Leading pharmaceutical stocks launch a "valuation defense battle"

When the innovative drug sector is in continuous adjustment and market sentiment is relatively low, many pharmaceutical companies have launched share repurchase plans or started implementing repurchases to boost investors' confidence.

On the 15th, China Biopharmaceutical (01177.HK), a leading enterprise in the innovative drug sector, issued an announcement, stating that it will repurchase shares with a total value of no more than HK$2 billion in the next 12 months, directly stating that "the company's value is currently severely underestimated."

The aforementioned repurchase is not an isolated case. Recently, Kangfang Biotech (09926.HK) has introduced a combined plan of "HK$200 million share repurchase + senior executives' shareholding increase of HK$50 million"; WuXi AppTec (603259.SH) has started implementing its HK$1 billion share repurchase plan; companies such as InnoCare Pharma - B (09606.HK), Hengrui Medicine (600276.SH), and Baili Tianheng (688506.SH) have also successively repurchased their company's shares.

In response, industry insiders interviewed believe that this reflects that some companies believe that the current stock price does not fully reflect the company's value. Share repurchases can repair market sentiment, and the re - evaluation of the value of China's innovative drug sector ultimately depends on the realization of commercialization, globalization capabilities, and the continuous improvement of profitability.

Leading Pharmaceutical Companies Intensively Initiate "Self - Purchase Mode"

Using "real money" to repurchase company shares and issuing announcements is often the most powerful statement of listed companies.

In the Hong Kong stock market, China Biopharmaceutical stated directly in the announcement that the board of directors noticed the obvious fluctuations in the company's stock price recently and believed that the company's current value is "severely underestimated." It hopes to boost investors' confidence and increase shareholders' returns as soon as possible through the share repurchase plan. According to the announcement, the company has cumulatively purchased 60.35 million shares this year, with a total cost of approximately HK$338 million.

Recently, Kangfang Biotech announced that the board of directors has approved the use of up to HK$200 million to purchase the company's shares in the open market. At the same time, Xia Yu, the chairman and CEO of the company, and several core senior executives plan to increase their shareholdings in the company with personal funds, with an upper limit of HK$50 million for the total increase. The company said that the current stock price does not fully reflect the company's intrinsic value and business prospects.

Also attracting attention is InnoCare Pharma, a star ADC company that has recently listed on the Hong Kong stock market. The announcement shows that as of early June, the company has cumulatively repurchased 255,400 shares, costing approximately HK$53.31 million.

A reporter from Cailian Press noticed that "undervalued" has almost become a common keyword in this round of share repurchase announcements, whether it is for Hong Kong stock 18A companies or leading innovative drug companies that have entered the commercialization stage.

The background for this phenomenon is that the innovative drug sector has undergone a significant adjustment. Since the beginning of this year, the stock price of industry giant China Biopharmaceutical has been oscillating downward, and its valuation has shrunk significantly. In the company's view, it has fallen into a significantly undervalued range.

Even Kangfang Biotech, which presented the historic and significant Phase III clinical data of HARMONi - 6 (AK112/Envafolimab) at the 2026 ASCO Annual Meeting and whose pipeline value is unanimously favored by many large banks, is also under pressure during this round of market adjustment. After the data was released, the stock price fell for several trading days, with a maximum single - day decline of more than 8% during the period.

The adjustment of the innovative drug sector in this round is quite severe. Taking the Morgan CSI Innovative Drug Industry ETF that tracks the innovative drug industry in the A - share market as an example, the decline in the range since 2026 has exceeded 10%; the performance of the Fuguo Hong Kong Stock Connect Innovative Drug and Healthcare ETF, which represents the trend of Hong Kong Biotech, is also weak. From the stage high in early February to mid - June 2026, the net value has retraced nearly 20% in four months, and the overall decline this year has exceeded 17%.

There are also signs of an increase in share repurchases and shareholding increases in the A - share innovative drug sector. As a leading domestic innovative drug company, Hengrui Medicine has been continuously promoting share repurchases. As of June 8, 2026, the cumulative repurchase amount is approximately 792 million yuan; after completing the first - round repurchase of approximately 200 million yuan this year, Baili Tianheng launched a second - round share repurchase plan in early June, with an upper limit of 200 million yuan for the repurchase amount. The total upper limit of the two - round plan reaches 400 million yuan; regarding Junshi Biosciences (688180.SH), the 100 - million - yuan shareholding increase plan previously disclosed by Xiong Jun, the company's chairman and one of the actual controllers, has been completed, with a cumulative shareholding increase amount of more than 100 million yuan.

WuXi AppTec, the leading company in the CRO/CDMO sector, has also joined the share repurchase camp. The company recently announced the launch of a new round of A - share repurchase plan worth 1 billion yuan for the employee stock ownership plan. According to the latest announcement, on the first day of the repurchase implementation, the company spent nearly 100 million yuan to complete the repurchase of more than 1 million shares.

In the view of Guo Shiliang, an expert in the Jing Platform think - tank and a financial commentator, the intensive share repurchases by listed companies are essentially an important means to stabilize market expectations. "When company executives increase their shareholdings and listed companies repurchase shares, it often means that the management believes that the stock price has entered a reasonable or undervalued range. Such actions help to stabilize investors' emotions and send a signal to the market that the company recognizes its long - term value."

Yang Tao, an executive of a biopharmaceutical listed company, told a reporter from Cailian Press that the recent share repurchase phenomenon reflects a certain degree of cognitive mismatch between the capital market pricing and the industrial fundamentals. "In the past period, market funds have been more chasing hot - spot sectors, and the innovative drug sector as a whole has borne relatively large valuation pressure. However, from an industrial perspective, the current market prices of many companies do not fully reflect their true value."

In Yang Tao's view, both corporate share repurchases and management shareholding increases are essentially active endorsements by enterprises of their long - term development prospects. "The fact that a company is willing to use real money for share repurchases itself shows that the management has confidence in the company's future development."

From 'Financing for Blood Transfusion' to 'Cash Repurchase'

For the innovative drug industry, share repurchase used to be a rather luxurious thing. In the past more than a decade, the Chinese innovative drug industry has always been in a high - investment cycle. Whether it is target screening, clinical development, or the construction of a commercialization system, continuous and huge financial support is required. For a long time, financing ability has even been regarded as an important indicator to measure the survival ability of a Biotech company.

After the implementation of the Hong Kong Stock 18A system in 2018, a group of unprofitable innovative drug companies concentrated on the capital market. In the following years, rights issue financing and private placement have almost become the norm in the industry. For investors, rather than profits and cash flows, the market is more concerned about how much cash the company has on its books, the progress of the core pipeline, and whether the next round of financing can be successfully completed.

With the rising wave of innovative drug going global, from ADC, bispecific antibodies to GLP - 1, the large - scale licensing cooperation between Chinese pharmaceutical companies and international pharmaceutical companies has continuously refreshed industry records. The continuous inflow of upfront payments, milestone payments, and sales royalties has begun to change the development model of innovative drug companies that have long relied on external financing.

Now, the abundant cash flow is the most solid "backbone" for this round of pharmaceutical company share repurchases. In the context of the innovative drug industry generally facing a tightening external financing window and high R & D investment, the companies that can easily spend huge amounts of money on repurchases are all "blood - making" giants with sufficient "ammunition" on their books. Both China Biopharmaceutical and Kangfang Biotech clearly emphasized in their announcements that the repurchase funds are entirely from the company's existing available cash and will not have a significant adverse impact on the company's financial situation.

"The 'crazy pursuit' of innovative drugs in the capital market in the past few years is accelerating the return to rationality. The 'PPT era' when companies could raise funds by 'telling stories and drawing pipeline pies' has completely ended." Yang Tao said directly to a reporter from Cailian Press. He pointed out that the essence of the current industry has returned to the most basic business logic. Capital and the market focus on hard indicators such as market operation ability, cash flow, and profits. "Without the support of these core financial indicators, pharmaceutical companies cannot last long in the current market situation, let alone use surplus cash to 'buy the bottom of their own stocks'."

On the other hand, the rational re - evaluation of the commercialization dividend expectations in the domestic local market is forcing pharmaceutical companies to "survive from adversity."

Yang Tao told a reporter from Cailian Press that in the past, the industry generally held an optimistic expectation that "the Chinese local market with a population of 1.4 billion is large enough, and an innovative drug can easily obtain huge commercial returns after its launch." However, with the large - scale launch of a large number of homogeneous and follow - up innovative drugs in recent years and the normalization of medical insurance negotiations and centralized procurement, there is a gap between the actual commercial value realized in the domestic market and the previous expectations.

"The current commercialization dividend is lower than the expectations of some investors before. Both the industrial circle and the capital market have generally lowered their expectations for the domestic local commercialization dividend." Yang Tao believes that this forces pharmaceutical companies to shift from "blindly expanding the pipeline" to "competing for commercial benefits." The leading pharmaceutical companies that have taken the lead and obtained continuous commercial cash flows naturally have more initiative to carry out capital protection at the valuation bottom.

The Logic of the Long - Term and Profitable Industry Remains Unchanged

Guo Shiliang pointed out to a reporter from Cailian Press that the technology - growth sectors such as artificial intelligence and semiconductors have been continuously hot. In the pattern of the secondary market's stock competition, the "money - attracting effect" of the technology main line has not cooled down, resulting in the pharmaceutical sector facing continuous "blood - drawing" of liquidity and a low stock price. However, from an industrial perspective, the long - term and profitable logic of the innovative drug industry remains unchanged.

Based on years of development, going global (License - out) has become the core driving force for the development of the Chinese innovative drug industry. Thanks to the large population base in China, the overall cost of clinical R & D in China is much lower than that in European and American countries, which endows domestic innovative drugs with the underlying dividend of continuous high - cost - performance output. After joining the ICH (International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use), China's clinical trials can now achieve global integration.

"Although the international recognition of China's R & D quality has been significantly improved, 'how well are China's clinical data recognized and accepted globally' is still a tough test for pharmaceutical companies going global." Yang Tao admitted that the emotional fluctuations caused by several large - scale BD transactions some time ago were relatively large. A single - point transaction cannot support the turnaround of the entire sector. Chinese pharmaceutical companies must prove their real global commercial operation capabilities in the international market.

Based on this, this round of intensive share repurchases more shows the characteristics of a strong defense and bottom - building of the pharmaceutical sector by "exchanging time for space."

"The problems currently faced by pharmaceutical and medical companies are quite complex and belong to industry - wide systematic problems. However, the intensive share repurchases have made the 'valuation bottom' very solid." Guo Shiliang judged. He believes that with the release of market panic and the gradual entry of the repurchase funds of various companies, the fundamental bottom of the industry is being accelerated to be consolidated.

"After the bubble bursts, the industry is accelerating the return to rationality. In the future, funds will inevitably accelerate the concentration on the leading pharmaceutical companies that are 'rich, have pipelines, and can generate cash flows'." Yang Tao finally emphasized to the reporter that the short - term fluctuations in the secondary market cannot change the long - term trend of the industry moving forward. Currently, Chinese pharmaceutical companies are experiencing a qualitative change from "Made in China" to "Created in China" and then to "Chinese Innovation Serving the World," and the technological path is also undergoing a deep transformation from follow - up innovation to true original (First - in - class) innovation.

This article is from the WeChat official account "Cailian Press", author: Lu Afeng, published by 36Kr with authorization.