Global X China Biotech ETF (02820) recorded positive returns in August. Mirae Asset indicates that driven by continued globalization themes, domestic policy support, improved corporate earnings, and a favorable macroeconomic environment, China's biotech sector remains the best-performing area this year.
Recent major overseas licensing deals demonstrate global recognition of Chinese companies' innovation quality. Analysis shows that outbound licensing transaction volumes and upfront payment amounts have accelerated over the past two years, with innovative drugs comprising an increasing proportion, indicating that Chinese original research assets entering the US/global markets is becoming the new normal in the biotech sector. Improved earnings and accelerated commercialization processes for biotech companies are expected to boost investor sentiment toward China's healthcare sector.
On August 20, the State Council Premier emphasized during research into the biopharmaceutical industry in Beijing that high-quality technological empowerment and policy support are needed to promote the quality upgrade of China's biopharmaceutical industry. Senior leadership also met with Novo Nordisk's Chairman, expressing welcome for global biopharmaceutical companies to strengthen cooperation with China.
At the end of August, the National Medical Insurance Administration published the final list of drugs eligible to participate in national medical insurance catalog adjustments. Domestic biotech companies are generally optimistic about the upcoming negotiations, believing that terms are becoming more favorable and flexible.
Reports indicate that the US government is drafting an executive order to restrict Chinese drugs and innovative therapies (mainly targeting licensing activities). A White House spokesperson stated the government is not "actively considering" the draft. Although this matter remains in early stages and highly uncertain, Chinese biotech companies may demonstrate stronger resilience amid such uncertainties—some leading companies possess the capability to independently conduct global clinical trials. Even if an executive order takes effect, Chinese drugs can still conduct overseas licensing to EU/Japanese companies.
**Individual Stock Commentary**
**Jiangsu Hengrui Medicine (01276)** Hengrui Medicine's Q2 2025 results announced in August met expectations: revenue of RMB 8.6 billion (up 12.5% YoY), pharmaceutical sales of approximately RMB 7.1 billion (up 15% YoY), accelerating from Q1's 11% YoY growth; net profit of RMB 2.6 billion (up 25% YoY). The company's Hong Kong IPO and multiple overseas licensing deals completed in the first half provided sufficient funding for advancing R&D pipelines, acquisition/introduction projects, and new commercial team building.
Partnership revenue has become a new profit growth driver for Hengrui. Q2 confirmed approximately RMB 1.5 billion in revenue from the licensing agreement reached with Merck in March 2025. More transactions (including GlaxoSmithKline's $500 million upfront payment) are expected to be reflected in revenue in the second half.
Additionally, Hengrui reached a new licensing agreement with US startup Braveheart Bio in September, granting rights outside Greater China for one drug, receiving $65 million upfront payment ($32.5 million cash + $32.5 million worth of Braveheart equity), $10 million in near-term technology transfer milestone payments, and up to $1.013 billion in clinical and commercial milestone payments plus sales royalties. With its deep R&D pipeline and extensive business development efforts, Hengrui may continue to receive overseas licensing revenue in coming years.
**BeiGene (06160)** BeiGene's Q2 2025 results showed solid performance: revenue of $1.3 billion (up 18% QoQ), net profit of $94.3 million, both exceeding market expectations. Strong sales momentum of star product BRUKINSA (zanubrutinib), especially in overseas markets, drove profit margin expansion during the period. The company simultaneously raised the lower bound of 2025 revenue guidance and gross margin guidance.
On August 25, BeiGene announced an agreement with Royalty Pharma (NASDAQ: RPRX) to sell sales royalty rights for its anti-tumor drug IMDELLTRA (tislelizumab) outside China for up to $950 million consideration. Under the agreement, BeiGene will receive: 1) $885 million upfront payment; 2) option to sell remaining royalty rights for up to $65 million consideration within 12 months; 3) partial royalty benefits after annual sales exceed $1.5 billion. This transaction marks a milestone return from the company's collaboration with Amgen (AMGN) and further strengthens cash reserves to capitalize on future opportunities.
Global X China Biotech ETF (02820) invests in 30 companies whose primary business involves researching, developing, manufacturing and distributing new drugs, therapies or vaccines using biological agents.
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