HKEX Insight

Biotech has become one of the best-performing sectors in the Hong Kong equities market, as investors leverage HKEX’s product ecosystem to gain exposure to the Chinese mainland’s biotech boom. As of end-September 2025, the Hang Seng Biotech Index, which tracks the top 30 biotech firms listed in Hong Kong, gained 104.6%¹.

It is no wonder that biotech is getting investors’ attention. The sector is rapidly expanding, with global sector revenues growing from around US$330 billion in 2015 to over US$1.7 trillion in 2025, according to Precedence Research.

China’s breakthrough from basic drug supplier to biotech powerhouse has been a core driver of this growth in the past decade.

The country’s contribution to the global pipeline of new drugs grew some 680% over this period, reaching over 1,250 new drug candidates for research and testing in 2024 according to Bloomberg – up from 160 in 2015 and closing in on the United States’ 1,440.

Behind this breakthrough lies a confluence of strategic policy support, the emergence of highly innovative companies and deep talent pools.

The government’s “Made in China 2025” initiative and marking of biotech as a "new quality productive force" offered the sector greater policy support in the form of research funding, talent incentives, infrastructure initiatives and more.

With this boost, nearly twice as many biopharma companies were launched in China between 2010 and 2020, when compared with the decade before, BCG estimates. And today, around 30% of the world's top biotech talent are employed in China’s universities and labs.

More innovative Chinese biotech companies are going global through partnerships with major international pharma companies, and so far this year, about a quarter of all global drug licensing deals have involved international companies partnering with Chinese companies to sell medicines made in China globally.

While one Chinese company’s cutting-edge blood cancer drug has outperformed international competitors and now takes the largest market share for this kind of treatment, another signed a US$600 million deal with a global firm in late 2024 to sell their cancer-fighting drug at scale.

This was the second time the Chinese company had licensed one of its drugs to a foreign partner – part of an emerging trend that reflects growing confidence in the quality of Chinese-developed treatments and a clear sign that China’s biotech industry is competing on the global stage.

In tandem with the Chinese mainland's biotech surge, Hong Kong has emerged as a vibrant hub for biotech fundraising and trading, with a vast array of issuers and investment tools.

The 2018 introduction of HKEX’s Chapter 18A listing rules allowing pre-revenue biotech companies to list and raise capital in Hong Kong has transformed its market as the world’s second-biggest biotech funding platform.

By the end of September 2025, a total of 78 companies have gone public in Hong Kong using Chapter 18A, collectively raising US$31 billion in capital and contributing a total market capitalisation of US$183 billion.

The infusion of biotech listings has laid the groundwork for a broader biotech product ecosystem.

The Hang Seng Biotech Index (HSBIO)² was introduced in December 2019, providing a benchmark for investing in the sector and catalysing the creation of new financial products.

These soon included a selection of Exchange Traded Funds (ETFs) for investors to gain additional exposure to the sector.

Six ETFs currently track HSBIO directly (four in the Chinese mainland and two in Hong Kong), and AUM and turnover across these instruments have increased markedly, with AUM growing by a factor of five from HK$1.5 billion in March 2021 to HK$11.0 billion in September 2025.

And there’s a much bigger universe of biotech-related ETFs – particularly in the Chinese mainland – following sectors such as healthcare and innovative drugs that are highly correlated to the HSBIO. The AUM of ETFs tracking biotech and related sectors have increased from HK$29.0 billion in March 2021 to HK$168.6 billion as of September 2025.

The biotech product ecosystem at HKEX is in the process of expanding further still.

Biotech stocks are inherently more volatile, often experiencing price swings driven by clinical trial outcomes, regulatory approvals and shifts in market sentiment. This dynamic environment demands more precise instruments for hedging and strategic positioning.

With HSBIO’s realised volatility³ at 42.6% (as of September 2025⁴), significantly higher than the Hang Seng Index (27.9%) and the Hang Seng China Enterprises Index (30.2%), the ability to hedge effectively is becoming more important.

The launch of HSBIO Futures in November 2025, subject to regulatory approval, gives investors a direct way to manage biotech exposure and risk, removing the need to rely on low-correlated proxies like the Hang Seng Index, Hang Seng China Enterprises Index, or Hang Seng Tech Index.

Additionally, HSBIO’s high correlation with other healthcare indices allows investors to hedge broader healthcare sector exposure. This new futures contract enhances the toolkit for portfolio management, price discovery and biotech market liquidity.

As firms from the Chinese mainland expand globally and international licensing deals multiply, Hong Kong’s deepening biotech ecosystem is poised to support the next wave of growth – cementing its role as a strategic hub in the global biotech value chain.

1. Effective 8 September, HSBIO was adjusted to 30 constituents. All 30 constituents are Southbound-eligible.
2. Initially tracking the top 50 biotech firms listed in Hong Kong, the number of constituents decreased from 50 to 30 from 8 September 2025 onwards.
3. Measured by 100-day historical volatility. Source: Bloomberg.
4. Source: Hang Seng Indexes Company Limited. Annual volatility based on daily return for the 12-month period ending 30 September 2025.