Chinese biopharmaceutical stocks have become extremely popular with investors this year amid strong policy support and a rise in licensing deals with multinational companies.
A more than 100 per cent gain in the Hang Seng innovative drug index this year is an indication of the euphoria sweeping the sector. Key industry players such as Hansoh Pharmaceutical Group and WuXi Biologics, which are also members of the Hang Seng Index, have more than doubled year to date.
The trade is reminiscent of the red-hot gains earlier this year in technology stocks, which were turbocharged by start-up DeepSeek’s launch of its artificial intelligence model and Beijing’s push to make the tech industry self-reliant. Years of policy support for the biotech industry – including significantly cutting the time for regulatory approvals – are bearing fruit, generating a long pipeline of innovative drugs that are now in development.
“China regards the biotech industry as a strategic one and that [support] is very important for the development of the sector,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai. “We are on an upcycle in the industry and sentiment is very strong.”
Meanwhile, little-known TransThera Sciences Nanjing, which has yet to generate revenue, hogged the spotlight after the Hong Kong-listed stock surged 116 per cent on Monday, taking its gains to 700 per cent in a month.
The evidence of the industry’s resilience can be seen in strong corporate earnings, driven by the roll-out of novel drugs and licensing deals. Jiangsu Hengrui Pharmaceuticals reported a 40 per cent year-on-year increase in first-half profit and rival Hansoh’s profit jumped 50 per cent.
