AI-driven drug discovery continues its powerful rally on September 18, with momentum building on fresh policy support. The benchmark index tracking the Hong Kong Stock Connect Healthcare ETF (159137) surged 3% intraday, powered by its nearly 70% allocation to AI pharma names. Meanwhile, the Hong Kong Stock Connect Innovative Drug ETF (520880) saw its index climb 2.48%, as leading innovative drug companies in its portfolio aggressively expand into AI-powered drug development.

Among standout performers, GenScript Biotech, often dubbed the "picks-and-shovels" play in AI pharma, extended gains with a 5% rise following yesterday's 14% surge, hitting a fresh three-year high. Pure-play AI drug discovery firm XTALPI jumped nearly 11%, while Insilico Medicine skyrocketed over 11% to reach a three-month peak. The AI+CRO model continues to attract attention, with Joinn Laboratories spiking as much as 12% during the session.

On the industry front, September 16 saw three major collaborations land in the AI pharma space, underscoring the global trajectory of the sector. First, Eli Lilly's TuneLab partnered with GenScript to streamline scaled wet-lab validation after AI-driven design. Second, Novo Nordisk joined forces with Anthropic, bringing cutting-edge large language models deeper into core drug R&D workflows. Third, ByteDance's AI pharma arm secured independent financing, signaling sustained capital commitments from industrial players.

From a policy perspective, on September 18, China's Ministry of Industry and Information Technology, along with nine other departments, released the "15th Five-Year Plan for Pharmaceutical Industry Development," setting ambitious targets for 2030. The plan aims for China to rank among the world's leaders in biomedical R&D application, fully unleash innovation-driven efficiency, achieve systematic breakthroughs in key core technologies, and accelerate the biopharmaceutical industry's emergence as a national strategic pillar. Key innovative drug metrics include annual industry growth exceeding 20%, at least five products surpassing $1 billion in global annual sales, and first-in-class drugs accounting for over 25% of the global share.

As AI pharma reshapes the innovative drug landscape, investors seeking exposure can consider two T+0 trading vehicles. The Hong Kong Stock Connect Healthcare ETF (159137) passively tracks the HK Stock Connect Healthcare Thematic Index, with nearly 70% AI pharma exposure. Representative holdings include XTALPI, GenScript Biotech, and the three WuXi entities. Its off-exchange feeder fund is 026922. The Hong Kong Stock Connect Innovative Drug ETF (520880) passively tracks the Hang Seng HK Stock Connect Innovative Drug Select Index, with 100% allocation to innovative drug R&D companies. Key holdings include Insilico Medicine, Biocytogen-B, and CSPC Pharmaceutical Group. Its off-exchange feeder fund is 025221.

Data sources include public information from the Shanghai, Shenzhen, and Hong Kong exchanges, CSI Index, and Hang Seng Index. Weighting data is as of August 31, 2026. The HK Stock Connect Healthcare Thematic Index covers 17 AI pharma-related constituents, including pure AI drug platforms, AI+CRO firms, and innovative drug companies adopting AI, with a combined weight of 69.52%. Specific weightings include: WuXi entities totaling 39.01% (WuXi Biologics 18.77%, WuXi AppTec 14.70%, WuXi XDC 5.54%), GenScript Biotech at 8.15%, and XTALPI at 4.02%. For the Hang Seng HK Stock Connect Innovative Drug Select Index: CSPC Pharmaceutical Group at 9.64%, Insilico Medicine at 3.15%, and Biocytogen-B at 0.62%.

Fund fee notes: ETFs do not charge sales service fees. When subscribing or redeeming fund shares, agents may charge commissions up to 0.5%, including fees from exchanges and registration institutions. Detailed fees are outlined in each fund's legal documents. Risk warning: The fund manager assesses the risk level of the HK Stock Connect Healthcare ETF and its feeder fund, as well as the HK Stock Connect Innovative Drug ETF and its feeder fund, as R4-moderate to high risk, suitable for aggressive investors (C4) and above.

Important disclaimer: Index constituents shown are for illustration only. Individual stock descriptions do not constitute investment advice nor represent holdings or trading activities of any fund under management. Any information in this article, including but not limited to stocks, comments, forecasts, charts, indicators, theories, or other forms of expression, is for reference only. Investors must bear responsibility for their own investment decisions. Views, analyses, and forecasts herein do not constitute investment advice and the publisher assumes no liability for direct or indirect losses arising from use of this content. Past performance of funds managed by the fund manager does not guarantee future results, and fund investing carries risks.