{"text":[[{"start":10.63,"text":"This article only represents the author's own views."}],[{"start":15.120000000000001,"text":"After a prolonged downturn that began in the second half of 2021, Hong Kong’s biotechnology and pharmaceutical sector finally staged a strong rebound in 2025, emerging as one of the most closely watched segments in global capital markets. The Hang Seng Healthcare Index (HSHCI) has risen 76% year to date, significantly outperforming the broader Hang Seng Index and far surpassing the 25.64% gain recorded by China’s A-share pharmaceutical sector."}],[{"start":55.71000000000001,"text":"Behind the explosive growth of Hong Kong’s healthcare sector lies a record influx of southbound capital and the tangible delivery of earnings by innovative drugmakers. According to data from Securities Times’ Data Treasure, net southbound inflows reached HK$1.4 trillion in 2025. Holdings of southbound investors in the healthcare sector surged to HK$540 billion, up 125.51% from the end of 2024, injecting substantial liquidity into the market."}],[{"start":95.76,"text":"At the same time, sector fundamentals hit an inflection point, with total outbound licensing and authorization deals for innovative drugs exceeding $130 billion. Improved revenue and profitability among companies have driven both trading activity and valuations higher."}],[{"start":117.86000000000001,"text":"However, structural divergence within the biopharmaceutical sector has become increasingly pronounced, reinforcing a “winner-takes-more” dynamic. Within innovative drugs, companies with First-in-Class or Best-in-Class pipelines, stable business development (BD) income, or established commercialization capabilities are increasingly favored by investors. In contrast, firms that remain far from commercialization and rely heavily on a single core R&D project have come under valuation pressure. The CXO segment also performed strongly in 2025, as sustained investment in innovative drugs continued to support robust and relatively predictable earnings for upstream service providers."}],[{"start":171.31,"text":"Medical devices and supplies stocks also posted solid gains, supported by their relatively stable cash flows. Representative companies such as Weigao Group (1066.HK) and MicroPort Scientific (0853.HK) recorded year-to-date share price increases of 38% and 76%, respectively."}],[{"start":199.34,"text":"By contrast, amid weaker economic expectations, reduced consumer spending on non-essential medical services, and intensifying competition, some dental and medical aesthetics stocks moved against the broader trend. Shares of Arrail Group (6639.HK) and Giant Biogene (2367.HK) both fell by nearly 40% in 2025."}],[{"start":229.72,"text":"Policy support further fueled market momentum in 2025, as several A-share industry leaders completed H-share listings, bringing high-quality assets and significant capital inflows to the Hong Kong market. Their large fundraising sizes helped boost overall investor confidence."}],[{"start":252.05,"text":"Biopharmaceutical companies were particularly active, with more than 90 firms submitting listing applications during the year and over 20 successfully completing IPOs—double the number recorded in 2024. Sector leaders continued to win strong investor backing. Hengrui Pharma (1276.HK; 600276.SH) raised HK$11.3 billion, ranking among the top five Hong Kong IPOs by fundraising amount in 2025, and its H shares have gained more than 30% since listing."}],[{"start":293.40000000000003,"text":"In 2025, overseas expansion and business development (BD) transactions for innovative drugs also emerged as key drivers behind the sharp rally in pharmaceutical stocks. According to the NextPharma® database operated by Pharmcube, the total value of outbound licensing and BD deals involving Chinese innovative drugs reached US$135.655 billion as of December 31, 2025, representing a 161% increase from 2024."}],[{"start":336.68000000000006,"text":"Aggregate upfront payments totaled $7 billion, while the number of transactions hit a record high of 157. Notably, Hengrui Pharma signed as many as 12 innovative drug programs with GlaxoSmithKline in a single agreement, securing $500 million in upfront payments and up to approximately $12 billion in potential option exercise fees and milestone payments—the largest single BD deal ever recorded by a Chinese pharmaceutical company."}],[{"start":374.61000000000007,"text":"Value realization"}],[{"start":376.70000000000005,"text":"The explosive growth in BD transactions, together with sustained IPO activity, has injected strong cash flows and renewed confidence into the biopharmaceutical sector. Looking ahead to 2026, against the backdrop of an easing cycle by the U.S. Federal Reserve and continued improvements in drug reimbursement mechanisms, leading companies such as BeiGene are expected to achieve profitability. The Hong Kong–listed pharmaceutical sector is therefore poised to enter a new phase of value realization."}],[{"start":412.23,"text":"Ongoing improvements in the policy environment are set to unlock greater room for the commercialization of innovative drugs. In 2025, China’s National Medical Products Administration (NMPA) approved 76 innovative drugs for market launch, far exceeding the 48 approvals recorded in 2024 and marking a historical high. The regulator has stated that, starting in 2026, additional measures will be introduced to further accelerate the development of China’s innovative drug sector."}],[{"start":452.93,"text":"In December 2025, China’s National Healthcare Security Administration and the Ministry of Human Resources and Social Security jointly released the first commercial insurance catalogue for innovative drugs, formally ushering the country’s pharmaceutical payment system into a dual-coverage model combining basic medical insurance and commercial health insurance."}],[{"start":479.68,"text":"The inclusion of high-value therapies such as CAR-T and PD-1 drugs is expected to raise clinical treatment standards and improve overall returns on R&D investment. For leading innovative drugmakers with extensive pipelines—such as BeiGene, Innovent Biologics and Akeso—the introduction of commercial insurance funding will provide a critical source of incremental capital to support volume expansion."}],[{"start":509.77,"text":"That said, challenges remain significant. Given the exceptionally active IPO market in 2025, a wave of share unlocks following the expiration of lock-up periods in 2026 could weigh on overall sector valuations."}],[{"start":530.17,"text":"Tighter regulatory scrutiny is also expected to impact the market. In December 2025, the Hong Kong Securities and Futures Commission and Hong Kong Exchanges and Clearing jointly issued warning letters to IPO sponsors, voicing concerns over declining application quality and compliance issues, which may result in more stringent IPO vetting going forward. For most Chapter 18A companies, profitability remains elusive: in 2025, only Zylox-Tonbridge and Everest Medicines successfully removed their “B” designation, while the majority continue to face challenges in converting R&D investment into commercial output."}],[{"start":588.5299999999999,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1767863474_2462.mp3"}