Guojin Securities: Three-dimensional resonance of industry, performance and capital to seize the bottom layout opportunities of innovative drugs

The Zhitong Finance App learned that Guojin Securities released a research report saying that it continues to be optimistic about the upward sustainability of domestic innovative drugs going overseas, prompting investors to pay attention to the investment opportunities brought by many molecules that have already reached BD in the early stages starting in 2027 to start a new commercialization cycle overseas. The bank continues to be optimistic that domestic innovative drugs have entered the golden window to achieve results. The overall Hong Kong stock innovative drug sector is concerned about potential valuation repair opportunities brought about by structural changes in capital, and is concerned about price difference repair opportunities for some A/H targets. In summary, the bank is optimistic about investment opportunities in the domestic innovative drug industry from the second half of '26 to '27, and gives it a buying investment rating.

Guojin Securities's main views are as follows:

On the industrial side, the BD (business cooperation) boom for innovative drugs going overseas is rising, and current valuation mismatches bring layout opportunities

Domestic innovative drugs have gone through investment and financing, technology iteration, leading the world in pipeline reserves on cutting-edge sub-tracks such as ADC (antibody-conjugated drugs), double antibodies, and small nucleic acids. Combined with the Chinese innovative drug industry's triple advantages in regulatory review, clinical efficiency, and development costs, Chinese innovative pharmaceutical companies are deeply embedded in the global pharmaceutical industry chain: the layout of global clinical trials within China continues and rapidly rises; moreover, there is inertial momentum for local pharmaceutical companies to continue to deepen cooperation after binding with MNC (multinational pharmaceutical companies). However, the current market lacks valuation of BD, and the bank believes that going overseas will support long-term iteration of the pharmaceutical industry: in the short to medium term, the benefits of BD cooperation will significantly optimize the financial fundamentals of innovative domestic pharmaceutical companies; in the medium to long term, it will drive the domestic pharmaceutical industry to meet global standards and reshape the R&D capabilities of pharmaceutical companies, forcing domestic pharmaceutical companies to carry out more clinical reports between China and the US and accelerate FIC (First-In-Class) molecular research and development.

Finally, the bank is optimistic that overseas beta will continue to be sustainable. Many large patent expiration gaps continue to force MNC external pipeline investment into a long-term upward cycle. According to statistics, TOP15 MNC will invest about 200 billion dollars in external capital expenses every year from 2023. As of July 10, '26, TOP15 MNC's external capital expenditure has reached 2003 billion US dollars since this year, close to 73.5% of the total for the full year of 2025. The boom in mergers and acquisitions in the global pharmaceutical industry has basically been established. Furthermore, biomedical capital expenditure is sustainable: mature business models can provide cash flow to maintain demand-side growth of capital expenditure; at the same time, continuous iteration of global biomedical technology provides diversified supply for capital expenditure. Starting in 2027, many molecules that have already reached BD will begin the commercialization cycle overseas.

Performance side: The late-stage pipeline is expected to focus on marketing+two-way policy empowerment, and the innovative pharmaceutical industry will enter a golden period of performance realization

Currently, the number of back-end pipelines for innovative drugs in China, including clinical phase III, NDA (application for listing), or approval for marketing, continues to expand, adding channels such as priority review and conditional approval to accelerate the implementation of new indications, and the supply side supports the continuous expansion of the domestic innovative drug market. Health insurance negotiations have been normalized to absorb innovative varieties and continue to open up space for distribution in innovative pharmacies; moreover, the new version of the basic drug catalogue has recently been expanded, greatly broadening the grass-roots terminal channels for innovative drugs. The bank believes that leading domestic pharmaceutical companies are forming a positive cycle of “high R&D investment - rich pipeline - product commercialization - backfeed R&D”, the share of innovative drug revenue is steadily increasing, and the overall profit flexibility of the industry continues to be released, ushering in a multi-year performance realization window.

Capital side: The sector is at the bottom of valuation, and the restructuring of the capital structure will welcome sufficient room for restoration

Hong Kong stock innovative drugs continued to recover in the early stages due to overseas liquidity suppression, and the capital level showed a structural shift: foreign investment reduced holdings close to the bottom, the share of capital holdings going south increased, and sector pricing logic gradually shifted to domestic fundamentals+flexibility in overseas expectations; at the same time, the US Biotech Index was subject to mergers and acquisitions, favorable FDA (US Drug Administration) policies strengthened, and global pharmaceutical sentiment picked up. Recently, trading activity in the innovative drug sector of Hong Kong stocks has rebounded from the bottom. There is room for repair in A/H valuation spreads, and high-quality targets with pipelines and commercialization barriers have ushered in allocation opportunities.

Risk Alerts

BD is subject to the risk of being bound by overseas geopolitical policies, the risk of increased competition in the innovative drug industry, the risk of falling short of expectations in medical insurance fee control and the risk of tightening overseas liquidity.