After three years of deep correction, Hong Kong's innovative drug market surged back into a bull run in 2025, catalyzed by the massive $4.8 billion business development deal between 3SBio and Pfizer in May. The Hang Seng Healthcare Index (800804) skyrocketed until September, reaching a peak of 4721.41 points, representing a staggering gain of 102.76%. Fueled by this innovative drug bull market, the Hong Kong market has demonstrated significant appeal for biopharmaceutical companies, establishing itself as a crucial platform for industry players seeking listing and financing this year. According to statistics, a total of 27 healthcare/biotechnology companies successfully listed in Hong Kong this year, with nearly 10 more submitting their prospectuses in December. Furthermore, Hong Kong Exchange data indicates that approximately 300 companies are still in the listing queue, with healthcare enterprises accounting for a substantial one-third. Notably, Hong Kong's IPO market fundraising in 2025 ranked first globally, with cumulative total funds raised surpassing HKD 280 billion. This amount is not only nearly triple the fundraising of the previous year but also sets a new four-year high. Among them, Hengrui Pharmaceuticals (01276) ranked in the top five for IPO fundraising in 2025, raising HKD 11.374 billion.
Behind the successful listings of 27 healthcare companies this year, the powerful incentive effect of Hong Kong's innovative drug bull market cannot be overlooked. As mentioned, the BD transaction between 3SBio (01530) and Pfizer in May served as a strong stimulant for the sector, initiating a robust rebound for Hong Kong's pharmaceutical stocks this year. The Hang Seng Healthcare Index, with a gain of over 100% from the year's start, significantly outperformed the broader Hang Seng Index and the Hang Seng TECH Index, emerging as the most explosive sub-sector in the Hong Kong market at the time. The fundamental reason for the high热度 in the Hong Kong pharmaceutical sector lies in the valuation recovery reflected in the secondary market, driven by policy dividends and breakthroughs in innovation.
From a policy perspective, 2025 is undoubtedly a pivotal transition year for China's pharmaceutical industry, moving from "innovation awakening" to "value realization." A crucial support for this valuation reversal in the secondary market is the breakthrough upgrade of the domestic pharmaceutical R&D policy system, built upon a decade of reform. The core of China's 2025 pharmaceutical R&D policy focuses on "comprehensive chain support for innovation and multi-level value protection," forming three main policy thrusts: R&D guidance, payment security, and internationalization support. Particularly in R&D and payment, domestic policies have shifted from previous "broad support" to "precise innovation guidance," and have established a "dual-track parallel" system in payment, effectively breaking the bottleneck for innovative drug reimbursement. This has greatly incentivized the domestic innovative drug market and significantly raised secondary market expectations for growth in the pharmaceutical sector, especially innovative drugs.
Taking the performance of the Hong Kong Chapter 18A market as an example, this year saw substantial price rebounds for pre-revenue biotech firms listed under this regime, exemplified by companies like CanSinoBio-B (01228). From IPO issuance results, biopharmaceutical companies listing in Hong Kong during 2025 were predominantly innovative drug firms, most still in the pre-profit stage. Their technological focus concentrated on cutting-edge areas such as Antibody-Drug Conjugates (ADC), bispecific antibodies, small nucleic acids, weight-loss drugs, and AI healthcare. For instance, Duality Biologics-B (09606), focused on ADC drug R&D, achieved the largest fundraising scale among Chapter 18A companies since 2022 upon its listing in April. Meanwhile, Sciwind Biosciences-B (02591), dedicated to GLP-1 drug development, saw its public offering oversubscribed by over 5300 times upon its August listing. Both aspects demonstrate strong long-term market confidence in the innovative drug industry.
The strong performance of the healthcare sector, led by innovative drugs, in 2025 is also attributable to the robust overall performance of the Hong Kong market. Against a backdrop of significantly improved market turnover activity, the healthcare sector demonstrated superior allocation value compared to other sectors. Market activity in Hong Kong has been vigorous this year. According to disclosed data, the total market capitalization of the Hong Kong securities market reached HKD 48 trillion by the end of November, a 41% increase year-on-year. The average daily turnover for the first 11 months of 2025 was HKD 255.8 billion, surging 95% compared to the same period last year, indicating a marked improvement in Hong Kong stock liquidity. During this period, southbound capital became a major source of incremental funds for the Hong Kong market. Data shows that by December 30, net purchases by southbound capital for the year totaled HKD 1.40 trillion, forming the most critical liquidity support for the Hong Kong market.
Southbound capital clearly targeted the pharmaceutical sector as a key allocation direction. On one hand, following a deep correction, the valuation of Hong Kong's pharmaceutical sector dropped to around 15 times PE, creating a clear value洼地 with strong potential for valuation recovery. With expectations of Fed rate cuts driving global liquidity easing, the allocation value of the Hong Kong pharmaceutical sector became increasingly apparent. On the other hand, the significantly better performance of new pharmaceutical listings compared to the overall market's new listings was another key reason for incremental capital allocation. Data shows that by December 30, 117 new listings were completed in Hong Kong for the year, a 67.14% year-on-year increase.
Concurrently, starting August 4, the Hong Kong Exchange formally implemented new IPO allocation mechanism rules. Prospective listed companies can choose between "Mechanism A" and "Mechanism B," further enhancing IPO pricing efficiency, improving market stability, and granting greater discretion to issuers and institutional investors. This has fostered an issuance landscape dominated by institutional, cornerstone, and anchor investor allocations, aiming to "protect and escort" the stock price at listing. The most evident impact of this policy in the IPO market is a significant decline in the rate of new stock breakages. The breakage rate for Hong Kong IPOs remained stable at 32%-34% from 2022 to 2024. However, in 2025, despite a higher number of IPOs, this rate inversely fell to 28.83%. Even so, the breakage rate for new healthcare IPOs, propelled by the innovative drug bull market, was suppressed further to approximately 17%, significantly lower than the overall market average. Among these, stocks with first-day gains exceeding 100% accounted for over 35% of the total, with Sciwind Biosciences setting an annual record with a 206% first-day surge, demonstrating exceptionally high allocation value.
However, the investment fervor for healthcare companies did not persist uniformly throughout the year. By December, a subtle shift in market sentiment became apparent, concretely manifested in significant first-day breakages for three healthcare IPOs and the emergence of one "big bull stock." In December, BenQ Medical (02581) plunged 49.46% on its debut, Hansoh Aita-B (03378) slumped 46.25%, and Huazhen Bio-B (02396) fell 29.32% on its first trading day. A commonality among these three companies is that their fundamental business prospects require further improvement. Notably, the latter two opted for Mechanism B issuance during their IPO stages. Huazhen Bio's Hong Kong public offering portion was oversubscribed by 791.95 times, while Hansoh Aita received a massive oversubscription of 3074.09 times. Despite this, they still experienced first-day breakages. In contrast, Insilico Medicine (03696), also in the healthcare sector and listing later, not only secured the title of the largest Biotech IPO by fundraising in Hong Kong for the year but also achieved a grey market closing gain of over 50% and a maximum intraday gain of nearly 50% on its debut.
This indicates that while market enthusiasm for Hong Kong's pharmaceutical sector remains high, investors are not indiscriminately "all-in." Companies with stronger fundamentals and more promising development prospects are clearly becoming the preferred allocation choices.
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