Global X China Biotechnology ETF recorded positive returns in August

According to Zhitong Finance APP, the Global X China Biotechnology ETF (02820) recorded positive returns in August. Future Asset stated that with the continuation of globalization themes, domestic policy support, improved corporate earnings, and a favorable macro environment, the Chinese biotechnology sector remains one of the best-performing areas this year. Recent significant external licensing transactions highlight global recognition of the innovation quality of Chinese companies. We have observed an accelerating growth trend in the number of external licensing transactions and the amount of upfront payments over the past two years, with an increasing proportion of innovative drugs, indicating that the entry of Chinese original research assets into the U.S./global market is becoming a new norm in the biotechnology field. The improvement in profitability and acceleration of commercialization processes for biotechnology companies are expected to boost investor sentiment towards the Chinese healthcare sector.

On August 20, the Premier of the State Council emphasized during a visit to 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 leaders also met with the chairman of Novo Nordisk and expressed a welcome for global biopharmaceutical companies to strengthen cooperation with China. At the end of August, the National Healthcare Security Administration announced the final list of drugs that meet the conditions for participation in the national medical insurance catalog adjustment. Domestic biotechnology companies generally hold an optimistic attitude towards the upcoming negotiations, believing that the terms are becoming more favorable and flexible.

Reports indicate that the U.S. government is drafting an executive order (EO) to restrict Chinese drugs and innovative therapies (mainly targeting licensing activities). A White House spokesperson stated that the government is not "actively considering" the draft. Although this matter is still in its early stages and highly uncertain, Chinese biotechnology companies may demonstrate stronger resilience amid such uncertainties—some leading companies have the capability to independently conduct global clinical trials. Even if the executive order takes effect, Chinese drugs can still be licensed to EU/Japanese companies.

Stock Commentary

Jiangsu Hengrui Medicine (01276)

Hengrui Medicine's performance for the second quarter of 2025, announced in August, met expectations: revenue for the period was RMB 8.6 billion (up 12.5% year-on-year), with drug sales of approximately RMB 7.1 billion (up 15% year-on-year), an increase from the 11% year-on-year growth in the first quarter; net profit was RMB 2.6 billion (up 25% year-on-year). The company's Hong Kong IPO and multiple external licensing transactions completed in the first half of the year have provided ample funds for the advancement of subsequent R&D pipelines, acquisitions/introduction of projects, and the establishment of new commercial teams. (Company data, August 2025)

Cooperative income has become a new growth point for Hengrui's profits. In the second quarter, approximately RMB 1.5 billion in revenue was confirmed from the licensing agreement reached with Merck in March 2025. More transactions (including a $500 million upfront payment from GlaxoSmithKline) are expected to be reflected in revenue in the second half of the year. Additionally, Hengrui reached a new licensing agreement with U.S. startup Braveheart Bio in September, granting rights outside Greater China for a drug, receiving a $65 million upfront payment ($32.5 million in cash + $32.5 million worth of Braveheart equity), a $10 million recent technology transfer milestone payment, and up to $1.013 billion in clinical and commercial milestone payments plus sales royalties. With a strong R&D pipeline and extensive business development efforts, Hengrui is likely to continue generating external licensing income in the coming years (Company data, August 2025)

Beigene (06160)

Beigene's performance in the second quarter of 2025 was robust: revenue of $1.3 billion (up 18% quarter-on-quarter), and a net profit of $94.3 million, both exceeding market expectations. The strong sales momentum of its star product BRUKINSA (Zebutinib), especially in overseas markets, drove margin expansion during the period. The company also raised the lower limit of its revenue guidance and gross margin guidance for 2025. (Company data, August 2025)

On August 25, Beigene announced an agreement with Royalty Pharma (NASDAQ: RPRX) to sell its sales-sharing rights for the anti-tumor drug IMDELLTRA (Tislelizumab) outside of China for up to $950 million. Under the agreement, Beigene will receive: 1) an upfront payment of $885 million; 2) an option to sell the remaining sales-sharing rights for up to $65 million within 12 months; 3) a share of the revenue from sales exceeding $1.5 billion annually. This transaction marks a milestone return from the company's collaboration with Amgen (AMGN) and further strengthens its cash reserves to explore future opportunities. (Company data, August 2025)

It is reported that the Global X China Biotechnology ETF (02820) invests in 30 companies primarily engaged in the research, development, manufacturing, and distribution of new drugs, therapies, or vaccines using biopharmaceuticals