Lyon: China's innovative drug sector returns to Alpha to dominate macro-fluctuations or provide buying opportunities

The Zhitong Finance App learned that Lyon released a research report saying that China's innovative drug sector is returning to a market dominated by company fundamentals and individual stock excess earnings (Alpha). The influence of specific company fundamentals, especially business development (BD) and phase III clinical progress, is picking up relative to macro factors (Beta). The bank's attribution analysis shows that its ability to basically explain pharmaceutical stock price trends reached 82.7% from 2015 to 2021, fell to about 32.7% from 2021 to 2024, and has rebounded to more than 54% since 2025, partly supported by BD progress and key overseas Phase III trials. The bank expects that as the market's confidence in the clinical and BD execution of innovative pharmaceutical companies improves, the role of fundamentals will become more important; short-term macro-fluctuations may provide an opportunity to buy on dips and verify this view.

The bank pointed out that the industry is entering a catalyst-intensive period. Historically, the fourth quarter accounted for about 35% of the annual number of BD transactions, and in the first half of 2026, China's relevant external authorizations reached 81, with a total transaction value of about US$99.7 billion, which is close to double the level of the full year of 2024, so BD activities in the fourth quarter of 2026 are worth paying attention to. The World Lung Cancer Conference (WCLC) will be held in Korea from September 12 to 15. Hanson Pharmaceuticals (03692) /GSK and Medilink/Roche's two original Chinese B7-H3 ADCs compared to topotecan's phase III data for treating recurrent small cell lung cancer, and a number of other original Chinese research assets will be presented; the European Society of Medical Oncology (ESMO) will be held immediately from October 23 to 27. The bank believes that major clinical findings and BD activity are accelerating, and a positive catalytic window is opening.