Over the past three months, three major innovative drug indices—the Shanghai Stock Exchange STAR Innovative Drug Index, the CSI Innovative Drug Industry Index, and the Hang Seng HK Stock Connect Innovative Drug Index—have each climbed more than 14%. Capital has been pouring into the innovative drug sector, with multiple pharmaceutical ETFs recording combined net inflows exceeding 22 billion yuan over the same period. Among them, innovative drug ETFs managed by firms such as Guotai, Yinhua, and E Fund each attracted over 2 billion yuan in inflows.
Looking at first-half performance, the innovative drug sector and its supply chain have continued to sustain robust earnings growth, with several companies beating expectations. According to a research report from Industrial Securities, as of August 28, excluding firms that had not yet released interim reports, the A-share innovative drug index posted a 6.41% year-on-year increase in first-half 2026 revenue, a 25.57% rise in net profit attributable to shareholders, and a 44.84% jump in non-GAAP net profit. In the second quarter, revenue grew 5.78%, net profit attributable to shareholders rose 23.16%, and non-GAAP net profit surged 52.22%.
Additionally, the A-share CRO index saw first-half 2026 revenue climb 23.57%, net profit attributable to shareholders rise 15.94%, and non-GAAP net profit increase 62.66%. In the second quarter, revenue expanded 28.43%, net profit attributable to shareholders grew 12.05%, and non-GAAP net profit increased 64.84%. The H-share innovative drug index recorded first-half revenue growth of 17.91%, a 60.94% rise in net profit attributable to shareholders, and a 30.73% gain in non-GAAP net profit.
Several companies delivered better-than-expected interim results, including Innovent Biologics, Sino Biopharmaceutical, Hansoh Pharmaceutical, InnoCare Pharma, Sunshine Guojian Pharmaceutical, and Salubris Pharmaceuticals in the innovative drug space, as well as WuXi Biologics, WuXi XDC, and ChemPartner in the industry chain. Institutions believe that "innovation plus internationalization" remains the core theme for the pharmaceutical sector in 2026, with fundamentals for the innovative drug supply chain, medical devices, and consumer healthcare expected to keep improving.
China Galaxy Securities noted that industry profit growth in the first half significantly outpaced revenue gains, primarily driven by increased commercialization revenue from innovative drugs and out-licensing deals, which substantially raised the share of high-margin businesses. Meanwhile, CXO and research services are showing strong momentum, as order growth has enabled full utilization of pre-built capacity and staffing, spreading fixed costs and boosting profit expansion. Shenwan Hongyuan expressed optimism about the innovative drug and supply chain theme, stating that from a fundamental perspective, this remains the sub-sector within pharmaceuticals with the clearest industry trend and future growth potential. However, following the recent price appreciation, the market's driving force is expected to shift from valuation recovery to order flow, clinical data, and commercialization milestones.
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