30 innovative drug ETFs collectively surged over 5%. How far can this rally go?

Ask AI · What are the multiple positive factors behind the big surge in the Innovative Drug ETF?

In the near term, the A-share market style has once again shifted to the innovative drug theme.

According to Wind data, as of the close on March 27, the Shanghai Composite rose 0.63%, with the pharmaceutical, chemical, and nonferrous metals sector leading the gains. Among them, the innovative drug sector saw a strong rally after midday, lifting more than 30 innovative drug-related ETFs (exchange-traded open-end index funds) by over 5% on the day.

Interviewees believe the innovative drug sector’s rally is the result of multiple positive factors in the biopharmaceutical industry converging. From a liquidity perspective, A-share liquidity is clearly better than Hong Kong’s. When industry sectors broadly rebounded, the 科创创新药 ETF rose more than the Hong Kong innovative drug ETF.

“Top in the leaderboard” for innovative drug ETFs

The public offering ETF gain leaderboard once again showed the “top in the leaderboard” phenomenon among innovative drug-related ETFs, with both A-share Innovative Drug ETFs and cross-border Innovative Drug ETFs ranking near the top of the daily gain chart.

Source of chart: Wind

Wind data shows that as of the close on March 27, the pharmaceutical sector rebounded sharply. In terms of the CITIC一级 industry index, the pharmaceutical industry index rose 3.69%, leading all industry indices. Looking at sub-sectors, innovative drug concept stocks kept strengthening after the open, with multiple individual stocks rising more than 10%. As for ETFs, more than 30 innovative drug or pharmaceutical-related ETFs rose by more than 5%.

Specifically, the 科创创新药 ETF managed by 汇添富 led the entire market ETF universe with a gain of 6.7%; the 科创创新药 ETF managed by 国泰 rose 6.55%. In addition, three Hong Kong innovative drug ETFs and one Hong Kong Stock Connect medical ETF each rose by more than 6%. In terms of trading value, the 广发 Innovative Drug ETF in Hong Kong led the cross-border ETF category on the day with 8.05B yuan in trading value.

Since September of last year, innovative drug ETFs have been moving within a range and declining. Although they saw a modest rebound in January this year, they quickly fell again. As of March 27, among all ETFs whose names include “innovative drugs” nationwide, the average return for the year to date was -0.24%, with the maximum gain at 2.07% and the maximum drawdown at 2.56%. Since the start of the year, ETFs tracking Hong Kong innovative drug-related indices have performed slightly better than ETFs tracking A-share innovative drug indices. However, in this rebound, ETFs tracking the 上证科创板 innovative drug index showed stronger performance.

Despite the ongoing volatility in the innovative drug sector, fund companies are still building positions in this space. The CSRC website shows that since September of last year, seven public fund management companies have submitted innovative drug-related ETFs, including Hong Kong Stock Connect innovative drug ETFs, SSE STAR Market innovative drug ETFs, CSI innovative drug ETFs, and CSI Innovative Drug Industry ETFs, among others.

Can the rally last?

The innovative drug sector belongs to the biopharmaceutical field. Regarding this sudden surge, 曾方芳, an operations person for fund products at 排排网财富, told a reporter from 国际金融报 that it is the result of multiple positive factors converging in the biopharmaceutical industry.

曾方芳 analyzed that, on the policy front, biopharmaceuticals have been explicitly designated as a “strategic emerging pillar industry,” and the sector’s strategic positioning has been elevated. On the performance front, the revenue share of innovative drug products at leading companies has increased and they have turned profitable, and the industry has entered a profitability inflection point. On the overseas expansion front, the amount authorized for BD (business development) this year has already exceeded the full-year figure of last year, highlighting global competitiveness. In addition, near-term catalysts such as the upcoming ASCO conference have also contributed. The sector’s prior adjustment was sufficiently deep, and valuations are at historically low percentiles; with favorable news stacking on top, the sector’s strong performance is likely to continue.

E Fund Asset Management (Hong Kong) said that biopharmaceuticals are a high-conviction sector with both rigid-consumption characteristics and innovative growth characteristics, and the global population aging trend provides a long-term demand foundation for the industry lasting 10 to 20 years.

Currently is the 2025 annual report disclosure season, and some pharmaceutical companies have delivered impressive results. Even though the innovative drug sector experienced pullbacks for several months earlier, 何理, general manager of 至善投资, told reporters that the industry’s fundamentals have not changed. You can see continued improvement in fundamentals from the annual reports of certain companies that swung from loss to profit.

“We have long been optimistic about the rise of domestic innovative drug companies globally,” 何理 said. In the 2026 government work report, biopharmaceuticals were explicitly defined as an emerging pillar industry for the first time, giving it more weight than the previous “cultivating and strengthening” approach. This means that, from the top-level design perspective, innovative drugs are now seen as a new engine for national economic growth.

From an investment standpoint, 何理 believes that since the pullback starting in September of last year, the valuations of some innovative drug stocks have returned from being somewhat overpriced to levels that are reasonable or even somewhat undervalued. In particular, innovative drugs in earlier-stage pipelines saw larger valuation declines.

Looking at same-day performance, some 科创 innovative drug ETFs were stronger than the Hong Kong innovative drug ETFs. 曾方芳 believes this is mainly because their constituent stocks are almost all pure-play source-origin innovative biotech companies, with no traditional business dilution, so they can more directly reflect breakthroughs at the industry frontier. At the same time, they cover more concentrated frontier technology areas such as ADC (antibody-drug conjugates) and small nucleic acids. Major R&D progress at related companies often transmits quickly to stock prices, so they have more pronounced growth elasticity and faster response speed.

From a liquidity perspective, 何理 believes that A-share liquidity is clearly better than Hong Kong’s. When industry sectors generally rebound, the 科创 innovative drug ETFs rise more strongly than the Hong Kong innovative drug ETFs.

Reporter 夏悦超

Text editor 陈偲