Core Insights - The top three companies by Hong Kong Stock Connect holding ratios are China Telecom (00728) at 71.08%, COSCO Shipping Energy (01138) at 70.79%, and GCL-Poly Energy (01330) at 69.70% [1] - In the last five trading days, the companies with the largest increase in holding amounts are CNOOC (00883) with an increase of 2.13 billion, Pop Mart (09992) with an increase of 1.42 billion, and Zijin Mining International (02259) with an increase of 1.32 billion [1] - Conversely, Alibaba-W (09988) saw the largest decrease in holding amounts, down by 2.28 billion, followed by Innovent Biologics (01801) down by 903 million, and China Hongqiao (01378) down by 598 million [2] Group 1: Hong Kong Stock Connect Holding Ratios - China Telecom (00728) has a holding ratio of 71.08% with 9.866 billion shares [1] - COSCO Shipping Energy (01138) has a holding ratio of 70.79% with 918 million shares [1] - GCL-Poly Energy (01330) has a holding ratio of 69.70% with 282 million shares [1] Group 2: Recent Increases in Holdings - CNOOC (00883) increased its holding amount by 2.13 billion with an addition of 10.64 million shares [1] - Pop Mart (09992) increased its holding amount by 1.42 billion with an addition of 6.18 million shares [1] - Zijin Mining International (02259) increased its holding amount by 1.32 billion with an addition of 10.21 million shares [1] Group 3: Recent Decreases in Holdings - Alibaba-W (09988) decreased its holding amount by 2.28 billion with a reduction of 13.54 million shares [2] - Innovent Biologics (01801) decreased its holding amount by 903 million with a reduction of 10.56 million shares [2] - China Hongqiao (01378) decreased its holding amount by 598 million with a reduction of 21.56 million shares [2]

Core Insights - Innovent Biologics announced that the fourth Phase 3 clinical trial DREAMS-3 of mazdutide has met its primary endpoint, demonstrating superior efficacy compared to semaglutide in Chinese patients with type 2 diabetes and obesity [1][2][3] Summary by Sections Clinical Trial Results - In the DREAMS-3 trial, 48.0% of participants in the mazdutide group achieved HbA1c < 7.0% and a 10% body weight reduction from baseline at week 32, compared to 21.0% in the semaglutide group (p<0.0001) [1][3] - The mean change in HbA1c from baseline was 2.03% for mazdutide and 1.84% for semaglutide, while the mean percentage weight reduction was 10.29% for mazdutide and 6.00% for semaglutide, both statistically significant (p<0.05) [1] Study Design - The DREAMS-3 trial was a multi-center, randomized, open-label study involving 349 Chinese adults with early-stage type 2 diabetes and obesity, who had inadequate glycemic and weight control after lifestyle interventions [2] - Participants were randomized to receive either mazdutide 6 mg or semaglutide 1 mg for 32 weeks, with an extension period for those on mazdutide based on weight-loss targets [2] Safety Profile - The overall safety profile of mazdutide was consistent with previous studies, with gastrointestinal symptoms being the most common adverse events, mostly mild to moderate in severity [1] Implications for Treatment - The results indicate that mazdutide could play a critical role in treating patients with type 2 diabetes and comorbid obesity, addressing both glycemic control and weight loss [1][2] - Mazdutide is positioned as a new-generation GLP-1-based therapy suitable for Chinese patients, with multiple metabolic benefits and a favorable safety profile [1] Company Background - Innovent Biologics is a leading biopharmaceutical company focused on developing high-quality medicines for various diseases, including oncology, autoimmune, cardiovascular, and metabolic disorders [8] - The company has launched 16 products and has several assets in clinical trials, indicating a robust pipeline and commitment to innovation in the biopharmaceutical sector [8]

Investment Rating - The report maintains a "Recommended" investment rating for the pharmaceutical industry [1] Core Insights - The report highlights the significant collaboration between Innovent Biologics and Takeda Pharmaceutical, which is seen as a positive trend for Chinese innovation going global. The deal includes an upfront payment of $1.2 billion and potential milestone payments, with a total deal value reaching up to $11.4 billion [2] - The report notes a surge in License-out transactions, with 103 deals and a total value of $92.03 billion in the first three quarters of 2025, marking a 77% increase compared to the total for 2024 [2] - The report emphasizes the recovery of the CDMO sector, with companies like Jiuzhou Pharmaceutical and Boteng achieving significant revenue growth in Q3 2025, indicating a positive trend in the industry [3] - The medical device market is showing a steady recovery, with a 29.8% year-on-year growth in the overall bidding market for medical devices in Q3 2025 [4] - The report discusses the increasing trend of oral immunomodulatory drugs, particularly in the treatment of psoriasis, with Johnson & Johnson's acquisition of Protagonist Therapeutics being a notable example [5] - The report also highlights the trends in respiratory infectious diseases, with an expected increase in cases in the coming months, which may impact medical testing and treatment medications [6] Summary by Sections 1. Pharmaceutical Market Tracking - The pharmaceutical industry has underperformed compared to the CSI 300 index, with a recent weekly decline of 0.95% and a monthly decline of 3.28% [21][25] 2. Pharmaceutical Sector Performance and Valuation - The pharmaceutical sector's recent performance has been below the CSI 300 index, with a 1-month decline of 3.28% and a 3-month increase of only 1.75% [39][42] 3. Recent Research Achievements - The report lists various recent research outputs from the team, including deep dive reports on the growth of the blood products industry and the potential of GLP-1 drugs [47] 4. Recent Industry Policies and News - The report outlines significant recent policies, including the promotion of instant settlement reforms by the National Medical Insurance Administration and the regulation of clinical research for biomedical technologies [49] - Recent news highlights include major collaborations and drug approvals, such as the partnership between Innovent Biologics and Takeda, and the approval of new drugs by various companies [50][51]

Investment Rating - The report maintains a "Positive" investment rating for the pharmaceutical and biotechnology industry [1] Core Insights - The report highlights significant advancements in innovative drugs, particularly in the context of recent clinical trial results presented at the 2025 ESMO conference, showcasing the potential for new treatment options in various cancer types [12][19] - The report emphasizes the emergence of domestic drugs that have achieved notable efficacy in treating conditions such as NSCLC and HER2-positive breast cancer, indicating a shift in the competitive landscape [13][17] Summary by Sections 1. New Drug Developments - **2L EGFR Mutant NSCLC**: The drug Lukanosumab (sac-TMT) is the first to demonstrate both overall survival (OS) and progression-free survival (PFS) benefits in patients with TKI-resistant NSCLC, with mPFS of 8.3 months compared to 4.3 months for chemotherapy [13][14] - **HER2 Positive Breast Cancer**: The drug Ruikang Trastuzumab shows longer mPFS of 30.6 months compared to 8.3 months for the chemotherapy combination, indicating a promising new option for patients [17][18] - **T-Bren for Breast Cancer**: Early data from the T-Bren trial shows a clinical overall response rate (cORR) of 82.2% in HER2-positive patients, with mPFS of 18.0 months [19][20] - **2L HER2 Positive Gastric Cancer**: Anniotuzumab combined with chemotherapy shows significant improvements in mPFS (7.1 months vs 2.7 months) and mOS (19.6 months vs 11.5 months), suggesting a potential shift in treatment paradigms [21][24] 2. Market Performance - The pharmaceutical and biotechnology sector saw a 0.58% increase in October, underperforming the CSI 300 index by 2.67 percentage points, ranking 25th among 31 sub-industries [25][30] - The medical research outsourcing sector experienced the highest growth, up 5.47%, while other bioproduct sectors faced declines [30][34]

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]

Investment Rating - The report maintains a positive outlook on the pharmaceutical sector, indicating an "Overweight" rating for the industry, suggesting it is expected to outperform the overall market in the next six months [30]. Core Insights - The pharmaceutical sector saw a weekly increase of 0.6%, while the Shanghai Composite Index rose by 2.9% during the same period. The pharmaceutical index ranked 25th among 31 sub-industries [3][5]. - Notable collaborations include a strategic partnership between Innovent Biologics and Takeda Pharmaceutical, valued at up to $11.4 billion, which includes an upfront payment of $1.2 billion [4][13]. - Key clinical trial results presented at the 2025 ESMO conference highlighted significant advancements in cancer treatments, with several companies reporting promising outcomes in their respective studies [4][14][17]. Market Performance - The pharmaceutical sector's overall valuation stands at 30.4 times earnings, ranking 9th among 31 primary industries [7][5]. - Various sub-sectors showed mixed performance, with medical devices and medical consumables performing relatively well, while traditional Chinese medicine and chemical preparations faced declines [7][5]. Key Events - The report notes that 99 A-share pharmaceutical companies released their Q3 2025 earnings, with a total revenue of 94.15 billion yuan, reflecting a year-on-year growth of 1.3% [19][21]. - Significant clinical trial results from companies like Kintor Pharmaceutical and Zai Lab were highlighted, showcasing their innovative approaches to cancer treatment [14][17][18]. Company Recommendations - The report recommends focusing on innovative drug companies and those with improving performance in medical devices and CXO sectors, listing companies such as Hengrui Medicine, Changchun High-tech, and Mindray Medical as key investment targets [4][19].

Investment Rating - The report maintains a positive outlook on the pharmaceutical sector, indicating an "Overweight" rating for the industry, suggesting it is expected to outperform the overall market [32]. Core Insights - The report highlights that the Shenwan Pharmaceutical and Biological Index increased by 0.6% this week, while the Shanghai Composite Index rose by 2.9% and the Wind All A (excluding financials and petrochemicals) increased by 3.7% [4][6]. - The pharmaceutical sector's overall valuation stands at 30.4 times earnings, ranking 9th among 31 Shenwan primary industries [4][8]. - Significant collaborations and clinical trial results were reported, including a $11.4 billion global strategic partnership between Innovent Biologics and Takeda Pharmaceutical, which includes a $1.2 billion upfront payment [5][13]. - Key clinical trial results presented at the 2025 ESMO conference showed promising outcomes for several drugs, indicating advancements in treatment efficacy for various cancers [14][18][19]. Market Performance - The report details the performance of various sub-sectors within the pharmaceutical industry, with notable increases in medical devices (+0.2%), medical consumables (+1.7%), and medical research outsourcing (+5.5%), while traditional Chinese medicine and other biological products saw declines [4][8]. - The report also notes that 99 A-share pharmaceutical companies released their Q3 2025 earnings, with a total revenue of 94.15 billion yuan, reflecting a 1.3% year-on-year increase [20][22]. Key Events - The report mentions that Bairui Tianheng has passed the Hong Kong Stock Exchange hearing and is in the process of listing its H-shares [12]. - The report emphasizes the importance of the 2025 ESMO conference, where several companies presented significant clinical data, enhancing their market visibility and potential investment attractiveness [14][17][18]. Company Recommendations - The report recommends focusing on innovative drug sectors and companies with improving performance in medical devices and upstream sectors, including companies like Hengrui Medicine, Changchun High-tech, and Mindray Medical [5][20].

Investment Rating - The report maintains a positive outlook on the innovative drug sector and suggests focusing on quality defensive assets in the pharmacy sector [1][11]. Core Views - The innovative drug industry continues to show long-term potential, with Chinese pharmaceutical companies demonstrating their strength in international markets. The report anticipates further business development (BD) activities from domestic companies [2][37]. - In the pharmacy sector, leading companies are expected to enhance their market share through mergers and acquisitions, supported by strong cash flow and self-sustaining capabilities. The report highlights the defensive attributes of these leading pharmacies [2][47]. - The report emphasizes the importance of monitoring the updates to the essential drug list and identifies companies with potential for inclusion, such as Fangsheng Pharmaceutical [2][11]. Summary by Sections Innovative Drugs - The report highlights a significant global strategic partnership between Innovent Biologics and Takeda, involving three second-generation IO and ADC products, with a total transaction value potentially reaching $11.4 billion [2][37]. - It suggests focusing on dual/multi-antibody drugs and slow disease medications that meet unmet clinical needs, as well as ADC and small nucleic acid therapies [11]. Pharmacies - The report notes that the retail scale of physical pharmacies in China reached 50.4 billion yuan in August 2025, indicating a recovery trend despite a slight year-on-year decline [2][42]. - Leading pharmacy chains are expected to increase their market share during the industry clearing phase, with a focus on mergers and acquisitions when the timing is right [2][47]. Traditional Chinese Medicine - The report advises paying attention to the progress of the essential drug list updates and highlights companies like Huazhong Sanjiu that have already absorbed high baseline pressures [2][11]. Biopharmaceuticals - The report discusses the promising results of the ASO drug Bepirovirsen for hepatitis B treatment, suggesting continued monitoring of research developments in this area [3][11]. Medical Devices - The report indicates that leading companies are accelerating their international strategies, with successful product registrations in markets like Ecuador [3][11]. Medical Services and Consumer Healthcare - The report notes a year-on-year increase in total medical visits in Chongqing, suggesting a recovery in the medical services sector [3][11].

Core Insights - The strategic collaboration between Innovent Biologics and Takeda involves three innovative drugs, with a total transaction value exceeding $10 billion, marking a significant milestone for domestic companies in licensing-out agreements [1][3][12] - This partnership is one of the largest licensing deals in China's biotechnology sector to date, highlighting the growing value of Chinese innovative drugs in the global pharmaceutical market [1][12] Summary by Sections Transaction Details - The agreement includes an upfront payment of $1.2 billion (including a $100 million premium for nearly 30% equity stake) and potential milestone payments, bringing the total deal value to a maximum of $11.4 billion, along with sales revenue sharing [3][12] - This transaction sets a new record for licensing deals by Chinese biotech companies and aligns with Takeda's strategic focus on competing in the oncology market, similar to Merck's approach with its K drug [3][12] Drug Pipeline - The collaboration focuses on three key investigational drugs: IBI363 (PD-1/IL-2α-bias), IBI343 (CLDN18.2 ADC), and IBI3001 (EGFR/B7H3 ADC), all of which are at the forefront of tumor immunotherapy and antibody-drug conjugate (ADC) development [3][4] - IBI363 is a globally innovative PD-1/IL-2α-bias bispecific antibody fusion protein, currently undergoing a global Phase III clinical trial for advanced non-small cell lung cancer patients who have failed previous treatments [4][6] - IBI343 has received breakthrough therapy designations for three indications: third-line gastric cancer, second-line pancreatic cancer, and third-line pancreatic cancer, while IBI3001 is the first EGFR/B7H3 ADC currently in Phase I clinical trials [7][9] Market Context - The collaboration reflects a broader trend where global pharmaceutical giants are reassessing the value of Chinese innovative drugs, as evidenced by Merck's success with its K drug, which transformed its oncology business [12] - The partnership between Takeda and Innovent is positioned to compete in the multi-billion dollar global immunotherapy and ADC market, potentially reshaping the global pharmaceutical landscape over the next decade [12]

Core Insights - The collaboration between Innovent Biologics and Takeda Pharmaceuticals aims to advance the global development and commercialization of Innovent's next-generation IO and ADC therapies, covering three products: IBI363, IBI343, and IBI3001 [1][2] Group 1: Collaboration Details - The partnership involves a cost-sharing model for IBI363, with Innovent and Takeda sharing development costs at a ratio of 40/60, while Takeda will pay potential milestone payments and a high-tier sales share based on net sales outside Greater China and the U.S. [1] - The total deal value could reach up to $11.4 billion, including an upfront payment of $1.2 billion and approximately $10.2 billion in milestone payments [1][2] Group 2: Product Significance - IBI363 is highlighted as a key product, being a PD-1/IL-2α-bias bispecific antibody fusion protein, which has garnered significant market anticipation [2] - The collaboration model reflects Innovent's strong product capability and bargaining power, indicating initial market recognition of IBI363's clinical value [2] Group 3: Market Dynamics - The partnership is expected to accelerate the demand for second-generation IO pipelines, particularly in the PD-1/IL-2 space, as global competition intensifies [2] - Other companies, both domestic and international, are also positioning themselves in the PD-1/IL-2 market, indicating a competitive landscape [2]