Core Viewpoint - Heng Rui Medicine (1276.HK) experienced a significant increase of 5.21% to HKD 80.8 following the announcement of the approval for its innovative diabetes medication, marking a positive development for the company and the pharmaceutical sector in China [1] Company Summary - Heng Rui Medicine's subsidiary, Shandong Shengdi Pharmaceutical Co., Ltd., received approval from the National Medical Products Administration for its product, HR20031 tablets, which is the first domestically developed oral hypoglycemic combination drug in China [1] - The HR20031 tablets are designed to improve blood sugar control in adult patients with type 2 diabetes who have inadequate control with metformin hydrochloride [1] Industry Summary - According to a report from Galaxy Securities, the pharmaceutical sector has undergone a prolonged valuation adjustment but is now showing a significant structural recovery trend [1] - Public fund holdings in the pharmaceutical sector remain below historical averages, indicating potential for growth [1] - With supportive policies for commercial insurance development expected to improve payment conditions by 2025, innovative drugs and medical devices are likely to benefit [1] - The outlook for the pharmaceutical industry remains positive, with continued interest in innovative drug business development (BD) and a potential revival in pharmaceutical investment and financing [1]

Investment Rating - The report maintains an "Overweight" rating for several pharmaceutical companies including Jiangsu Heng Rui Medicine, Hansoh Pharmaceutical Group, 3SBio, and Jiangsu Nhwa Pharmaceutical, with related targets such as CSPC Innovation Pharmaceutical [6][28]. Core Insights - The innovative drug sector is experiencing high prosperity, and the report continues to recommend innovative drugs and their industry chain. It highlights the recent global strategic collaboration between Innovent Biologics and Takeda, which is expected to catalyze the innovative drug market [6][29]. - The report notes that the A-Shares pharmaceutical sector underperformed the market in the fourth week of October 2025, with the SW Pharmaceutical and Biological index rising only 0.6% compared to a 2.9% increase in the SHCOMP [8][30]. - In the same period, the Hong Kong pharmaceutical sector also underperformed, while the U.S. pharmaceutical sector performed in line with the market [31][19]. Summary by Sections Continuous Recommendation of Innovative Drugs and Industry Chain - The report emphasizes the ongoing recommendation of innovative drugs and the industry chain, maintaining "Overweight" ratings for various companies including Heng Rui Medicine, Hansoh Pharmaceutical, 3SBio, and Nhwa Pharmaceutical. It also recommends Biopharma/Biotech companies with innovative pipelines and increasing performance, maintaining "Overweight" ratings for Innovent Biologics, Xiamen Amoytop Biotech, and others [6][28]. Performance of A-Shares Pharmaceutical Sector - In the fourth week of October 2025, the A-Shares pharmaceutical sector's performance was weaker than the overall market, with a 0.6% increase compared to the SHCOMP's 2.9% rise. The medical service, pharmaceutical commerce, and medical equipment sub-sectors showed relatively better performance [8][30]. Performance of Hong Kong and U.S. Pharmaceutical Sectors - The Hong Kong pharmaceutical sector underperformed the market with a decline of 0.8%, while the U.S. pharmaceutical sector matched the market performance with a 1.9% increase. Notable stock movements included significant gains for companies like WuXi AppTec and declines for Alphamab Oncology in Hong Kong [31][19].

Summary of Jiangsu Hengrui Conference Call Company Overview - **Company**: Jiangsu Hengrui (1276.HK) - **Industry**: Biopharmaceuticals Key Points Financial Performance - **3Q25 Product Sales Growth**: Estimated to be in the low-teens percentage range year-over-year, with single-digit growth quarter-over-quarter compared to 2Q25 [4][9] - **Net Profit Growth**: Expected to show low-teens percentage growth in 3Q25, with a significant increase in net profits projected at RMB 8,546 million, a 34.9% year-over-year increase [12] - **Revenue Estimates**: Projected revenue for FY25 is RMB 32,121 million, reflecting a 14.8% year-over-year growth [12] Business Development (BD) Outlook - **BD Income**: Anticipated to include a €15 million upfront payment from Merck for GnRH and a portion of the US$500 million upfront payment from GSK related to PDE3/4 [4][9] - **Collaboration Revenue**: Expected to grow significantly, with estimates of RMB 3,741 million for FY25, a 38.5% increase year-over-year [12] Oncology Portfolio Strength - **ESMO 2025 Highlights**: Hengrui showcased 46 oncology projects, with SHR-A1811 (HER2 ADC) demonstrating significant progression-free survival (PFS) improvement in advanced HER2+ breast cancer [5][14] - **SHR-A1811 Results**: Reported median PFS of 30.6 months compared to 8.3 months for the control group, with a competitive profile against Enhertu [15][16] Market Position and Valuation - **Valuation Metrics**: Hengrui A and H shares are trading at 42x and 45x 2026 estimated EPS, with a projected EPS CAGR of 25% from 2024 to 2027 [6] - **Price Target**: Set at HK$86.00, indicating a 13% upside from the current price of HK$76.30 [7] Upcoming Catalysts - **Key Events**: NRDL negotiation in October-November, Phase 3 readout for HRS9531 (GLP-1/GIP injectable) at Obesity Week, and potential new BD deals [6][9] Risks and Considerations - **Upside Risks**: More-than-expected out-licensing deals and faster-than-expected drug sales growth [25] - **Downside Risks**: Potential setbacks in pipeline progress and adverse impacts from VBP on specific drugs [25] Additional Insights - **Pipeline Depth**: Hengrui's pipeline is noted for its depth and breadth, which supports its premium valuation compared to Chinese biopharma peers [6] - **Market Cap**: Current market capitalization is approximately RMB 435.74 billion [7] This summary encapsulates the critical insights from the conference call, focusing on Jiangsu Hengrui's financial performance, business development outlook, oncology portfolio strength, market position, upcoming catalysts, and associated risks.

Summary of Key Points from Conference Call Industry Overview - The oral GLP-1 market has significant potential, particularly in diabetes and weight loss, with an estimated total market size exceeding $150 billion. Oral GLP-1 drugs are expected to capture 30% to 50% of this market, indicating a vast opportunity for growth [2][3][14]. Core Insights and Arguments - Early participants in the oral GLP-1 market, such as Pfizer and Eli Lilly, have faced setbacks, creating opportunities for Chinese biotech companies like Heng Rui, Haosen, East China Pharmaceutical, and Innovent Biologics, which are actively developing related drugs [1][2]. - Eli Lilly's Orpho Phase III clinical data serves as a crucial reference for future oral GLP-1 drug development, showing a weight reduction of 11.5% at the highest dose, but with notable side effects such as nausea and vomiting, leading to a high discontinuation rate [1][5]. - Heng Rui's oral GLP-1 assets are nearing Phase I status, while Haosen has sold some assets to Merck. Clinical trials indicate that high-dose groups typically use longer titration times to mitigate side effects, with varying weight loss results across different treatment cycles [1][6][8]. - The baseline BMI of Chinese patients is lower than that of Western patients, affecting cross-trial data comparisons. Safety remains a critical consideration for the long-term use of GLP-1 drugs [7][11]. Company-Specific Developments - Heng Rui has two assets in development, one being a small molecule and the other a peptide oral version, both close to Phase I status. Haosen has multiple assets, with one sold to Merck and others in development [6][13]. - East China Pharmaceutical and Innovent Biologics are also advancing their research, with East China expected to release Phase III data by the end of this year or early next year [3][11]. - Investors are encouraged to focus on Heng Rui, East China, and Wuxi iPAC, as these companies are making significant progress in their respective projects [3][14]. Market Dynamics and Future Considerations - The medical device market is projected to exceed 74 billion yuan by 2035, with an annual growth rate of over 10%. The electrophysiology segment is expected to quadruple in surgical volume due to unmet demand and the trend of domestic substitution [3][15]. - Huatai Medical has competitive advantages in cost and distribution channels, with its high-end RF products poised to accelerate domestic substitution [16]. - PFA technology is becoming the mainstream treatment for atrial fibrillation, with Huatai Medical being the first to have dual-pulse electric field catheters approved, enhancing its market position [17]. Investment Opportunities - Huatai Medical's current valuation is 3,940 times its 2026 PE, slightly above the A-share medical device average of 30 times, but justified by its superior growth rate of 29% over the next three years [19]. - The company is expected to expand its overseas market presence significantly, targeting regions with high demand such as Russia, Brazil, and Indonesia, with a total market size projected to reach 30 billion yuan by 2035 [18]. Conclusion - The oral GLP-1 market presents substantial investment opportunities, particularly for Chinese biotech firms that are advancing their drug development pipelines. The medical device sector, especially in electrophysiology, is also poised for growth, driven by domestic demand and technological advancements. Investors should closely monitor the developments of key players like Heng Rui, East China, and Huatai Medical for potential returns.

Core Viewpoint - The eleventh batch of national organized drug procurement has commenced, involving over 400 companies and covering 55 drug varieties, with a focus on quality control and fair competition in pricing [1] Group 1: Procurement Details - The procurement process started at 7:30 AM in Qingpu District, Shanghai, with public disclosure of application information at 10:30 AM [1] - The procurement includes significant products such as cefoperazone injection and dapagliflozin oral sustained-release formulation, projected to achieve sales in the billions for 2024 [1] - Major pharmaceutical companies like Heng Rui Medicine, Qilu Pharmaceutical, and AstraZeneca are participating with multiple products [1] Group 2: Procurement Rules - The new procurement rules emphasize "stabilizing clinical use, ensuring quality, preventing internal competition, and avoiding collusion" [1] - For the first time, medical institutions are allowed to report quantities based on brand names, enhancing the focus on quality control [1] - Each participating company must commit to pricing no lower than their costs, with lower-priced bids requiring a justification for their pricing to promote healthy market competition [1]

Policy Developments - The National Health Commission emphasizes the construction of a fertility-friendly society, promoting supportive policies for childbirth, elderly care, and the gradual delay of retirement age to optimize population structure [1] Drug Approval - East China Pharmaceutical's subsidiary received approval for the drug Mevanertinib, a new treatment for advanced or metastatic non-small cell lung cancer, with a direct R&D investment of approximately 306 million yuan [2] - Hengrui Medicine's subsidiary received approval for a fixed-dose combination of three oral diabetes medications, marking the first of its kind in China [3] Financial Reports - Shuanglu Pharmaceutical reported a 143.28% year-on-year increase in net profit for Q3, driven by gains from financial assets [4] - Huitai Medical announced a 18.02% increase in net profit for the first three quarters, with Q3 revenue up 24.77% [5] Capital Market - WuXi AppTec plans to sell 100% equity of two subsidiaries for 2.8 billion yuan to focus on its CRDMO business model, enhancing its global capabilities [7] Industry Events - The Ministry of Industry and Information Technology conducted a survey on the traditional Chinese medicine industry, aiming to promote modernization and quality improvement [8] - Shanghai's biopharmaceutical industry is projected to exceed 1 trillion yuan, marking it as the fifth trillion-level industry in the city [9] - The Jiangxi Pharmaceutical Development Conference resulted in the signing of 16 key pharmaceutical projects across various sectors [10] Public Sentiment - Beilu Pharmaceutical announced that a major shareholder plans to reduce its stake by up to 1.78% to improve asset liquidity [11]

Market Performance - The market experienced a rebound last week, with the CSI Xinhua National Brand Index rising by 4.14% to 2037.67 points [1][2] - The Shanghai Composite Index increased by 2.88%, the Shenzhen Component Index by 4.73%, the ChiNext Index by 8.05%, and the CSI 300 Index by 3.24% [2] Strong Stock Performances - Notable strong performers included: - Zhongji Xuchuang (up 32.23%) - Shiyuan Technology (up 14.54%) - Sunshine Power (up 14.37%) [2] - Other stocks with significant gains included: - Anji Technology and Wowo Bio (both up over 10%) - SMIC and Zhaoyi Innovation (both up over 9%) [2] Year-to-Date Stock Performance - Since the beginning of the second half of the year, Zhongji Xuchuang has surged by 239.03%, leading the gains [3] - Sunshine Power has increased by 145.06%, while other stocks like Lanke Technology and Yiwei Lithium Energy have risen over 70% [3] Market Outlook - According to Fangzheng Fubang Fund, liquidity remains a crucial driver for market development, and future capital inflow will significantly impact market trends [4] - The fund suggests focusing on sectors with solid fundamentals and reasonable valuations, rather than chasing high-performing stocks with poor earnings [4] - Long-term investment opportunities may lie in technology companies with real technological barriers that align with national strategies [4] - Kangmand Capital anticipates a volatile market in the short term due to uncertainties, but the core logic for an upward trend remains unchanged [4] - Xingshi Investment notes that positive incremental information could stabilize market expectations and emotions, with a potential shift in economic momentum towards technology and consumption [4]

Group 1 - The core point of the article is the performance and changes in the top holdings of the Yinhua CSI Innovation Drug Industry ETF, which reported a net value growth rate of 24.54% over the past year [1] - The fund has added new top holdings including Kanglong Chemical and Baile Tianheng, while increasing its stake in WuXi AppTec by 64.87 million shares, making it the largest holding [1] - The fund has exited from its previous top holdings, including Tigermed and Tonghua Golden Horse [1] Group 2 - The detailed data shows the number of shares held and market value for each of the top holdings, with WuXi AppTec holding 15.52 million shares valued at 1.74 billion and Kanglong Chemical holding 8.56 million shares valued at 306 million [1] - Other significant holdings include Hengrui Medicine, Changchun High-tech, and Kelun Pharmaceutical, with respective increases in shareholding [1] - The report indicates a strategic shift in the fund's portfolio, reflecting a focus on companies with strong growth potential in the pharmaceutical sector [1]

每经记者｜林姿辰 每经编辑｜魏文艺 "全世界也找不出第二家公司，像恒瑞医药有这么完整的布局⋯⋯那么，出海的标准是什么？" 10月26日，恒瑞医药全球研发总裁张连山在第十届医药创新与投资大会上向包括《每日经济新闻》记者 在内的媒体表示，创新药出海的首要前提是认清产品的差异化价值，并非只有First-in-Class（同类首 创）才能打开海外市场，如果产品能跻身前三或前五梯队，具备足够的临床差异化优势，同样能获得海 外企业的认可，由此促成的BD（商务拓展）合作，是恒瑞医药出海的第一步。 第二步，是推动优质产品的海外自主开发。张连山表示，对于部分具备明确临床价值，但尚未进入海外 药企重点布局范围的新药，恒瑞医药会依托在中国已积累的临床数据，以相对较低的研发投入，推动其 在海外的临床试验与上市申报。 "这是国际化的两步，第一步借船出海，第二步还是要回归到造船出海，为创新产品的价值实现画了一 个句号，这是目前公司出海的大概策略。"张连山表示，自己不会给出突破性进展的时间表，"因为做药 是Science（科学），有很多不确定性，今天好了，明天可能死掉了，很多产品在三期（临床试验）失 败的可能性比较小，但还是有的。我们还是 ...

Investment Rating - The report maintains an "Overweight" investment rating for the pharmaceutical and biotechnology industry [1]. Core Insights - The report highlights that the 2025 ESMO conference showcased significant advancements from Chinese innovative drug companies, marking a shift from being followers to leaders in the global market [19][22]. - The A-share pharmaceutical index has shown a year-to-date increase of 19.54%, with a weekly increase of 0.58%, while the Hang Seng Biotechnology Index has surged by 81.15% year-to-date [9]. - Key sub-sectors showing positive performance include medical services (+3.94%), pharmaceutical commerce (+2.27%), and medical devices (+0.89%), while chemical pharmaceuticals and traditional Chinese medicine experienced declines [9]. Summary by Sections Industry Trends - The report notes that the Chinese pharmaceutical sector is entering a harvest period, with a significant increase in the number and quality of research presented at the ESMO conference [16][19]. - The report emphasizes the successful approval of innovative drugs, such as Boehringer Ingelheim's treatment for pulmonary fibrosis and Novartis' drug for polymyalgia rheumatica, which have achieved significant clinical milestones [4]. Research and Development Progress - The report details several groundbreaking studies that have the potential to change existing treatment paradigms, including studies on innovative drugs and ADCs (antibody-drug conjugates) [4][22]. - Specific companies are highlighted for their promising research pipelines, including Innovent Biologics, Rongchang Biologics, and others, which have made significant contributions to the field [12][22]. Market Performance - The report provides a detailed analysis of stock performance within the pharmaceutical sector, noting that certain stocks, such as Teva Pharmaceutical and ST Rong Control, have seen significant weekly gains [9][11]. - The report suggests a ranking of favored sub-sectors for investment, with innovative drugs, research services, and CXO services at the top of the list [10][12]. Recommendations - The report recommends specific companies for investment based on their performance and potential, including Hengrui Medicine, WuXi AppTec, and others across various sub-sectors [11][12].