According to the report released by GF Securities, statistical analysis shows that the pharmaceutical industry's revenue growth rate in the first half of 2025 is -2.3% year-on-year, with an overall net profit margin of 13.7% after deducting non-recurring items. Revenue is under short-term pressure, but profitability continues to improve. Among 16 Hong Kong-listed pharmaceutical companies, 9 companies achieved positive revenue growth year-on-year in the first half of 2025, and 11 companies saw positive growth in net profit after deducting non-recurring items. In the first half of 2025, Biotech companies' revenue increased by 24.6% year-on-year, and net profit after deducting non-recurring items reduced losses by 600 million yuan, mainly benefiting from the rapid commercialization of new products/new indications after their launch, as well as accelerated internationalization through external licensing agreements that generated upfront payments or milestone payments.
GF Securities pointed out that external licensing can improve corporate cash flow in the short term to support continued investment in R&amp;D. In the medium to long term, domestic companies can also learn R&amp;D experience from collaborations, enhancing their clinical operational capabilities. Therefore, external licensing will remain the preferred option for innovative pharmaceutical companies going overseas. Business Development (BD) is just the starting point for the current round of innovative drug value reassessment. Looking ahead to the second half of the year, it is essential to continuously track the progress of medical insurance and commercial insurance negotiations and pay attention to significant data catalysts from international academic conferences such as WCLC and ESMO.
<h2>Key Points from GF Securities:</h2>
Operational efficiency improvement, long-term positive trend established in the industry
Based on the analysis of 56 A-share chemical pharmaceutical companies included by GF Securities, the overall revenue growth rate in the first half of 2025 is -2.3%, with an overall net profit margin of 13.7% after deducting non-recurring items; revenue is under short-term pressure, but profitability continues to improve. Among 16 Hong Kong-listed pharmaceutical companies, 9 companies achieved positive revenue growth year-on-year in the first half of 2025, and 11 companies saw positive growth in net profit after deducting non-recurring items.
At the same time, GF Securities analyzed the revenue situation of 18 A-share Biotech companies' commercialized drugs, which saw a 24.6% year-on-year increase in revenue in the first half of 2025, and net profit after deducting non-recurring items reduced losses by 600 million yuan, mainly benefiting from the rapid commercialization of new products/new indications after their launch, as well as accelerated internationalization through external licensing agreements that generated upfront payments or milestone payments. As innovative products enter a new cycle, product structure continues to improve, and the pace of innovative drugs going overseas accelerates, a long-term positive trend in the industry has been established.
Domestic new drugs are in a harvest period, and internationalization is a necessary path for innovation upgrading
With policy support across the entire chain of &#34;R&amp;D - access - clinical - payment - guarantee,&#34; domestic new drugs are experiencing explosive growth. Against the backdrop of continuous innovation and upgrading in the industry, domestic pharmaceutical companies have incubated a batch of high-quality pipelines with global competitiveness and have reached a peak in external licensing transactions, with a significant increase in both the number and amount of transactions, becoming the main driving force behind the current round of innovative drug market. In the short term, external licensing can improve corporate cash flow to support continued investment in R&amp;D. In the medium to long term, domestic companies can also learn R&amp;D experience from collaborations, enhancing their clinical operational capabilities. Therefore, external licensing will remain the preferred option for innovative pharmaceutical companies going overseas.
However, BD is just the starting point for the current round of innovative drug value reassessment. The future focus must still be on finding the best drugs globally in various therapeutic areas to realize the clinical value of overseas products. Looking ahead to the second half of the year, it is essential to continuously track the progress of medical insurance and commercial insurance negotiations and pay attention to significant data catalysts from international academic conferences such as WCLC and ESMO
Investment Advice
Under the backdrop of innovation upgrading and internationalization in the domestic pharmaceutical industry, domestic new drugs are gradually shifting from following innovation to leading innovation. I remain optimistic about the medium to long-term investment opportunities brought by a new round of product cycles in the domestic market. It is essential to select assets from a global perspective, focusing on competitively strong individual products. I recommend paying attention to two categories of targets:
(1) Traditional Pharma Transformation: HengRui Medicine (600276.SH), Hansoh Pharmaceutical (03692), Sanofi (01530), Xiansheng Pharmaceutical (02096), Shiyao Group (01093), Changchun High-tech (000661.SZ), Haisco (002653.SZ), Kelun Pharmaceutical (002422.SZ), China Biopharmaceutical (01177), Aosaikang (603369.SH), Zhongsheng Pharmaceutical (002317.SZ), Xinlitai (002294.SZ), Xingqi Eye Medicine (300573.SZ), Yipinhong (300723.SZ).
(2) Biotech: Baillie Gifford (688506.SH), Kelun Biotech-B (06990), Innovent Biologics (01801), CanSino Biologics (09926), Dizal Pharmaceutical-U (688192.SH), Beigene-U (688235.SH), Fuhong Hanlin (02696), Zai Lab (09688), Genscript Biotech (01548), CanSino Biologics-B (02162), Mabwell (688062.SH), Rongchang Biologics (09995), Junshi Biosciences (01877), Ascentage Pharma-B (06855), InnoCare Pharma-B (09606), Zai Lab-U (688266.SH), Hutchison China MediTech (00013), Hengrui Medicine-B (02256), CStone Pharmaceuticals-B (09966), Lepu Biopharma-B (02157), CStone Pharmaceuticals (02616), Kintor Pharmaceutical (02171), Eddie Pharmaceuticals (688488.SH), etc.
Risk Warning
Risks of unexpected price reductions in generic drug procurement and new drug negotiation, risks of new drug research and development failures, risks of innovative drugs not achieving expected sales after market launch, and risks of intensified market competition, etc

688235

BGNE

06160

688192

688062

002653

688180

01877

Guangfa Securities released a research report indicating that under the backdrop of innovation upgrading and internationalization, the domestic pharmaceutical industry is gradually shifting from following innovation to leading innovation, and it is expected to usher in a new round of investment opportunities in the product cycle in the medium to long term. In the first half of 2025, the pharmaceutical industry's operating revenue year-on-year growth rate was -2.3%, but profitability continued to improve. Among the 16 Hong Kong-listed pharmaceutical companies, 9 companies achieved positive growth in operating revenue, and 11 companies reported positive growth in net profit attributable to the parent company after deducting non-recurring gains and losses. Biotech companies saw a year-on-year revenue increase of 24.6%, mainly benefiting from the launch of new products and accelerated internationalization

Zhitong

BeOne Medicines

Beigene

BEONE MEDICINES

Dizal Pharmaceutical

Mabwell

Haisco

Junshi Biosciences

JUNSHI BIO

Guangfa Securities: The long-term positive trend in the industry has been established; BD is just the starting point for the current round of innovative drug value reassessment