Innovative drug overseas expansion and BD transactions have become important driving forces for the explosive growth of pharmaceutical sector stock prices. The total transaction amount for innovative drug BD overseas licensing reached USD 135.655 billion for the whole year, a 161% increase compared to 2024.
<h4>Key Points:</h4>
<ul>
<li>The structural differentiation of the biopharmaceutical sector, where &#34;the strong get stronger,&#34; is becoming increasingly evident.</li>
<li>The continuous optimization of the policy environment will release greater space for the commercialization of innovative drugs.</li>
</ul>
Molly
After a long period of silence since the second half of 2021, the Hong Kong stock market's biopharmaceutical sector finally welcomed a strong rebound in 2025, becoming the focus of global capital markets. The Hang Seng Healthcare Index (HSHCI) saw an annual increase of 76%, significantly outperforming the Hang Seng Index and leaving the overall increase of 25.64% in the A-share pharmaceutical and biotechnology sector behind.
The explosive growth of the Hong Kong healthcare sector is backed by a record influx of southbound funds and substantial realization of innovative drug performance. According to statistics from Securities Times·Data Treasure, net purchases of southbound funds reached a staggering HKD 1.4 trillion in 2025, with the market value of holdings in the healthcare sector reaching HKD 540 billion, a 125.51% increase compared to the end of 2024, injecting ample liquidity into the market. Meanwhile, the industrial fundamentals have reached a turning point, with the total amount of innovative drug overseas licensing transactions exceeding USD 130 billion, significantly improving corporate revenue and profitability, driving simultaneous increases in transaction volume and valuations in the healthcare sector.
However, the structural differentiation of the biopharmaceutical sector, where &#34;the strong get stronger,&#34; is also becoming increasingly evident. From the perspective of sub-sectors, in the innovative drug sector, companies with First-in-Class or Best-in-Class R&amp;D pipelines, stable BD (business development) revenue sources, or existing commercialization capabilities are more favored; while companies that are far from commercialization and rely on a single core R&amp;D project face valuation pressure. The CXO sector also performed excellently in 2025, as the innovative drug industry continued to invest, the &#34;water sellers&#34; upstream of the industrial chain also had strong performance certainty.
The medical devices and supplies sector, due to its relatively stable cash flow, also performed well in stock prices, with representative companies such as WEIGAO GROUP (1066.HK) and MICROPORT (0853.HK) seeing annual increases of 38% and 76%, respectively. In contrast, due to economic downturn expectations leading consumers to reduce non-essential medical services and intensified industry competition, some stocks in the dental and medical beauty sectors, such as RuiEr Group (6639.HK) and Juzi Bio (2367.HK), saw their stock prices drop nearly 40% in 2025.
Encouraged by policies, many leading A-share companies completed H-share listings in 2025, bringing high-quality targets and significant capital flow to the Hong Kong market, with their massive fundraising scale significantly boosting market confidence. Biopharmaceutical companies have also flocked to list in Hong Kong, with the total number of companies submitting applications exceeding 90 for the year, and more than 20 biopharmaceutical companies successfully listed, achieving a doubling growth compared to 2024
Leading enterprises in niche sectors are highly recognized by capital, among which Hengrui Medicine (1276.HK; 600276.SH) has reached HKD 11.3 billion, ranking among the top five in fundraising amounts for Hong Kong IPOs in 2025, with a cumulative increase of over 30% in the Hong Kong stock market.
In 2025, the overseas expansion of innovative drugs and BD transactions also became important driving forces for the explosive growth of stock prices in the pharmaceutical sector. The pharmaceutical database NextPharma® shows that as of December 31, 2025, the total transaction amount for China's innovative drug BD overseas licensing reached USD 135.655 billion, a 161% increase compared to 2024. The total upfront payments for various transactions amounted to USD 7 billion, with a total of 157 transactions, all setting historical highs. Among them, Hengrui Medicine signed as many as 12 innovative projects with GlaxoSmithKline in a single agreement, not only receiving USD 500 million in upfront payments but also securing potential total amounts of approximately USD 12 billion in option exercise fees and milestone payments, setting a record for the largest single BD transaction scale in the country.
<h4>Entering the Value Realization Stage</h4>
The explosive growth of BD transactions and the continuously active IPOs have injected strong cash flow and development confidence into the biopharmaceutical industry. Looking ahead to 2026, against the backdrop of the Federal Reserve's interest rate cuts and the continuous improvement of the drug payment system, leading enterprises represented by BeiGene are expected to achieve profitability, and the Hong Kong pharmaceutical industry is likely to enter a new stage of value realization.
The ongoing optimization of the policy environment is about to release greater space for the commercialization of innovative drugs. In 2025, the National Medical Products Administration of China approved 76 innovative drugs for market launch, significantly exceeding the 48 approved in the entire year of 2024, setting a historical high. The National Medical Products Administration stated that starting from 2026, it will introduce more measures to promote the rapid development of China's innovative drugs.
In December 2025, the National Healthcare Security Administration and the Ministry of Human Resources and Social Security jointly released the first version of the commercial insurance catalog for innovative drugs, officially entering the dual protection stage of &#34;basic medical insurance + commercial health insurance&#34; in China's medical payment system. The inclusion of high-value drugs such as CAR-T and PD-1 in the catalog will help improve clinical medication levels and the overall R&amp;D return rate of the industry. For leading innovative drug companies like BeiGene, Innovent Biologics, and CanSino Biologics, which have rich pipelines, the introduction of commercial insurance funds will provide important incremental funding for the volume expansion of their products

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The overseas expansion of innovative drugs and BD transactions have driven the explosive growth of stock prices in the pharmaceutical sector. By 2025, net purchases from southbound funds are expected to reach HKD 1.4 trillion, with the Hong Kong Stock Exchange Healthcare Index increasing by 76% this year. Structural differentiation is evident in the biopharmaceutical sector, with companies possessing First-in-Class or Best-in-Class R&D pipelines being more favored. The medical devices and supplies sector has performed well, with representative companies such as WEIGAO GROUP and MICROPORT seeing increases of 38% and 76% respectively this year

BD transactions and policy dividends resonate, the pharmaceutical sector will have a strong rebound in 2025