The latest drug tariffs in the United States have been implemented! San Sheng Guo Jian dropped over 6%, and the Innovation Drug ETF from Huatai-PineBridge (589120) retreated 1.62%! With international academic conferences like ASCO approaching, what are the key highlights?

On April 7, the A-share market saw a volatile upward move, and the innovative drug sector—having previously surged one after another—pulled back. As of 13:12, the “20CM Innovative Drug New Species” Sci-Tech Innovation Drug ETF Huatai-PineBridge (589120) was down 1.62%.

Most of the constituent stocks of the Sci-Tech Innovation Drug ETF Huatai-PineBridge (589120) index pulled back. San Sheng Guojian fell by more than 6%, Rongchang Biotech fell by more than 5%, Borie Medical fell by more than 4%, Yifang Biotech and Tebo Biotech fell by more than 3%, while Zizhen Pharmaceutical and others edged up slightly against the trend.

【Top Ten Constituent Stocks of the Sci-Tech Innovation Drug ETF Huatai-PineBridge (589120) Index】

As of 13:15, the constituent stocks are only shown for display purposes and do not constitute investment advice.

On the news front, according to the U.S., as of the local time of April 2, the United States imposed a 100% tariff on imported patented drugs and their raw materials pursuant to Section 232 of the Trade Expansion Act of 1962. The core rules are as follows:

Drugs produced in the European Union, Japan, South Korea, Switzerland, and Liechtenstein are subject to a 15% tariff, while some products from the United Kingdom are subject to lower tariff rates.

Companies that sign both Most Favored Nation (MFN) pricing agreements and domestic capacity agreements with the U.S. can enjoy a zero tariff, while companies that sign only domestic capacity agreements face a 20% tariff.

Generic drugs, biosimilars, orphan drugs, and other parts of certain special medicines are exempt from tariffs.

Large enterprises are granted a 120-day transition period, and tariffs become effective after 120 days; small enterprises have a 180-day transition period.

In response, UBS believes that for China’s biopharmaceuticals (innovative drugs), leading overseas licensing projects (such as sac-TMT, SSGJ-707) are only limitedly affected. This is because most partners are multinational pharmaceutical companies, and many have already signed MFN agreements. For BeiGene, although the raw materials of Zebuotinib are produced outside the U.S., the finished drugs are produced in the U.S. itself, and the company is registered in Switzerland. All of Zebuotinib’s indications have received orphan drug qualification recognition, so the impact is expected to be very limited.【Innovative drugs enter a period of intensive data catalysts: overseas BD + innovative drug approvals + international academic conferences such as AACR/ASCO】

Regarding innovative drug news, in the first quarter of 2026, the total BD amount for innovative drugs hit a new high, maintaining a strong development momentum. Data from Pharma Magic shows that in Q1 2026, the total value of China’s innovative drug external licensing transactions exceeded $60 billion, with upfront payments reaching $3.4 billion. The total transaction value in 2025 was $138.8 billion, and the full-year upfront payments were $7.5 billion. It can be seen that whether it is the total amount or the upfront payments, the figures for Q1 2026 are both close to about half of the full-year 2025 numbers.

The latest statistics from the National Medical Products Administration show that as of March 27, China has approved 10 innovative drugs in 2026, of which 2 are imported and 8 are domestically produced. China’s innovative drugs are maintaining a good development momentum and have strong potential.

CITIC Securities stated that with international academic conferences such as AACR/ASCO coming up, China’s innovative drug pipeline is about to enter a period of intensive data readouts. AACR 2026 will be held in Santiago from April 17 to 22. According to the official AACR conference website, Chinese pharmaceutical companies will appear with a scale of more than 100 companies and nearly 400 research outcomes. Participation and innovation quality are both expected to see a leap. ADC drugs remain the focus; data from more than 90 innovative drug pipeline programs are expected to be read out. The trend of technological iteration is significant. Suggested areas to watch include: next-generation CDK4/2 dual-target inhibitors; BCL-2 small-molecule inhibitors; tri-specific co-stimulatory TCE, dual-target/dual-toxin ADCs; the world’s first Pan RAS ADC; dual-antibody ADCs such as EGFR/HER3, SSTR2/DLL3, and others. Overall, China’s innovative drugs in multiple sub-sectors such as ADCs, bispecific antibodies, and small-molecule targeted drugs have already shown a trend of leading globally.

ASCO 2026 will be an important stage for data readouts with significant weight for China’s innovative drug companies. The value of related assets is expected to be further unlocked, driving the realization of global value for the innovative drug industry. An outline of the key timeline: abstract title release: April 21; abstract disclosure: May 21; conference dates: May 29 to June 2. Suggested areas to focus on for key iterative directions: ① combination therapy plans based on ADCs, bispecific/multispecific antibodies, and immunotherapy; ② ADCs moving from single-target and traditional payloads to a new stage that emphasizes optimization of the therapeutic window, including better payload/linker design, bispecific targeting, and stronger platform-based development capabilities; ③ early clinical breakthroughs of new therapies such as cell therapy and gene therapy in solid tumors; ④ readouts of major clinical data with global-value pipelines, including SKB264 combined with K drug 1L for PD-L1 positive NSCLC, HARMONi-6, and others.

After the Qingming holiday, A shares will see the first trading day. Looking ahead to future market performance, institutions believe that as March economic data and the earnings season are released, the market’s focus in April will gradually shift to a substantive verification of the quality of economic recovery and improvements in corporate earnings. High-level sectors lacking earnings support may face valuation pullbacks, while top-quality targets are more likely to deliver excess returns. In terms of sector allocation, institutions suggest focusing on sectors such as innovative drugs. (Source: CITIC Securities 20260403, “Innovative Drugs | Innovative drugs enter a period of intensive data catalysis; focus on key areas”)

【Innovative drugs: strong offense and strong defense, with upside flexibility and downside resilience】

BOC Securities believes that there is still a high degree of uncertainty in how the situation evolves afterward. Against this backdrop, many sectors in A-share industry allocation face difficulties in making directional choices, while industries that combine offensive and defensive attributes are expected to cope better with a highly uncertain situation. Innovative drugs are one such industry. If conflicts ease and risk appetite recovers, innovative drugs become the offensive “spear”; but if conflicts continue or even escalate, innovative drugs can also serve as the defensive “shield,” combining upside flexibility with downside resilience. Judging from historical experience, during phases of systematic market adjustment, the innovative drug sector often shows stronger relative returns, reflecting its “defensive attribute.” On the other hand, given that China’s innovative drug overseas BD continues to enjoy strong momentum and earnings expectations remain favorable, if the market sees a rebound, the industry also has upside flexibility.

Defensive “Shield”: When the market pulls back, innovative drugs are prone to become a safe haven for funds, showing relatively better ability to withstand declines. Judging from historical experience, during phases of systematic market adjustments, the innovative drug sector often displays stronger relative returns—i.e., “defensive attributes.” As a sub-sector of biopharmaceuticals, demand for innovative drugs has relatively high rigidity. Meanwhile, the industrial logic of innovative drugs is to some extent independent of macro cycles. When funds exit risk-sensitive sectors, innovative drugs—with a stable security/position structure and long-term imagination space—are more likely to become a refuge for funds, showing a “counter-trend resilience against declines” characteristic.

Offensive “Spear”: China’s innovative drug overseas BD continues to have strong momentum and earnings expectations remain favorable. From a fundamental logic perspective, pharmaceutical sectors such as innovative drugs have relatively solid fundamental support. For innovative drugs in China, both the overseas BD outflow amount and the number of overseas BD deals have continued to hit new highs. In 2025, China’s innovative drug external BD licensing transactions totaled 157 deals, with a transaction total value of as much as $135.655 billion, up 161% year over year. This trend further continued in 2026. As of February 25, within the year, China’s innovative drugs have already seen 44 external licensing (license-out) transaction events, with a total amount of $53.276 billion. Even before Q1 has fully passed, the total overseas licensing transaction value for innovative drugs has already exceeded one-third of the full-year total in 2025. Since September 2025, the pharmaceutical sector has continued to pull back. With the need for capital rebalancing, innovative drugs are expected to become a key direction for funds switching from “high” to “low.” Currently, China’s innovative drug overseas BD remains in high prosperity with favorable earnings expectations; if the market rebounds, the sector also has upside flexibility. (Source: BOC Securities 20260404, “Innovative drugs: balanced spear and shield”)

Catalyzed by the “policy support + innovation upgrade + normalized overseas BD” triple logic, the “high prosperity” of innovative drugs is being continuously validated, and the industry is entering a period of comprehensive harvest! As a “20CM” innovation/drug “new species” with a 20% price limit for rises and falls, the Sci-Tech Innovation Drug ETF Huatai-PineBridge (589120) offers higher flexibility. The index focuses on leading innovative drug companies; there are only 30 constituent stocks, and it is 100% focused on Sci-Tech Innovation Drugs—higher purity, higher sharpness—capturing China’s innovative drug rise opportunities comprehensively!

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