0.15% plus a custody fee of 0.05%, ranking among the lowest in the market. The fund focuses 100% on core innovative drug R&D companies, helping investors low-cost, one-click position the sector for valuation recovery and long-term growth dividends.