China AI-Driven Drug Discovery Drug Discovery Riding the Next Wave of AI; initiate on Insilico & XtalPi at OW

Research evidence excerpt

China AI-Driven Drug Discovery Drug Discovery Riding the Next Wave of AI; initiate on Insilico & XtalPi at OW

J P M O R G A N Asia Pacific Equity Research

23 July 2026

China AI-Driven Drug Discovery

Drug Discovery Riding the Next Wave of AI; initiate on

Insilico & XtalPi at OW

We initiate coverage of two China AI-driven drug discovery (AIDD) companies, Healthcare

ACInsilico (3696.HK) and XtalPi (2228.HK), with Overweight (OW) ratings. China’s Yang Huang

AIDD sector is shifting from business exploration to early commercialization, (852) 2800 3812

supported by rising business development (BD) activities and clinical catalysts. yang.huang@jpmorgan.com

Our positive view on China AIDD rests on three pillars: 1) AIDD has materially J.P.MorganMorganBrokingSecurities(Hong (AsiaKong)Pacific)LimitedLimited/ J.P.

improved drug R&D productivity and could further increase success probability

Derek Choi

through “dry-wet lab” closed loop platforms; 2) AIDD coupled with China's (852) 2800-8744

structural cost and R&D pace and regulatory advantages could make China a more derek.c.choi@jpmorgan.com

attractive hotbed for applying AIDD compared to overseas; and 3) The above J.P. Morgan Securities (Asia Pacific) Limited/ J.P.

Morgan Broking (Hong Kong) Limited

factors have driven Big Pharma deal flow, clinical milestones, and significant

topline growth, providing early validation for AIDD companies. We see a multi- Eric Zhao, CFA

(86-21) 6106 6256

year rerating opportunity, with Insilico and XtalPi offering complementary eric.zhao@jpmorgan.com

investment theses. We like Insilico for its high-risk, high reward pipeline built SAC Registration Number: S1730524050001

through AIDD and like XtalPi for its diverse businesses led by AIDD services and J.P. Morgan Securities (China) Company Limited