Innovative Drug Stocks Surge as Key Players Trigger Market Frenzy

The spotlight today is on innovative drug makers. Following gains in lithium battery stocks yesterday, the innovative drug sector took center stage on March 27. During the morning session, shares of innovative drug companies rose sharply, with INNOVENT BIO hitting the daily limit within five minutes of market opening. Several other firms, including Keto Biological and Wanbangde, also surged by the 10% limit. The sector index climbed over 3%.

Hong Kong-listed biotech stocks followed suit. INNOVENT BIO jumped more than 7% after reporting its first annual profit. The company announced total revenue of 13.042 billion yuan for 2025, up 38.4% year-on-year, with net profit soaring 959.72% to 814 million yuan. This milestone performance ignited a rally across the biopharmaceutical sector.

Additionally, the expiration of Novo Nordisk's core compound patent for semaglutide in China broke the long-standing monopoly of the blockbuster drug, fueling investor interest in local weight-loss treatment developers.

The innovative drug sector's collective surge reflects growing market optimism. Analysts note that INNOVENT BIO's turnaround marks a significant breakthrough, challenging perceptions of high investment and low returns in the industry. The company's 18 marketed products, including 12 covered by national insurance, contributed to a 44.6% increase in product revenue. Its global partnerships generated over $16 billion in upfront payments, with total deal value exceeding $22 billion.

Market potential for GLP-1 drugs in China remains substantial. Industry reports project the type 2 diabetes treatment market to reach 68.8 billion yuan by 2032, while the obesity treatment market could hit 42.7 billion yuan, combining for a total potential exceeding 100 billion yuan.

Despite the rally, analysts believe innovative drug stocks are still undervalued. Huatai Securities suggests that global licensing deals and clinical data presentations at upcoming international conferences may drive further revaluation. The sector's strategic importance was also highlighted in China's 2026 government work report, which elevated biopharmaceuticals to a "pillar emerging industry," signaling stronger policy support.

Guosheng Securities notes that this policy shift positions innovative drugs as a core high-value segment, likely to benefit from sustained growth and industrial upgrading trends.