The innovative drug sector has rebounded strongly, driven by both policy support and industrial momentum, with the low-cost Hang Seng Stock Connect Innovative Drug ETF (E Fund) (159316) rising over 3%.

Gelonghui, March 6 | The Hang Seng Stock Connect Innovative Drug ETF (159316), managed by E Fund, surged over 3.9% in the morning session, becoming the top-performing sector-specific ETF of the day. On the news front, the industry has received multiple catalysts. Policy catalyst: The government work report has mentioned innovative drugs for three consecutive years, and biomedicine has been elevated to an 'emerging pillar industry.' For the first time, the 2026 government work report listed biomedicine alongside integrated circuits, aerospace, and low-altitude economy as a national 'emerging pillar industry.' With the elevation of strategic positioning, innovative drugs are expected to receive more concentrated policy support, funding, and resources. Coupled with the 'innovative drug catalog for commercial health insurance' proposed in the report, this is expected to address the 'last mile' of commercial payment, bringing long-term substantive benefits to the industry. Industry dynamics: Progress on three fronts—BD, R&D, and performance. BD transactions remain highly active: On March 4, Sino Biopharm entered into an exclusive licensing agreement with Sanofi for the world's first JAK/ROCK dual-target inhibitor, Rovacitinib, with a total transaction value of up to $1.53 billion. In January-February 2026 alone, the total value of China's innovative drug out-licensing deals reached $53.3 billion, nearing 40% of the total for all of 2025. CXO performance validates high prosperity: Strong earnings forecasts from several CXO companies in 2025 confirm the sector's robust momentum. Global CXO sector investment and BD transactions maintained high activity at the beginning of 2026, providing solid support for industry demand. From a valuation perspective, after previous adjustments, the valuation of Hong Kong's innovative drug sector has entered a historically low range. The upward trend driven by 'BD globalization + commercial volume growth + policy support' remains intact, with the valuation percentile over the past three years significantly below the median. The Hang Seng Stock Connect Innovative Drug ETF (159316), managed by E Fund, is currently the only product tracking the Hang Seng Stock Connect Innovative Drug Index. This index explicitly excludes CXO companies in its compilation methodology, focusing 100% on core enterprises in the innovative drug industry. Its major holdings include leading companies such as BeiGene, Innovent Bio, Wuxi Bio, and Akeso Biopharma, offering investors a convenient tool to gain exposure to cutting-edge innovative drug companies in Hong Kong. Additionally, starting March 6, its management fee rate was reduced from 0.50% to 0.15%, and its custody fee rate was lowered from 0.10% to 0.05%, bringing the comprehensive fee rate down to 0.20% per annum, the lowest among similar products in the market.