Since U.S. President Trump initiated the global tariff war triggering market panic, Hong Kong stocks plunged over 3,000 points in a single day on Monday, nearly erasing all gains made this year. However, certain sectors have maintained impressive performance since the beginning of the year, with the Hang Seng Biotechnology Index rising 8.41%, outperforming both the broader market and overall technology stocks. With favorable policy shifts, strong performance metrics, and increasing international licensing deals, this sector has regained momentum with many potential stocks poised for growth.
During the March earnings season, numerous biotech stocks delivered outstanding results. For instance, Innovent Biologics (01801.HK) saw revenue growth exceeding 50% in 2024, with annual losses narrowing significantly by 91%. 3SBio (01530.HK) achieved 16.5% revenue growth in 2024, with net profit surging 34.9%. Both stocks experienced upward momentum following their results. In fact, many listed biotech stocks in Hong Kong recorded gains exceeding 50% in the first quarter, showing strong momentum.
The current biotech stock rally is supported by multiple improving fundamentals. CITIC Securities reports that many healthcare subsectors are expected to show recovery trends in earnings or demand during the first quarter, potentially extending throughout the year. The overall healthcare industry is anticipated to see improvements in revenue, profit, and cash flow, leading to valuation reassessment.
Healthcare Industry Expected to See Valuation Reassessment
The report highlights several positive factors, including active international licensing deals, recovery in mainland hospital procurement, positive performance metrics, optimization of centralized procurement policies, and commercial insurance developments that help increase penetration of mid-to-high-end medical insurance, benefiting the entire sector.
International licensing deals refer to mainland pharmaceutical companies selling partial or full rights of their products or technologies to overseas pharmaceutical companies. Weight loss drugs are a popular category in these deals. Recently, The United Laboratories (3933.HK) announced its subsidiary’s exclusive licensing agreement with Novo Nordisk for “UBT251,” an early-stage GLP1/GIP/GCG triple receptor agonist for treating obesity, type 2 diabetes, and other conditions.
Accelerated approval for innovative drugs is another positive factor. The NMPA’s “2024 Drug Evaluation Report” showed a record-high 48 Class 1 new drugs approved last year, with anti-cancer drugs accounting for about 40% of approvals.
Innovative Drug Approvals Accelerating, Benefiting Biotech Stocks
Recently, Regent Pacific Group Limited (00575.HK) announced that its strategic partner Jiangsu Wanbang Pharmaceuticals received confirmation from NMPA that their premature ejaculation treatment drug Senstend™ (branded as Fortacin™ in China) has passed initial review and entered technical evaluation, with expected approval within 12 months of submission.
PE Treatment Drug Continuing Global Commercialization
Regent Pacific is also expanding beyond the domestic market, with Fortacin™ expected to begin Phase III studies in the U.S. this year while negotiating U.S. market licensing. The drug is already approved in Europe, mainly in Italy and Germany, and licensed to Kobayashi Pharmaceutical in Japan, with ongoing commercialization efforts in other Southeast Asian markets.
The company expects Fortacin™ to potentially help an initial target market of 9 million patients in China in its first year, growing to over 170 million patients by year ten, indicating significant growth potential. Additionally, the company’s Deep Longevity division has made progress in launching new LLM (Large Language Model) and secured its first customer in China, further validating its AI technology’s role in the global longevity health market.
