Core Insights - The report from CMB International highlights the release of the first batch of innovative pharmaceutical technology medical insurance payment incentive catalog by Zhejiang Province, which is expected to alleviate the challenges of innovative drugs entering hospitals [1] - Despite the Trump administration's announcement of a 100% tariff on imported innovative drugs, the overall impact on China's pharmaceutical industry chain is considered manageable, with a recommendation to monitor subsequent developments [1] - The upcoming ESMO conference in mid to late October is noted as a key event, with a focus on companies such as CanSino Biologics (09926), Kelun-Biotech (06990), and Rongchang Biologics (688331.SH) that are expected to release significant data [1] Industry Summary - The Hong Kong pharmaceutical sector has shown relatively flat performance in September, but with increasing industry catalysts such as academic conferences and favorable policy implementations in October, a market rebound is anticipated [1] - The report recommends focusing on specific segments: 1) Innovative drugs: Companies like 3SBio (01530) and Eucure Biopharma-B (06996) have rich short-term catalysts and their valuations do not yet reflect the core value of major products; companies like Ascletis Pharma (02096), Hutchison China MediTech (00013), and Legend Biotech are considered significantly undervalued with clear long-term growth logic [1] 2) CXO: Leaders in this segment, such as WuXi AppTec (02268), are expected to benefit from high downstream demand and marginal recovery in financing [1]

Core Viewpoint - Kintor Pharmaceutical Co., Ltd. (06990) has entered into a structured deposit agreement with Bank of China, committing to invest RMB 440 million in structured deposits, which are expected to yield higher returns than traditional bank deposits [1] Summary by Relevant Sections - **Investment Details** - The company has agreed to subscribe to structured deposits amounting to RMB 440 million with Bank of China [1] - The structured deposits are characterized as capital-protected financial products with floating returns [1] - **Expected Benefits** - The anticipated return rate from these structured deposits is expected to exceed that of general commercial bank deposits [1] - This investment is aimed at improving the efficiency of the company's idle funds [1] - **Management's Perspective** - The board believes that the terms of the structured deposit agreement are fair and reasonable [1] - The investment aligns with the overall interests of the company's shareholders [1]

格隆汇9月29日丨科伦博泰生物-B(06990.HK)公告，2025年9月29日，公司订立中国银行结构性存款协 议，据此，公司同意认购本金额为人民币4.4亿元的中国银行结构性存款。 ...

公告称，考虑到具有浮动回报的保本理财产品的性质，预期回报率，及理财产品的中短期性质，使用集 团闲置自有资金认购中国银行结构性存款将获得高于一般商业银行存款的回报，并且有利于提高集团闲 置资金的使用效率。董事认为中国银行结构性存款的条款属公平合理，并符合公司股东的整体利益。 科伦博泰生物-B(06990)发布公告，2025年9月29日，公司订立中国银行结构性存款协议，据此，公司同 意认购本金额为人民币4.4亿元的中国银行结构性存款。 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內 容 概 不 負 責，對 其 準 確 性 或 完 整 性 亦 不 發 表 任 何 聲 明，並 明 確 表 示，概 不對因本公告全部或任何部份內容而產生或因倚賴該等內容而引致的 任 何 損 失 承 擔 任 何 責 任。 Sichuan Kelun-Biotech Biopharmaceutical Co., Ltd. 四川科倫博泰生物醫藥股份有限公司 （於 中 華 人 民 共 和 國 註 冊 成 立 的 股 份 有 限 公 司） （股 份 代 號：6990） 須予披露交易 認購理財產品 與中國銀行的理財產品 2025年9月29日，本 公 司 訂 立 中 國 銀 行 結 構 性 存 款 協 議，據 此，本 公 司 同 意認購本金額為人民幣440百 萬 元 的 中 國 銀 行 結 構 性 存 款。 於 本 公 告 日 期，本 公 司 存 置 於 中 國 銀 行 的 理 財 產 品 的 未 償 還 本 金 額 為 人民幣440百 萬 元，即 中 國 銀 行 結 構 性 存 款 的 本 金 額。 《上 市 規 則》涵 義 由於於本公告日期存置於中國銀行的理財產 ...

Core Viewpoint - The announcement of a 100% tariff on all branded/patented drugs by Trump starting in October is expected to have limited impact on China's innovative drug industry chain, with no excessive concerns warranted [1] Group 1: Impact on Innovative Drugs - Most Chinese innovative drugs that are currently being exported have either established production capacity in the U.S. or have outsourced production to local CMO companies [1] - The majority of domestic innovative drugs are exported using a business development (BD) model, which mitigates the impact of the tariff [1] Group 2: Impact on CXO Sector - The export products in the CXO sector primarily consist of raw materials and biological raw liquids, which are not affected by the new tariff; the proportion of finished dosage forms exported is low [1] - The investment timeline for multinational corporations (MNCs) to build factories in China will take time, leading to limited direct impact on CXO orders in the short term [1] - Long-term policy changes may influence the pace of factory construction by MNCs [1] Group 3: Upcoming Catalysts - The ESMO conference will take place in mid to late October, with a focus on companies like CanSino Biologics (09926), Kelun-Biotech (06990), and Rongchang Biologics (09995) that are expected to release significant data [1] - The results of medical insurance negotiations and the first version of the commercial insurance innovative drug directory are expected to be announced in October-November [1] Group 4: Mid to Long-term Recommendations - Recommended stocks in the innovative drug sector include 3SBio (01530) and Eucure Biopharma-B (06996), which have rich short-term catalysts and their valuations do not yet reflect the core value of major products [2] - Companies like Ascletis Pharma (02096), Hutchison China MediTech (00013), and Legend Biotech are considered undervalued with clear long-term growth logic [2] - In the CXO sector, WuXi AppTec (02268) is highlighted as a leading player benefiting from high downstream demand and improving financing conditions [2]

Group 1 - The core viewpoint is that the new 100% tariff on all branded/patented drugs announced by Trump will have limited impact on China's innovative drug industry chain, and there is no need for excessive concern [1] - For innovative drugs, most products currently being exported are either produced in the U.S. or outsourced to U.S. CMO, and most domestic innovative drugs are exported using the BD model [1] - For CXO, the main export products are raw materials and herbal extracts, which are not affected by the new tariff; the proportion of finished drug exports is low, and the investment timeline for MNC clients to build factories will take time, leading to limited short-term impact on CXO orders [1] Group 2 - Mid to long-term recommendations include innovative drugs such as 3SBio (01530) and Eucure Biopharma-B (06996), which have rich short-term catalysts and their valuations do not yet reflect the core value of major products [2] - Other recommended companies include Ascletis Pharma (02096), Hutchison China MediTech (00013), and Legend Biotech, which are considered significantly undervalued with clear long-term growth logic [2] - For CXO, companies like WuXi AppTec (02268) are expected to benefit from high downstream demand and improving financing conditions [2]

Industry Rating - The report maintains an "Outperform" rating for the pharmaceutical and biotechnology industry [1] Core Insights - The innovative drug sector is experiencing a positive trend with significant revenue growth and a reduction in losses, indicating a potential for sector-wide profitability [2][6] - The overall revenue for the innovative drug sector in H1 2025 reached 30.649 billion yuan, a year-on-year increase of 9.77%, while the net loss attributable to shareholders was 2.096 billion yuan, showing a substantial reduction in losses [6] - The sector's gross margin remains high at 84.43%, with a slight decrease compared to the previous year, but showing signs of recovery in Q2 2025 [3][6] Summary by Sections Innovative Drug Sector - The innovative drug sector's revenue for H1 2025 was 30.649 billion yuan, with a growth rate of 9.77% year-on-year. Q2 2025 revenue was 16.387 billion yuan, reflecting a 33.24% increase [5][6] - The sector's gross margin for H1 2025 was 84.43%, slightly down from the previous year, but Q2 2025 saw an increase to 84.73% [3][6] - The number of License-out transactions with upfront payments exceeding 10 million USD reached a new high, indicating that overseas rights have become a crucial funding source for Chinese companies [4][7] Financial Performance - The innovative drug sector's net loss for H1 2025 was 2.096 billion yuan, with a significant reduction in losses of 127.58% year-on-year. The adjusted net loss was 2.880 billion yuan, reflecting a 151.25% reduction in losses [5][6] - The sector's operating cash flow was positive at 210 million yuan, indicating improved financial health [5] Traditional Pharmaceutical Sector - The traditional pharmaceutical sector, comprising 136 listed companies, reported total revenue of 254.895 billion yuan in H1 2025, a decrease of 1.64% year-on-year. The net profit attributable to shareholders was 32.099 billion yuan, down 4.83% [26][32] - The gross margin for the traditional pharmaceutical sector was 51.05% in H1 2025, showing a slight increase compared to the previous year [27][32] - The sector is adapting to policy changes, with increased industry concentration and some leading companies achieving growth through transformation and international expansion [32]

Core Viewpoint - The Hang Seng Healthcare Index fell by 1.4% this week, underperforming the market, with internet medicine, CXO, and traditional Chinese medicine sectors showing better performance [1] Group 1: Market Trends - Since September, the proportion of domestic holdings through the Hong Kong Stock Connect has remained stable, while foreign holdings have slightly decreased since mid-year [1] - Both domestic and foreign investors continue to increase their positions in innovative pharmaceutical companies, indicating a consistent long-term strategy [1] Group 2: Investment Recommendations - The report suggests focusing on companies with significant data releases at the upcoming ESMO conference in mid to late October, specifically mentioning Kangfang Biotech (09926), Kelun-Biotech (06990), and Rongchang Biotech (09995) [1] - The importance of timing and stock selection has increased following a broad rise in the innovative drug sector, with recommendations to gradually build positions during market corrections [1] Group 3: Sector Focus - For the innovative drug sector, the report highlights companies such as 3SBio (01530) and Eucure Biopharma-B (06996) as having rich short-term catalysts and undervalued core products, while companies like Ascletis Pharma (02096), Hutchison China MediTech (00013), and Legend Biotech are noted as significantly undervalued with clear long-term growth logic [1] - In the CXO sector, the report points to leading companies benefiting from high downstream demand and marginal recovery in financing, specifically mentioning WuXi AppTec (02268) [1]

Core Viewpoint - The Hang Seng Healthcare Index declined by 1.4% this week, underperforming the market, with internet medicine, CXO, and traditional Chinese medicine sectors showing better performance [1] Group 1: Market Trends - Since September, the proportion of domestic holdings through the Hong Kong Stock Connect has remained stable, while foreign holdings have slightly decreased since mid-year [1] - Both domestic and foreign investors continue to increase their positions in innovative pharmaceutical companies, indicating a consistent long-term strategy [1] Group 2: Investment Opportunities - Domestic investors are focusing on rebound opportunities, while foreign investors are increasing positions in innovative drug targets with high long-term potential and current cost-effectiveness [1] - The innovative drug guarantee model is gradually taking shape, which is expected to alleviate challenges such as hospital access and reimbursement difficulties for companies [1] Group 3: Upcoming Events - The ESMO conference will be held in mid to late October, and the report suggests focusing on companies like CanSino Biologics (09926), Kelun-Biotech (06990), and Rongchang Biologics (09995) that are expected to release significant data [1] Group 4: Stock Recommendations - The importance of timing and stock selection has increased after a broad rise in the innovative drug sector, with recommendations to gradually build positions during sector pullbacks [1] - Specific recommendations include: 1. Innovative drugs: 3SBio (01530), Eucure Biopharma-B (06996) with rich short-term catalysts and undervalued long-term growth logic [1] 2. CXO: Leaders in high-demand segments benefiting from improved financing conditions, such as WuXi AppTec (02268) [1]