Core Insights - CalliSpheres drug-eluting embolic microspheres developed by Suzhou Heng Rui Medical Devices Co., Ltd. celebrated its 10th anniversary since approval, marking a significant milestone in China's high-end medical device industry [1][2] - The product has received dual certification from the US FDA and EU CE, and has been widely adopted in thousands of hospitals globally, providing treatment for patients with lung and liver cancers [1][2] Industry Context - The global drug-eluting microsphere market was previously dominated by imported products, which were expensive and not fully compatible with the specific needs of Chinese patients, prompting Heng Rui Medical to pursue independent research and development [1] - The introduction of CalliSpheres microspheres represents a shift from "Made in China" to "Intelligent Manufacturing in China," showcasing advancements in domestic medical technology [2] Product Impact - CalliSpheres microspheres have significantly improved access to advanced cancer treatment technologies, with thousands of patients treated across numerous hospitals in China [2] - The product's diverse particle size options and consistent efficacy have facilitated the adoption of TACE technology in grassroots hospitals, allowing more patients to receive quality treatment locally [2] Future Outlook - The continued innovation and technological advancements of CalliSpheres microspheres are expected to elevate the field of interventional medicine in China, reinforcing its position as a representative of Chinese ingenuity on the global stage [2]

Core Insights - The report indicates a 2.07% week-on-week decline in the Shenwan Pharmaceutical Index, underperforming both the CSI 300 Index and the ChiNext Index during the week of September 15-19, 2025 [1][12] - The focus for the upcoming 1-2 quarters includes significant global conferences related to innovative drugs and the business development (BD) spending rhythm of multinational corporations (MNCs) [1][18] Recent Market Review - The market experienced fluctuations, with a notable rise in coal, electricity, electronics, and real estate sectors, while the pharmaceutical index showed similar volatility, particularly with a larger adjustment on Thursday and Friday [2][13] - The innovative drug sector is currently in a state of adjustment, reflecting a digestion of trading structures and a lack of short-term catalysts [3][14] Future Outlook - The report emphasizes a positive outlook for the pharmaceutical sector in 2025, driven by innovative drugs, with a focus on overseas major pharmaceuticals, small and medium-sized technology revolutions, and the revaluation of generic pharmaceuticals [4][15] - The report suggests that the innovative drug sector is entering a second wave of growth over the next 5-10 years, with the keyword being "disruption" [3][14] Investment Strategy - The report outlines specific investment strategies in the innovative drug sector, highlighting key companies such as Innovent Biologics, BeiGene, and others in various therapeutic areas including oncology and chronic diseases [7][16] - It also identifies emerging technologies such as brain-computer interfaces and AI in medicine as potential investment opportunities [8][16] Upcoming Conferences - Key upcoming global conferences include the ESMO Congress and SABCS, which are expected to influence BD activities and provide insights into the latest advancements in oncology [18][19] Performance Metrics - The report notes that the CSI Innovative Drug Index has increased by 38.55% since the beginning of 2025, outperforming both the Shenwan Pharmaceutical Index and the CSI 300 Index [23][26]

Market Performance - The Medical Health Index (980016) closed at 7021.34 points, down 1.08%, with a trading volume of 33.906 billion yuan and a turnover rate of 1.07% [1] - Among the index constituents, 5 stocks rose while 45 stocks fell, with Yirui Technology leading the gainers at 1.82% and Changchun High-tech leading the decliners at 3.91% [1] Key Constituents - The top ten constituents of the Medical Health Index include: - WuXi AppTec (13.58% weight) at 108.75 yuan, up 1.23% with a market cap of 320.976 billion yuan - Hengrui Medicine (10.87% weight) at 69.65 yuan, down 2.03% with a market cap of 462.281 billion yuan - Mindray Medical (8.17% weight) at 235.00 yuan, down 1.18% with a market cap of 284.924 billion yuan - United Imaging Healthcare (4.14% weight) at 147.90 yuan, down 1.40% with a market cap of 121.893 billion yuan - Other notable constituents include Pianzai Shou, Yier Eye Hospital, Kelun Pharmaceutical, Xinhecheng, Fosun Pharma, and Yixiao Aoshi [1] Capital Flow - The Medical Health Index constituents experienced a net outflow of 2.29 billion yuan from institutional investors, while retail investors saw a net inflow of 2.013 billion yuan [3] - Notable capital flows include: - Mindray Medical with a net inflow of 98.789 million yuan from institutional investors and a net outflow of 10.5 million yuan from speculative funds - Changchun High-tech with a net inflow of 67.986 million yuan from institutional investors and a significant net outflow from speculative funds [3]

Group 1: Changshan Pharmaceutical - The company is preparing for clinical trials of Aibennate peptide for weight loss, with no current plans for oral formulation development [1] - Aibennate peptide is a long-acting GLP-1 receptor agonist, developed through chemical modification of exenatide [1] - The marketing preparation includes team building, product knowledge training, and marketing strategy formulation [1] Group 2: Fosun Pharma - Four innovative drugs approved in the first half of the year are expected to gradually increase sales in the coming months [2] - Innovative drug revenue exceeded 4.3 billion yuan, a year-on-year increase of 14.26%, accounting for over 30% of total drug revenue [2] - The company is actively participating in negotiations for the inclusion of its innovative drugs in insurance and national basic medical insurance directories [2] Group 3: Tiantan Biological Products - The company has established an international cooperation department to enhance its global market presence [3] - Products such as tetanus immunoglobulin and rabies immunoglobulin have already been exported [3] - The company is focused on international certification and registration of key products [3] Group 4: Kangtuo Medical - The US-based subsidiary BIOPLATE has launched a local production line for PEEK plates [4] - The company has completed market access in nearly 40 countries and regions [4] - The marketing of "4D bioactive plates" and PEEK fixation systems is underway in the US [4] Group 5: Tailong Pharmaceutical - The company is focusing on the development of modified new drugs across various therapeutic areas including respiratory, digestive, and oncology [5] - Projects in progress include treatments for Alzheimer's disease and schizophrenia [5] Group 6: Heng Rui Pharmaceutical - The HRS-5635 injection has been included in the list of proposed breakthrough therapies [6][7] - Chronic hepatitis B infection affects approximately 257 million people globally, with a significant mortality rate [7] - There is a pressing need for more effective treatments to achieve functional cure for chronic hepatitis B [7]

Core Insights - The Chinese innovative drug industry is entering a global business development (BD) phase at an unprecedented speed, with over 70 pipeline licensing agreements signed in the first half of the year, totaling more than $60 billion, setting new records [1][2] - The surge in BD activities is driven by a precise match between supply and demand, as multinational companies face patent expirations and need external innovative pipelines, while Chinese biotech firms have a large number of early-stage projects but lack the resources to advance them independently [2][6] Industry Dynamics - The industry is characterized by two main development models: the "heavyweight approach" exemplified by companies like Heng Rui Pharma, which has a large R&D team and covers numerous hot targets, and the "lightweight approach" represented by companies like Abogen Biosciences, which focuses on efficiency and cost advantages [3][5] - Heng Rui Pharma ranks 13th globally with 173 projects in the pipeline and has generated nearly 2 billion RMB in upfront payments from BD transactions in the first half of the year [3] - Abogen Biosciences has signed approximately 280 antibody asset collaborations in the first half of 2025, leveraging its RenMice platform to create a vast resource library of candidate antibodies [3][4] BD-Driven Industry Restructuring - The BD model is reshaping the industry by enhancing molecular development efficiency and changing collaboration methods, allowing previously unsuccessful molecules to re-enter the pipeline for new indications [4] - This open platform is becoming a foundational infrastructure for the innovative drug industry, enabling biotech companies to rely on resource libraries for early-stage development while large pharmaceutical companies use it to supplement and accelerate their internal R&D [4] Future Outlook - The BD model is redefining industry value assessment, shifting capital market focus from solely independent R&D to the ability to continuously produce pipelines with licensing potential [5][6] - With ongoing patent cliffs for global pharmaceutical giants and the accumulation of R&D resources by Chinese companies, the wave of Chinese innovative drugs entering the global market is expected to remain strong, becoming a core driver of industry development over the next two decades [6]

Investment Rating - The report maintains a "Market Weight" rating for the pharmaceutical and biotechnology industry, indicating that the industry is expected to perform within ±10% of the market index over the next six months [6][29]. Core Insights - The SW pharmaceutical and biotechnology industry underperformed the Shanghai and Shenzhen 300 index, with a gain of 1.36% from September 5 to September 18, 2025, lagging behind the index by approximately 1.66 percentage points [5][13]. - Most sub-sectors within the industry recorded positive returns during the same period, with the medical research outsourcing and medical equipment sectors leading with increases of 8.17% and 5.83%, respectively, while the chemical preparations sector saw a decline of 0.96% [5][14]. - Approximately 48% of stocks in the industry achieved positive returns, with notable performers including Zhendemedical, which had a weekly increase of 62.30% [15][18]. Summary by Sections 1. Market Review - The SW pharmaceutical and biotechnology industry underperformed the Shanghai and Shenzhen 300 index, gaining 1.36% from September 5 to September 18, 2025, which is 1.66 percentage points lower than the index [5][13]. - Most sub-sectors recorded positive returns, with medical research outsourcing and medical equipment sectors leading [5][14]. - About 48% of stocks in the industry recorded positive returns, with Zhendemedical showing the highest weekly increase [15][18]. - The overall industry valuation remained stable, with a PE ratio of approximately 56.10 times as of September 18, 2025, which is 4.26 times relative to the Shanghai and Shenzhen 300 index [19][29]. 2. Industry News - The report highlights the upcoming release of the 11th batch of national drug procurement rules, with discussions held on various aspects of the procurement process [6][27]. - The National Health Commission issued a notification regarding the 2025 version of medical quality control indicators, emphasizing the importance of a scientific and standardized quality control system [23][26]. 3. Company Announcements - Changchun High-tech announced a collaboration with Denmark's ALK-Abelló A/S for the development and commercialization of specific immunotherapy products in China [28]. 4. Weekly Industry Outlook - The report suggests maintaining a focus on investment opportunities in innovative drugs and sectors with expected business development catalysts, particularly in medical devices and pharmaceutical commerce [29][30].

Investment Rating - The report maintains a "Market Weight" rating for the pharmaceutical and biotechnology industry, indicating that the industry is expected to perform within ±10% of the market index over the next six months [36]. Core Insights - The SW pharmaceutical and biotechnology industry underperformed the CSI 300 index, with a gain of 1.36% from September 5 to September 18, 2025, lagging behind the index by approximately 1.66 percentage points [11]. - Most sub-sectors within the industry recorded positive returns during the same period, with the medical research outsourcing and medical equipment sectors leading with increases of 8.17% and 5.83%, respectively [12]. - Approximately 48% of stocks in the industry achieved positive returns, while 52% experienced negative returns during the reporting period [13]. - The overall industry valuation remained stable, with a PE (TTM) ratio of about 56.10 times as of September 18, 2025, and a relative PE to the CSI 300 of 4.26 times [17][27]. Summary by Sections Market Review - The SW pharmaceutical and biotechnology industry underperformed the CSI 300 index, with a 1.36% increase compared to the index's performance [11]. - Most sub-sectors recorded positive returns, particularly in medical research outsourcing and medical equipment [12]. - About 48% of stocks in the industry had positive returns, with notable performers and underperformers identified [13]. Industry News - The report highlights the upcoming release of the 11th batch of national drug procurement rules, with discussions on various aspects of the procurement process [25]. - The National Health Commission issued a notification regarding the 2025 version of medical quality control indicators, emphasizing the importance of a scientific and standardized quality control system [21][24]. Company Announcements - Changchun High-tech announced a collaboration with Denmark's ALK-Abelló A/S for the development and commercialization of specific immunotherapy products in China [26]. Industry Outlook - The report suggests focusing on investment opportunities in innovative drugs and sectors with expected business development catalysts, including medical devices and pharmaceutical commerce [27][28]. - Specific companies to watch include Mindray Medical, Yifeng Pharmacy, and Aier Eye Hospital, among others, due to their strong market positions and growth potential [29].

Policy Developments - The 2025 Pharmaceutical Digital Development Conference was held in Beijing on September 17-18, focusing on the modernization of drug regulation through information technology and digital collaboration [1] Drug and Device Approvals - Hengrui Medicine's SHR-1501 has been included in the list of proposed breakthrough therapy varieties by the National Medical Products Administration, aimed at treating non-muscle invasive bladder cancer [2] - Kehua Bio's ferritin assay kit received a medical device registration certificate, valid from September 17, 2025, to September 16, 2030, for the quantitative measurement of ferritin in human serum and plasma [3] - Shanghai Pharmaceuticals' Nicorandil tablets passed the consistency evaluation for generic drugs, with approximately 5.5352 million yuan invested in R&D [4] Capital Market - Roche announced a definitive agreement to acquire biopharmaceutical company 89bio for up to nearly $3.5 billion, focusing on innovative therapies for liver and heart metabolic diseases [5] Industry Events - The first national group standard for "Non-Clinical Safety Technical Guidelines for Oligonucleotide Drugs" was released during the 9th China (Tianjin) Nucleic Acid Drug Conference [6] Research and Development - Chinese researchers developed a new generation of brain-machine interface electrodes, marking a shift towards dynamic and intelligent detection in bioelectronic interfaces [7] - A new blood testing tool, "HPV-DeepSeek," can identify HPV-related head and neck cancers up to 10 years before symptoms appear, potentially improving patient outcomes [9] Corporate Governance - The independent director of Buchang Pharma, Cheng Hua, resigned due to personal reasons, leading to a temporary reduction in the number of independent directors on the board [10] Strategic Collaborations - Siemens Healthineers and Stryker announced a strategic partnership to develop a new robotic system for neurovascular interventions [8]

Core Viewpoint - Heng Rui Medicine's subsidiary, Guangdong Heng Rui Medicine Co., Ltd., has received approval from the National Medical Products Administration for clinical trials of SHR-1139 injection for ulcerative colitis treatment [1] Group 1 - SHR-1139 injection is a self-developed biological product by Heng Rui Medicine, expected to enhance treatment for ulcerative colitis by inhibiting inflammatory responses and maintaining epithelial barrier mechanisms [1]

Core Viewpoint - Heng Rui Medicine announced the approval of clinical trials for SHR-3045 injection, a self-developed biological product aimed at treating rheumatoid arthritis by inhibiting immune cell function and reducing inflammation [1] Group 1 - The company received the clinical trial approval notice from the National Medical Products Administration for SHR-3045 injection [1] - SHR-3045 is expected to improve clinical symptoms in the treatment of rheumatoid arthritis [1] - The clinical trials are set to commence in the near future [1]