The 2026 government work report has, for the first time, explicitly positioned biopharmaceuticals as an "emerging pillar industry" and integrated it into the "15th Five-Year Plan," embedding it deeply within the grand blueprint for developing "new quality productive forces." This represents not only a strategic positioning for an industry's development but also a clear directive for the future direction of China's industrial upgrading. This top-level design signifies that the pharmaceutical and biotech industry is at a new starting point, transitioning from scale expansion to innovation leadership. For investors, understanding and participating in this profound industrial transformation is a crucial pathway to sharing in future growth dividends. Industrial and Commercial Bank of China (ICBC) Credit Suisse Asset Management offers a series of thematic funds focused on the healthcare sector that have been tested through market cycles, providing investors with multi-layered, systematic tool choices for allocating to this "emerging pillar industry."
The long-term investment thesis for the pharmaceutical industry requires looking beyond short-term market sentiment fluctuations and style rotations to delve into its industrial core. ICBC Credit Suisse Fund believes that after sustained adjustments, market sentiment towards the innovative drug sector is showing signs of recovery compared to earlier periods. Furthermore, driven by multiple factors including policy direction, outbound licensing deals, and clinical data catalysts, significant Business Development (BD) transactions are being finalized, and BD-related overseas expansion continues to surge, suggesting grounds for increased optimism regarding the innovative drug sector.
Further analysis by ICBC Credit Suisse Fund indicates that China's innovative drug sector possesses strong innovation capabilities and high clinical R&D efficiency, with a leading global share of pipelines in areas such as Antibody-Drug Conjugates (ADCs), bispecific ADCs, bispecific antibodies, and CAR-T. Although starting later in areas like small interfering RNA (siRNA) and Proteolysis-Targeting Chimeras (PROTACs), development is rapid. Outbound BD activities for Chinese innovative drugs have become an industry trend, with the total transaction value and number of large deals in 2026 potentially matching or exceeding those of 2025. This systematic progress at the industry level provides a solid foundation for long-term investment certainty.
According to disclosures from the National Medical Products Administration (NMPA), the total value of outbound licensing deals for Chinese innovative drugs exceeded $60 billion in the first three months of this year, approaching half of the total for the entire year of 2025. These figures clearly indicate that the growth trajectories of leading companies are expanding from the vast domestic market to the more promising global market, suggesting a potential systematic reassessment of their intrinsic value and growth potential. Among these, innovative pharmaceutical companies with global competitiveness that can successfully internationalize, along with their industrial chains, may represent a core, indispensable investment theme for medium to long-term pharmaceutical investment.
Against this industrial trend backdrop, the pharmaceutical investment research team at ICBC Credit Suisse Fund has developed a differentiated allocation framework through in-depth research and dynamic management, offering investors diversified participation tools.
Taking the ICBC Frontier Healthcare Equity Fund (Class A: 001717, Class C: 010685) as an example, this fund is positioned as a healthcare sector fund, with a long-term focus on the "frontier healthcare" field, aiming to capture high-growth, high-quality listed companies. Its 2025 annual report shows that the fund's strategy continues to align with industrial and era development directions. Utilizing a combination of top-down analysis and bottom-up stock selection, the fund has adjusted its allocations across sectors like innovative drugs, traditional Chinese medicine, medical devices, and consumer healthcare, rebalancing within sub-sectors and individual stocks.
Faced with periodic market volatility, the investment research team, based on its assessment of sub-sector trends and company fundamentals, identifies and favors innovative drug companies, or those transitioning from generics to innovation, with reasonable valuations, strong R&D capabilities, and products with overseas potential, particularly in the context of the ongoing trend of global innovative drug R&D breakthroughs. Through strategic overweighting, the fund has achieved substantial returns over the medium to long term. Custodian bank verification data shows that as of the end of March, the fund's cumulative return since its inception on February 3, 2016, reached 209.20%, significantly outperforming its benchmark return of 12.37% over the same period, demonstrating its ability to capture the core growth drivers of the pharmaceutical industry in complex markets.
The ICBC Pharmaceutical and Health Equity Fund (Class A: 006002, Class C: 006003), which covers both A-shares and H-shares, leverages the unique advantages of the Hong Kong market, particularly regarding innovative biotech companies. Disclosures in its 2025 annual report indicate that the investment research team was bullish on the clear industrial trend of innovative drugs, maintained significant exposure to this area that year, and achieved notable excess returns. The net value growth rate for the fund's Class A shares for the full year was 42.77%, leading the benchmark return of 8.34%.
In its management operations, based on deep research into industrial trends, the investment research team further smooths the net value curve through dynamic adjustments to the fund's portfolio holdings. For instance, during the market adjustment in the fourth quarter of 2025, the strategy involved reducing exposure to the innovative drug sector, particularly by trimming some small-cap companies, and concentrating holdings more towards leading companies. Simultaneously, based on portfolio rebalancing considerations, exposure to the Contract Research Organization (CRO)/Contract Development and Manufacturing Organization (CDMO) (CXO) sector was increased. Such operations to optimize the risk-reward ratio within prevailing industrial trends demonstrate professional investment judgment.
Beyond the aforementioned two products, another ICBC Credit Suisse fund focusing on assets related to the health industry theme, the ICBC Health Industry Mixed Asset Fund (Class A: 020558, Class C: 020559), aims to achieve cross-market allocation between "A+H" shares through in-depth analysis of the growth drivers in the pharmaceutical and health industry, with a primary focus on innovative drugs and their industrial chain. According to its 2025 annual report, the investment research team views innovative drugs as the sub-sector within pharmaceuticals with the most robust logic currently, supported by three key factors: the continuous emergence of global innovative drug R&D breakthroughs, the industrial advantages of China's innovative drug R&D, and recent national policies supporting and encouraging the development of the innovative drug industry, exemplified by the "Implementation Plan for Whole-Chain Support of Innovative Drug Development." The team is also optimistic about four types of investment opportunities, including Biotech companies with overseas potential, innovative drug leaders experiencing rapid revenue growth or nearing profitability, blockbuster products in the domestic approval and volume expansion phase, and traditionally large, stable pharmaceutical companies transitioning from generics to innovation, representing a multi-layered set of opportunities.
Benefiting from an overweight position in innovative drugs and related companies in the industrial chain, the ICBC Health Industry Mixed Asset Fund has achieved significant excess returns relative to its benchmark. Custodian bank verification data shows that as of the end of March 2026, the fund's cumulative return since its inception on September 6, 2024, reached 43.70%, significantly surpassing the benchmark return of 31.71% over the same period, providing investors with a tool for allocating to the innovative upgrade of the pharmaceutical industry.
Additionally, the ICBC New Economy Mixed Asset Fund, as a QDII fund capable of global allocation, offers investors a unique perspective. The fund's investment objective explicitly focuses on companies related to the "new economy" theme. Its 2025 annual report clearly stated a primary investment focus on the innovative drug industry and shared profound insights into global pharmaceutical innovation trends and the overseas expansion opportunities for Chinese pharmaceutical companies.
By investing more directly and broadly in innovative biotech companies listed in global markets, including Hong Kong, the ICBC New Economy Mixed Asset Fund provides investors with convenient access to high-quality Chinese pharmaceutical innovation assets listed overseas. Disclosures in the 2025 annual report indicated that the fund continued to increase its allocation to innovative drug companies (or those transitioning from generics) with reasonable valuations, strong R&D capabilities, and products with overseas potential. It also selectively participated in anchor investments for high-quality innovative drug IPOs in the Hong Kong market. Concurrently, it reduced exposure to some innovative drug companies that had experienced excessive short-term gains and stretched valuations. Through timely portfolio adjustments, the fund aims to capture the differentiated value of Chinese pharmaceutical innovation from a "global perspective." Custodian bank verification data shows that as of the end of March 2026, the ICBC New Economy Mixed Asset Fund RMB Class A (005699) achieved a one-year return of 41.91%, far exceeding the benchmark return of -1.04% over the same period.
Investing in pharmaceutical thematic funds essentially entails entrusting capital to professional managers to indirectly participate in a vibrant yet complex and volatile industry. Progress in the pharmaceutical industry is science-driven, and the investment process necessarily involves close monitoring of multiple factors, including R&D progress, clinical data, regulatory policies, and market competition.
Therefore, this type of investment tests investors' understanding and tracking of the industry. The core value of the investment research team lies in using professional expertise to distinguish genuine innovation, assess companies' long-term competitiveness, and strive to achieve sustainable excess returns for holders through active portfolio management and risk control. For ordinary investors, adopting strategies such as systematic investment plans or分批 buying during market lows, coupled with patient holding, may offer greater opportunities to share in the long-term, spiraling upward results of industrial progress.
Whether it is the A-share focused ICBC Frontier Healthcare Equity Fund, the A+H share covering ICBC Pharmaceutical and Health Equity Fund, or the globally capable ICBC New Economy Mixed Asset Fund, they all provide investors with diversified tool choices across different dimensions. On the long journey of embracing innovative development, partnering with professional "helmsmen" may allow for navigating market waves more calmly and steering more steadfastly towards the shores of value.
Comments