Investment Rating - The report maintains an investment rating of "Outperform" with a rating of A [5] Core Insights - The report highlights the significant performance of domestic new drugs showcased at the ESMO 2025 conference, with several companies presenting excellent clinical data [3][21] - The report emphasizes the importance of academic conferences as key catalysts for the innovative drug sector, particularly mentioning ESMO, ASCO, and WCLC as critical events for Chinese pharmaceutical companies [20] Weekly New Drug Market Review - From October 20 to October 26, 2025, the top five gainers in the new drug sector were: - 欧康维视 (+8.87%) - 君圣泰 (+8.21%) - 诺思兰德 (+7.07%) - 友芝友 (+4.42%) - 海创药业 (+3.73%) - The top five losers were: - 康宁杰瑞 (-17.72%) - 北海康成 (-14.42%) - 创胜集团 (-14.29%) - 宜明昂科 (-13.40%) - 来凯医药 (-12.40%) [16][17] Recommended Focus Stocks - The report suggests focusing on several stocks with potential catalysts, including: 1. Products with high overseas volume certainty after MNC certification: - PD-1 upgraded product: 三生制药 - GLP-1 asset: 联邦制药 - ADC assets: 科伦博泰, 百利天恒 2. Potential heavyweights for overseas MNC authorization: - PD-1 upgraded products: 康方生物, 信达生物 - Breakthroughs in autoimmune fields: 益方生物, 中国抗体 - Innovative target ADC: 复宏汉霖, 石药集团 3. Stocks likely to benefit from medical insurance negotiations and commercial insurance innovative drug directories: - Beneficiaries of medical insurance directory: 恒瑞医药, 康诺亚, 迈威生物, 智翔金泰, 海创药业 - Beneficiaries of commercial insurance innovative drug directory: 药明巨诺, 科济药业 [2][20] New Drug Approval and Acceptance - This week, four new drug or new indication applications were approved, and five new drug or new indication applications were accepted in the domestic market [9] - A total of 46 new drug clinical applications were approved, and 31 new drug clinical applications were accepted [10] Key Domestic Market Events - 信达生物 announced a global strategic partnership with Takeda to accelerate the development of new generation tumor immunotherapy and antibody-drug conjugate therapies [11] - 康宁杰瑞 and 石药集团 announced that their HER2 bispecific antibody-drug conjugate JSKN003 received breakthrough therapy designation from the CDE [11] - 和黄医药 presented clinical data for HMPL-A251 at the AACR-NCI-EORTC conference [11] Key Overseas Market Events - 罗氏 received FDA approval for Gazyva/Gazyvaro for the treatment of active lupus nephritis in adult patients [12] - Electra Therapeutics announced that its therapy ELA026 received breakthrough therapy designation from the FDA and PRIME qualification from the EMA [12] - 安斯泰来 announced that the FDA accepted its supplemental biologics license application for the antibody-drug conjugate Padcev in combination with Keytruda [12]

Core Points - The Hong Kong Innovative Drug ETF (159567) closed down 0.12% with a trading volume of 797 million yuan on October 24, 2024 [1] - The fund was established on January 3, 2024, with a management fee of 0.50% and a custody fee of 0.10% [1] - As of October 23, 2024, the fund's latest share count was 8.225 billion shares, with a total size of 6.801 billion yuan, reflecting a year-to-date increase of 1980.29% in shares and 1700.12% in size [1] Fund Performance - The current fund manager is Ma Jun, who has managed the fund since its inception, achieving a return of 65.38% during the tenure [2] - The fund's performance benchmark is the National Index for Hong Kong Innovative Drugs, adjusted for valuation exchange rates [1] Liquidity and Trading Activity - Over the last 20 trading days, the ETF has accumulated a trading amount of 22.849 billion yuan, with an average daily trading amount of 1.142 billion yuan [1] - Since the beginning of the year, the ETF has recorded a total trading amount of 227.996 billion yuan over 195 trading days, averaging 1.169 billion yuan per day [1] Top Holdings - The ETF's top holdings include: - Innovent Biologics (9.52% holding, 26 million yuan market value) - WuXi Biologics (9.47% holding, 25.8 million yuan market value) - BeiGene (8.73% holding, 23.8 million yuan market value) - CanSino Biologics (7.62% holding, 20.8 million yuan market value) - China National Pharmaceutical Group (7.17% holding, 19.6 million yuan market value) [2]

Core Insights - The Hang Seng Healthcare Index has shown a positive trend, with notable increases in constituent stocks such as Kangnate Optical and WuXi AppTec, indicating a robust performance in the healthcare sector [2][8] - The upcoming launch of the Hang Seng Biotechnology Index futures on November 28 is expected to provide hedging and incremental tools for the H-share biotech sector [7] - The 11th round of national centralized procurement (VBP) bidding is scheduled for October 27, introducing uncertainty regarding pricing and product selection [8] Market Performance - As of October 24, 2025, the Hang Seng Healthcare ETF has risen by 0.46%, with a recent price of 0.66 yuan and a 3-month cumulative increase of 2.02% [2][11] - The Hong Kong Stock Connect Innovative Drug Selection Index has increased by 0.19%, with significant gains in stocks like Rongchang Bio and Sanofi [4] - The Medical 50 ETF has also seen a rise of 0.16%, with a recent price of 0.62 yuan and a 3-month cumulative increase of 4.36% [7][13] Liquidity and Trading Activity - The Hang Seng Healthcare ETF recorded a turnover rate of 10.25% with a trading volume of 703 million yuan, indicating active market participation [2][12] - The Hong Kong Innovative Drug Selection ETF had a turnover rate of 12.51% and a trading volume of 61.91 million yuan, reflecting a vibrant trading environment [5] - The Medical 50 ETF had a turnover rate of 0.61% with a trading volume of 1.0073 million yuan, showing lower liquidity compared to the other ETFs [7] Company Performance - Sanofi's Q3 performance was impressive, with a revenue of 1.116 billion yuan, a year-on-year increase of 18.8%, and a net profit of 399 million yuan, up 71.15% [8] - The focus on "outbound + BD" strategies is expected to drive growth in the innovative drug sector, with a concentration of BD events typically occurring in Q4 [9][10] ETF Overview - The Hang Seng Healthcare ETF has a total size of 6.777 billion yuan, ranking in the top third among comparable funds [11] - The Hong Kong Innovative Drug Selection ETF closely tracks the performance of the Hang Seng Hong Kong Stock Connect Innovative Drug Selection Index, focusing on leading innovative drug companies [12] - The Medical 50 ETF tracks the CSI Medical 50 Index, representing the top 50 companies in the pharmaceutical and healthcare sector [13]

Group 1 - The Hang Seng Index rebounded, closing up 0.72%, with the internet sector leading the gains, followed by banking, industry, technology, and real estate sectors [1] - The internet sector saw a rise of 1.07%, with Meituan up 4.06%, Alibaba up 1.67%, Tencent Holdings up 1.52%, JD Group up 1.5%, and Baidu Group up 1.22%. However, companies like SenseTime, Bilibili, and Kingdee International experienced declines [3] - The banking sector opened strong and maintained a consolidation above the midline, closing up 0.88%, with Postal Savings Bank rising 4.59% and Minsheng Bank up 2.39% [3] Group 2 - The consumer sector rebounded, closing up 0.35%, with notable gains from companies like Chenzi Biological up 6.68%, Li Ning up 6.55%, and Sands China up 4.4% [3] - The healthcare sector opened low and saw a slight reversal near the end, closing down 1.31%, with CSPC Pharmaceutical down 2.96% and China Biopharmaceutical down 2.78% [3]

Investment Rating - The report maintains a "Positive" investment rating for the pharmaceutical and biotechnology industry in China [5]. Core Insights - The ESMO conference showcased significant breakthroughs in both foreign and domestic innovative drugs, highlighting the competitive strength of Chinese pharmaceutical companies on the international stage [3][12]. - The report emphasizes the potential of domestic innovative drugs to redefine standard therapies, particularly in the context of PD-1/VEGF dual antibodies and antibody-drug conjugates (ADCs) [8][29]. Summary by Sections 1. PD-1 plus and Domestic Dual Antibodies - The PD-(L)1/VEGF dual antibody, Ivosidenib, demonstrated strong positive results in a Phase III trial for first-line treatment of advanced squamous non-small cell lung cancer (NSCLC), showing a progression-free survival (PFS) improvement of 4.2 months compared to the PD-1 group [13][16]. - SSGJ-707, a PD-1/VEGF dual antibody, showed promising results in treating microsatellite stable (MSS) colorectal cancer, with an overall response rate (ORR) of 68.7% and a disease control rate (DCR) of 98.5% [18][19]. - HB0025, another PD-L1/VEGF dual antibody, reported an ORR of 83.3% in squamous NSCLC patients, indicating strong anti-tumor efficacy [20][21]. 2. ADCs: Accelerated Breakthroughs - SKB264, an ADC, has shown significant PFS and overall survival (OS) benefits in a Phase III trial for EGFR-mutant NSCLC, with PFS HR of 0.49 and OS HR of 0.60, indicating its potential as a new standard therapy [29][30]. - In the breast cancer domain, SKB264 demonstrated an ORR of 41.5% in CDK4/6i pre-treated HR+/HER2- advanced breast cancer, significantly outperforming chemotherapy [31][32]. - The report highlights the global potential of SKB264, with ongoing studies expected to further validate its efficacy and safety profile [23][29].

Core Insights - The report highlights the performance of the Changcheng Pharmaceutical Industry Selected Mixed A Fund, which has shown significant growth in equity scale, particularly in the technology sector, despite recent market adjustments [1][3]. Performance Analysis - As of October 22, 2025, the fund's unit net value is 1.7983, with a cumulative return of 79.83% since its establishment on October 22, 2024, and a year-to-date increase of 88.34% [1][3]. - The fund has experienced a notable decline of -8.81% over the past month and -14.29% over the last three months, indicating challenges faced by the pharmaceutical sector, especially in the innovative drug field during the third quarter [3][4]. Portfolio Composition - The top ten holdings of the fund have a combined market value of 1.313 billion, heavily concentrated in the innovative drug sector, which differs from the asset allocation logic of technology funds [4]. - The top three holdings include Innovent Biologics, 3SBio, and Hotgen Biotech, with a clear focus on biotechnology and innovative pharmaceutical companies [5]. Investment Strategy - The fund manager, Liang Furui, noted that the A/H market saw multiple sectors rise, primarily driven by technology and precious metals, with an average daily trading volume in the A-share market exceeding 2 trillion [5]. - Despite the strong performance of technology sectors, innovative drugs have entered a correction phase due to significant gains in the first half of the year and negative impacts from TMT-focused capital outflows [5][6]. - Liang Furui emphasized that many innovative drug stocks are now highly cost-effective, suggesting a shift towards selecting individual stocks with genuine competitive advantages as the sector moves into an "individual alpha phase" [6]. Future Outlook - The focus will be on increasing the weight of stocks with global competitiveness and scarcity in core pipelines, balancing long-term potential, drug certainty, and international market viability [6].

Core Viewpoint - The Hong Kong stock market's innovative drug sector is experiencing a decline, with the Hong Kong Stock Connect Innovative Drug ETF (520880) dropping over 3.5% as of the report, indicating a potential buying opportunity for investors despite the downturn [1] Group 1: Market Performance - The Hong Kong Stock Connect Innovative Drug ETF (520880) has seen a trading volume exceeding 200 million yuan, continuing to exhibit high premiums in the market [1] - The innovative drug sector faced a significant drop recently, with the ETF attracting over 75 million yuan in a single day, totaling over 120 million yuan in the last four days [1] Group 2: Recent Developments - The ESMO 2025 conference recently showcased positive data for several core projects of Chinese innovative drugs [1] - On October 22, Innovent Biologics announced a global strategic partnership with Takeda Pharmaceutical worth 11.4 billion USD, setting a record for the value of business development (BD) transactions in China's innovative drug sector, involving three product rights and pipeline development [1] Group 3: Future Outlook - Huafu Securities suggests that the recent adjustments in the Hong Kong innovative drug sector may present a significant opportunity for investment in late October [1] - The long-term outlook remains positive for companies with commercialization capabilities and rich pipelines, particularly in BioPharma, potential BD targets, and cutting-edge technology [1] - The innovative drug industry is expected to benefit from interest rate cuts, with performance anticipated to improve, and the end-of-year BD period may act as a catalyst for growth [1] Group 4: Index Composition - The Hong Kong Stock Connect Innovative Drug ETF (520880) and its linked fund (025220) passively track the Hang Seng Hong Kong Stock Connect Innovative Drug Select Index, which includes top ten weighted stocks such as BeiGene, China Biologic Products, Innovent Biologics, and others [1]

Core Insights - The report from Guojin Securities highlights the significant advancements in China's innovative drug research presented at the ESMO conference, indicating a potential boost for the international expansion of these drugs [1] Group 1: Innovative Drug Research - The number of significant research publications from Chinese pharmaceutical companies at ESMO has reached a historical high, making it a focal point of the conference [1] - A total of 35 Chinese studies were included in the regular oral abstracts for the 2025 ESMO conference, with 14 formal oral presentations, a significant increase from 5 in 2024 [1] - The inclusion of 23 Chinese studies in the Late-Breaking Abstracts (LBA) category also set a new record, showcasing the research strength and academic influence of Chinese companies on the international stage [1] Group 2: ADC Developments - Domestic ADCs are demonstrating the potential to redefine existing clinical treatment standards, with notable products like Kelun's SKB264 showing promising Phase III clinical data for NSCLC and HR+/HER2- breast cancer [2] - The mOS data for SKB264 in the second-line EGFRm NSCLC treatment is particularly impressive, with a hazard ratio of 0.60, indicating a significant survival benefit [2] - Bai Li Tian Heng's ADC, iza-bren, has achieved breakthroughs in treating nasopharyngeal carcinoma, marking a critical milestone from concept validation to efficacy verification [2] Group 3: Bispecific and Multi-specific Antibodies - Bispecific and multi-specific antibodies are poised to upgrade existing immunotherapy and targeted therapy, with significant data from Kangfang Biotech's PD-1/VEGF bispecific antibody showing superior results compared to traditional treatments for advanced squamous NSCLC [3] - The mPFS for the combination of the bispecific antibody and chemotherapy was reported at 11.14 months versus 6.90 months for the comparator, with a hazard ratio of 0.60, indicating a strong potential to reshape first-line treatment standards [3] - The HER2 bispecific antibody KN026 from Shiyao Group/Kangning Jierei has shown promising results in III phase trials for gastric cancer, indicating its potential as a global leader in this category [3]

Core Insights - The article highlights the significant performance of certain funds in the third quarter, particularly the "Yongying Technology Smart Selection" fund, which achieved a remarkable 194% increase, making it the top-performing fund of the year [1][2] - The report indicates a substantial growth in fund size, with "Yongying Technology Smart Selection" increasing from 1.166 billion to 11.521 billion yuan, nearly a ninefold increase in a single quarter [2] - The article also discusses the ongoing optimism in the innovative pharmaceutical sector, with funds like "Great Wall Pharmaceutical Industry Selection" showing over 100% growth [1][4] Fund Performance - "Yongying Technology Smart Selection" fund's top holdings include leading optical module stocks such as "Yizhongtian" (Xinyi Sheng, 300502), Zhongji Xuchuang (300308), and Tianfu Communication (300394), which significantly contributed to its net value [2] - The fund's share count surged from 700 million to 3.466 billion, resulting in a profit of 4.715 billion yuan for investors in the third quarter [2] - The "Great Wall Pharmaceutical Industry Selection" fund also saw its size grow from 1.132 billion to 1.790 billion yuan, with a share increase from 678 million to 932 million [5] Sector Insights - The global cloud computing industry remains a focal point, with AI model valuations increasing and a notable 100% quarter-on-quarter growth in token numbers [3] - The innovative pharmaceutical sector continues to attract attention, with funds maintaining high stock positions despite recent market adjustments [6][8] - The article suggests that the technology and pharmaceutical sectors may still have upward potential, although careful stock selection is advised [8] Future Outlook - The article indicates that the technology sector, particularly AI and cloud computing, is expected to see increased investment, with potential for new opportunities in the industry chain [9] - The innovative pharmaceutical sector is projected to strengthen its global competitiveness, supported by upcoming industry conferences and positive data trends [8] - The article emphasizes the importance of not solely relying on past performance to predict future outcomes in the cloud computing sector, highlighting the need for caution [9]

Core Insights - The attitude of foreign capital towards Chinese medical assets has dramatically reversed within a year, shifting from a neutral to a positive outlook on the biotechnology sector in China [1][3][7] Group 1: Market Sentiment Shift - Morgan Stanley's report titled "China Biotech: Innovation Dawn" indicates that China's biotechnology sector is now viewed as a critical part of the global new drug supply chain, with projected pharmaceutical revenues reaching $34 billion by 2030 and $220 billion by 2040 [1][3] - The number of foreign institutions conducting research on Chinese biotech companies has surged, with notable firms like State Street Bank and BlackRock showing increased interest [1][2] - The collective buying actions of foreign investors, such as JPMorgan and Citigroup, reflect a significant shift in sentiment towards Chinese innovative drug companies [2][5] Group 2: Investment Dynamics - The efficiency of converting research interest into actual holdings is evident, as seen in the stock price surge of WuXi AppTec, which rose by 6.52% due to increased foreign investment [2] - Major foreign investors have increased their holdings in key Chinese biotech firms, indicating a trend of strategic accumulation among top foreign capital [5][6] - The report highlights that foreign capital is now viewing specific sectors in China as essential assets in the global technology race, with over 90% of U.S. investors expressing plans to increase exposure to Chinese stocks, particularly in biotechnology [6][7] Group 3: Industry Evolution - The narrative surrounding China's pharmaceutical industry has shifted from being cost-driven to innovation-driven, acknowledging the significant advancements in the sector [3][4] - Morgan Stanley and Goldman Sachs both emphasize the growing recognition of China's innovative capabilities in biotechnology, with expectations that several leading biotech firms will reach breakeven by 2025-2026 [4][8] - The report outlines that the Chinese biotech sector is becoming a key player in filling the revenue gaps created by patent expirations in multinational corporations (MNCs), with an estimated $115 billion revenue loss due to patent cliffs by 2035 [8][10] Group 4: Future Projections - By 2040, China's share of FDA-approved drugs is expected to rise from 5% to 35%, with a projected global sales figure exceeding $1.22 trillion even in the most pessimistic scenarios [25][27] - The report anticipates that the collaboration between MNCs and Chinese biotech firms will intensify, driven by the need to address revenue shortfalls from patent expirations [10][14] - The overall improvement in clinical trial data integrity and the increasing number of new molecular entities launched in China are contributing to a more favorable investment landscape [20][22]