Core Insights - The pharmaceutical and biotechnology index experienced a decline of 0.64% during the week, underperforming the Shanghai Composite Index by 1.34 percentage points, ending a two-week upward trend [4] - The National Healthcare Security Administration released the 2025 National Basic Medical Insurance Drug List, which included 114 products, achieving a success rate of 88% in negotiations, the highest in recent years [5] - The launch of the commercial health insurance innovative drug list included 19 drugs, complementing the basic medical insurance list and indicating a shift towards a multi-tiered healthcare system in China [5][19] Weekly Market Performance - The A-share market saw significant gains for Haiwang Bio, which rose by 71.20%, while Zhongsheng Pharmaceutical increased by 15.56% [2] - In the Hong Kong market, Jinxin Reproductive Medicine and Boan Biotechnology saw increases of 7.53% and 8.62%, respectively [2] Clinical Trials and Innovations - Kangfang Biopharma's dual-antibody drug, Kadunilumab, has initiated a Phase II clinical trial for esophageal squamous cell carcinoma, a prevalent cancer type in China [13][14] - A clinical trial for a gout treatment, polyethylene glycol-uricase injection (HZBio1), has also commenced, targeting patients with poorly controlled uric acid levels [17][18] New Drug Developments - Baoyi Pharmaceutical's stock surged nearly 140% on its first trading day, with a market capitalization of HKD 20.5 billion, despite a significant net loss of CNY 183 million in the first half of 2025 [6][7] - The company has 12 self-developed products, with SJ02 being the first long-acting FSH-CTP product approved in China [7] Industry Trends - The trend of "innovation + internationalization" remains a core direction for the pharmaceutical sector, supported by policies and increasing global competitiveness [5] - The demand for more effective and safer uric acid-lowering drugs is rising due to the increasing prevalence of gout, particularly among younger populations in China [18]

Core Viewpoint - The innovation drug sector in China is experiencing significant growth due to favorable policy developments, with the introduction of new drug listings in the national medical insurance catalog and commercial insurance, providing a stable policy outlook for innovative drug companies [1][2]. Group 1: Industry Trends - The China Hong Kong Stock Connect Innovation Drug Index increased by 0.30% as of December 11, 2025, with notable gains from companies such as Zhaoyan New Drug (+4.15%) and Rongchang Bio (+2.85%) [1]. - The national medical insurance catalog for 2025 successfully added 114 new drugs, including 50 innovative drugs, achieving a historical high success rate of 88% [1]. - The introduction of dual catalogs for medical insurance and commercial insurance is expected to directly benefit innovative drug companies, indicating a positive industry outlook [1]. Group 2: Market Opportunities - The top ten weighted stocks in the China Hong Kong Stock Connect Innovation Drug Index account for 72.68% of the index, highlighting the concentration of investment in leading innovative drug companies [2]. - The Harvest Innovation Drug ETF (520970) closely tracks the index, providing investors with access to leading companies involved in drug research, development, and production [2]. - Investors without stock accounts can leverage the Hong Kong Stock Connect Innovation Drug ETF linked fund (024700) to capitalize on the growth opportunities in the innovative drug sector [2].

Group 1 - The core point of the news is that Kangfang Biopharma's stock rose over 3% following the announcement of promising clinical trial results for its PD-1/VEGF bispecific antibody, Ivosidenib, in treating locally advanced unresectable or metastatic triple-negative breast cancer (TNBC) [1] - Ivosidenib has shown significant clinical potential in first-line treatment for TNBC, as evidenced by updated efficacy data presented at the ESMO IO conference [1] - The drug has been included in the Breakthrough Therapy Designation (BTD) list by the National Medical Products Administration (NMPA) in China, indicating its promising efficacy and safety [1] Group 2 - Ivosidenib is the world's first PD-1/VEGF bispecific antibody developed by Kangfang Biopharma, with its first indication expected to receive approval from the NMPA in May 2024 for treating locally advanced or metastatic non-small cell lung cancer (nsq-NSCLC) [2] - The drug represents a novel combination of tumor immunotherapy and anti-angiogenesis mechanisms, marking a significant advancement in cancer treatment [2] - In November 2024, Ivosidenib was included in the national medical insurance catalog, enhancing its accessibility for patients [2]

Core Viewpoint - 康方生物's stock price experienced a rise of over 3% in early trading, indicating positive market sentiment towards the company [2] Company Summary - 康方生物's stock is currently trading at 120.2 HKD, reflecting a gain of 2.83% [2] - The trading volume reached 100 million HKD, suggesting active investor interest [2]

Core Viewpoint - Kangfang Biotech's PD-1/VEGF bispecific antibody, Ivosidenib, shows promising efficacy in treating locally advanced unresectable or metastatic triple-negative breast cancer (TNBC) in a phase II clinical study, highlighting its potential in first-line therapy [1] Group 1: Clinical Development - Ivosidenib has been included in the Breakthrough Therapy Designation (BTD) list by the National Medical Products Administration (NMPA) for its excellent efficacy and safety in treating TNBC [1] - A multicenter, randomized, double-blind phase III clinical study (HARMONi-BC1/AK112-308) for Ivosidenib in this indication is currently progressing efficiently [1] Group 2: Product Approval and Market Position - Ivosidenib is the world's first PD-1/VEGF bispecific antibody for tumor immunotherapy, with its first indication expected to receive approval from the NMPA in May 2024 for locally advanced or metastatic non-small cell lung cancer (nsq-NSCLC) after progression on EGFR-TKI treatment [2] - In November 2024, Ivosidenib was included in the national medical insurance catalog, enhancing its market accessibility [2]

Core Viewpoint - Kangfang Biopharma's innovative PD-1/VEGF bispecific antibody, Ivosidenib, shows promising efficacy in treating locally advanced unresectable or metastatic triple-negative breast cancer (TNBC) in a phase II clinical study, highlighting its potential in first-line therapy [1][2] Group 1: Clinical Development - Ivosidenib has demonstrated superior efficacy data in a phase II clinical study presented at the ESMO IO conference, indicating significant clinical potential for TNBC treatment [1] - The drug has been included in the Breakthrough Therapy Designation (BTD) list by the National Medical Products Administration (NMPA) in China, based on its excellent efficacy and safety profile [1] - A multicenter, randomized, double-blind phase III clinical study (HARMONi-BC1/AK112-308) for Ivosidenib in TNBC is currently progressing efficiently [1] Group 2: Regulatory Approvals - Ivosidenib is the first PD-1/VEGF bispecific antibody globally, with its first indication expected to receive approval from the NMPA in May 2024 for locally advanced or metastatic non-small cell lung cancer (nsq-NSCLC) after progression on EGFR-TKI treatment [2] - The drug was included in the national medical insurance catalog in November 2024, enhancing its accessibility [2]

Core Insights - The report from CMB International indicates a leading rating for the mainland pharmaceutical industry, following the National Healthcare Security Administration's announcement of the results from the 2025 Innovative Drug High-Quality Development Conference [1] Group 1: Industry Developments - The recent negotiations for the medical insurance and commercial insurance innovative drug catalog have resulted in many innovative pharmaceutical companies covered by CMB International having products newly included or successfully renewed in the insurance coverage [1] - Companies such as Heng Rui Medicine (600276), Innovent Biologics (01801), CanSino Biologics (09926), and China National Pharmaceutical Group (01177) have more than five products that received new coverage or new indications [1] Group 2: Market Outlook - The inclusion of more new drugs in the catalog is expected to enhance clinical medication levels and improve the overall R&D return rates in the innovative drug industry [1] - The introduction of commercial insurance funds is anticipated to provide significant incremental funding for innovative drug payments, paving the way for a diversified payment system alongside basic medical insurance [1] Group 3: Future Growth Potential - CMB International is optimistic about the sales growth potential of newly included products/indications in 2026, particularly for potential blockbuster products from companies like CanSino Biologics [1] - The report emphasizes the importance of monitoring the actual execution and payment situations of the first batch of commercial insurance catalog, as well as the dynamic adjustments in the list and pricing, and the long-term development opportunities arising from real-world data accumulation [1]

Investment Rating - The report maintains a "Positive" investment rating for the pharmaceutical and biotechnology industry, indicating an expected return that is stronger than the market benchmark by over 5% [5]. Core Insights - The National Medical Insurance Administration is strongly encouraging the high-quality development of innovative drugs, with clear policies supporting the payment side for innovative drugs. Domestic leading innovative drug companies are entering a commercial realization phase [3][7]. - The 2025 National Medical Insurance Drug List includes 127 products, with 114 successfully added, of which 50 are innovative drugs, marking a historical high. The overall negotiation success rate reached 90%, the highest in nearly seven years [7]. - The report highlights that the domestic innovative drug market is becoming increasingly concentrated, with leading companies like Heng Rui and Xin Da Biotech significantly benefiting from the new insurance policies [7]. Summary by Sections Investment Recommendations and Targets - Recommended stocks include Heng Rui Pharmaceutical (600276, Buy), Ke Lun Pharmaceutical (002422, Buy), Xin Li Tai (002294, Hold), Ao Sai Kang (002755, Buy), Jing Xin Pharmaceutical (002020, Buy), and others [3]. Market Dynamics - The report notes that the introduction of the commercial insurance directory marks the beginning of a "new golden decade" for Chinese innovative drugs, with a focus on high clinical efficacy and value innovation [7]. - The report emphasizes that the competition in the GLP-1 market remains clear, with the entry of new drugs not significantly altering the competitive landscape for existing treatments [7].

Core Insights - On December 9, 2025, Alibaba-W (09988), Xiaomi Group-W (01810), and Tencent Holdings (00700) were the top three companies by trading volume in the southbound trading of the Stock Connect, with trading amounts of 4.115 billion, 3.321 billion, and 2.930 billion respectively [1] - In the Shenzhen-Hong Kong Stock Connect, Alibaba-W (09988), Tencent Holdings (00700), and SMIC (00981) led the trading volume, with amounts of 3.237 billion, 1.987 billion, and 1.503 billion respectively [1] Southbound Trading Highlights - **Top Active Companies in Southbound Trading (Shanghai-Hong Kong Stock Connect)** - Alibaba-W (09988): Trading amount of 4.115 billion, net inflow of 83.45 million [2] - Xiaomi Group-W (01810): Trading amount of 3.321 billion, net inflow of 156 million [2] - Tencent Holdings (00700): Trading amount of 2.930 billion, net inflow of 1.126 billion [2] - SMIC (00981): Trading amount of 2.806 billion, net outflow of 133 million [2] - Pop Mart (09992): Trading amount of 1.880 billion, net outflow of 438 million [2] - **Top Active Companies in Southbound Trading (Shenzhen-Hong Kong Stock Connect)** - Alibaba-W (09988): Trading amount of 3.237 billion, net inflow of 342 million [2] - Tencent Holdings (00700): Trading amount of 1.987 billion, net outflow of 248 million [2] - SMIC (00981): Trading amount of 1.503 billion, net inflow of 14.69 million [2] - Xiaomi Group-W (01810): Trading amount of 1.203 billion, net inflow of 384 million [2] - Pop Mart (09992): Trading amount of 1.016 billion, net outflow of 136 million [2]

Core Viewpoint - The Hong Kong innovation drug sector is experiencing a downturn, with the Hong Kong Stock Connect Innovation Drug ETF (520880) declining over 2% and major stocks like Kangfang Biotech and 3SBio dropping more than 5% [1][3] Group 1: Market Performance - The Hong Kong innovation drug sector has entered a phase of adjustment since early September, with the Hong Kong Stock Connect Innovation Drug ETF (520880) index retreating over 19%, indicating that previous high risks have been sufficiently released [3] - There is a surge in "bottom-fishing" capital, with over 56 million yuan entering the market recently, leading to a spike in the premium of the Hong Kong Stock Connect Innovation Drug ETF [1][3] Group 2: Policy and Market Opportunities - A favorable policy announcement was made with the release of the 2025 National Medical Insurance Drug List, which added 114 new drugs, including 50 innovative drugs, achieving an overall success rate of 88%, significantly higher than the 76% in 2024 [5][6] - The introduction of the first version of the "Medical Insurance + Commercial Insurance Dual Directory" by the National Medical Insurance Bureau is expected to boost investment enthusiasm in innovative drugs [6] Group 3: Investment Insights - Analysts suggest that the current market conditions may present a good opportunity for medium to long-term investment in core innovative drug assets [3][6] - The Hong Kong Stock Connect Innovation Drug ETF (520880) is highlighted for its unique advantages, including a pure focus on innovative drug companies, a high concentration of leading firms (over 72% in the top ten), and better risk control through the management of less liquid stocks [6][7]