Investment Rating - The report maintains a "Recommended" rating for the pharmaceutical industry [5] Core Insights - The underlying logic of the current pharmaceutical industry era is innovation and international expansion, with a focus on innovative drugs and technology-driven sectors [2][3] - The report highlights the strong performance of the CRO market and suggests a dual investment strategy focusing on both "0 to 1" technology innovation and low-position stocks [2][3] - The report emphasizes the ongoing trend of BD (Business Development) transactions in innovative drugs, with significant growth expected in 2026 [4][15] Summary by Sections 1. Key Events in the Pharmaceutical Industry During the Spring Festival - Innovative drug BD transactions have seen a strong start, with significant overseas development and registration progress for key products [13][14] - The total amount of BD transactions for innovative drugs in China for 2026 has already surpassed one-third of the total for 2025 [15] - The revision of the National Essential Medicines List Management Measures may signal changes in the essential medicines directory [28] 2. Pharmaceutical Market Review and Hotspot Tracking - The pharmaceutical sector's performance was relatively weak, with a weekly decline of 0.81%, ranking 20th among all industries [34][38] - The total trading volume for pharmaceuticals was 401.12 billion yuan, accounting for 3.83% of the total market, below the historical average of 7.09% [55] - The report notes a rising valuation level for the pharmaceutical industry, with a PE ratio of 29.25, which is below the historical average [52] 3. Stock Performance Review - The report lists the top-performing stocks, including Dongyangguang and Zhendemedical, while highlighting the underperformers like Huayuan Biology and *ST Sailong [58][59]

Core Insights - The CRO (Contract Research Organization) industry in China is a strategic emerging industry that supports pharmaceutical innovation and is crucial for the transition from a pharmaceutical power to a pharmaceutical stronghold [1][9] - The development of policies for the CRO industry has evolved from a focus on the overall biopharmaceutical sector to specialized areas, emphasizing innovation, safety, and supply chain security [1][3] Policy Development History - The policy evolution from the "Tenth Five-Year Plan" to the "Fourteenth Five-Year Plan" has progressively recognized the importance of the CRO industry, with increasing support for specialized services [1] - The "Fifteenth Five-Year Plan" emphasizes differentiated, high-value innovation alongside supply chain security [1] National Policy Summary and Interpretation - Since 2006, multiple national policies have been introduced to support the CRO service system, focusing on regulatory standards, clinical trial optimization, and international development [3][7] - Key policies include the establishment of the MAH (Marketing Authorization Holder) system and the optimization of review and approval processes [3][7] Key National Policies (2025 Outlook) - Policies from 2006 to 2025 highlight the strategic importance of biopharmaceuticals and the CRO industry, with a focus on enhancing innovation capabilities and regulatory frameworks [4][5][6] - Recent policies aim to streamline clinical trial approvals and support the development of innovative drugs [6][10] Provincial and Municipal Policy Summary - Various provinces and cities have implemented supportive policies for the CRO industry, including investment subsidies, revenue rewards, and insurance subsidies, with some regions offering up to 50 million yuan in support [11][12] - Specific measures include allowing foreign investment in CROs and promoting AI integration in the industry [11][12][14] Provincial Development Goals - Regions like the Yangtze River Delta focus on high-end CRO service systems, while the Beijing-Tianjin-Hebei area emphasizes collaborative innovation and full-chain outsourcing [14] - Local governments aim to enhance the scale and service capabilities of the biopharmaceutical industry, with targeted initiatives for specific sectors such as seed industry CROs in Hainan [14]

Core Viewpoint - The article discusses the current funding logic in the market, highlighting the significant movements of public funds in the technology sector, particularly in the semiconductor and biopharmaceutical industries, as they adjust their portfolios based on performance and valuation metrics [3][8]. Group 1: Public Fund Movements - Public funds have shown a notable shift in their holdings, particularly in the STAR Market, with the STAR 50 Index rising by 12.1% this year [3][4]. - The total market capitalization of STAR Market companies reached 10.4 trillion yuan, with the technology sector dominating, accounting for 62.1% of the total market cap [5][6]. - The semiconductor industry remains the core focus for fund allocation, with 12 companies in the sector having a market capitalization exceeding 10 billion yuan [9][11]. Group 2: Semiconductor Sector Insights - The market's pricing anchor for the semiconductor sector has shifted from "valuation expansion" to "performance realization," emphasizing the importance of actual earnings [13][14]. - Key drivers for future growth in the semiconductor sector include strong order backlogs, profit growth through acquisitions and expansions, and sustained price increases in advanced processes [13][14]. - Public funds have significantly increased their holdings in semiconductor materials, chip design, and equipment, with companies like ShenGong Co. seeing an 11% increase in fund holdings [15][21]. Group 3: Biopharmaceutical Sector Insights - The biopharmaceutical sector is a critical area for public funds, with major holdings in companies like BeiGene and United Imaging Healthcare, although the sector has faced a reduction in holdings for several key companies [24][26]. - The article notes that innovative drug companies are currently under pressure, with significant reductions in holdings observed in companies like BaiLi TianHeng and RongChang Biopharma [26][28]. - Despite the challenges, companies with strong earnings potential and innovative drug pipelines are still attracting interest from public funds, indicating a selective investment approach [35][40].

Group 1 - The company, Haoyuan Pharmaceutical, announced that its Chongqing Haoyuan antibody-drug conjugate (ADC) CDMO base will officially start operations in March 2025 and will pass the EU QP audit by June 2025 [2] - By the end of 2025, the international GMP system construction at the base is progressing smoothly, with a good number of ADC large molecule contracts signed and projects successfully delivered [2] - As orders increase, the company's capacity utilization rate is gradually improving [2]

Core Viewpoint - The company has successfully launched multiple production bases and is experiencing a positive growth trend in its order backlog, indicating a strong outlook for its ADC (Antibody-Drug Conjugate) business [1] Group 1: Production and Capacity - The company's production bases in Ma'anshan, Jiangsu, and Chongqing have commenced operations, with capacity utilization currently in a ramp-up phase [1] - By the end of 2025, the company's small molecule business has achieved a continuous quarter-on-quarter increase in order backlog for five consecutive quarters, supporting ongoing improvements in capacity utilization [1] Group 2: Business Structure and Compliance - The company is actively adjusting its business structure to accelerate the rollout of raw material drug products, focusing on advancing its GMP (Good Manufacturing Practice) system and successfully passing FDA certification [1] - The Chongqing ADC CDMO base is set to officially commence production in March 2025, contributing to a comprehensive capacity layout across its three bases in Shanghai, Ma'anshan, and Chongqing [1] Group 3: Market Position and Future Outlook - The establishment of a "three-in-one" XDC (XDC Full-Service System) service framework positions the company as a rare one-stop ADC CDMO provider in China [1] - The management is optimistic about the future trends and development prospects of the ADC industry and plans to further enhance investments in this area [1]

Group 1 - The company expects to procure chemical raw materials from its affiliate Gansu Haotian Technology Co., Ltd. with a maximum amount of 50 million yuan by 2026 [1] - The company plans to sell products and provide technical services to a new affiliate, Hangzhou Jiaolian Biomedical Technology Co., Ltd., with a maximum amount of 10 million yuan [1] - These transactions are based on daily operational needs and are expected to be executed within the board's approval authority [1] Group 2 - The company continues to expand in cutting-edge fields such as XDC, PROTAC, peptides, and small nucleic acid drugs, aiming to build an integrated service capability from laboratory to commercial production [2] - Long-term trends such as policy support for the pharmaceutical industry and population aging may present opportunities for the company's innovative drug research and development [2] Group 3 - The pharmaceutical and biotechnology industry is significantly influenced by policies, such as adjustments to medical insurance catalogs and the pace of review and approval for innovative drugs, which may indirectly affect the business demand for the company as a medical research outsourcing entity [3]

Core Viewpoint - The A-share market is experiencing a strong upward trend, particularly in the innovative drug sector, with significant gains in the ChiNext Innovative Drug ETF [1][3]. Group 1: Market Performance - As of 11:08 on February 10, the ChiNext Innovative Drug ETF (589120) surged by 2%, marking a potential two-day consecutive rise [1]. - Major component stocks of the ETF, such as Rongchang Biopharma and Baili Tianheng, saw increases exceeding 5%, while others like Baijie Shenzhou rose over 4% [3]. Group 2: Key Component Stocks - The top ten component stocks of the ChiNext Innovative Drug ETF include: - J-Z**KD with a 4.04% increase and an estimated weight of 10.43% - Baili Tianheng with a 5.10% increase and an estimated weight of 7.89% - Rongchang Biopharma with a 5.51% increase and an estimated weight of 6.35% [4]. Group 3: Industry Developments - Innovent Biologics announced the approval of its ICP-538, a VAV1 molecular glue degrader, for clinical research, marking it as the first of its kind in China and the second globally [4]. - Baili Tianheng's recent shareholder meeting approved significant resolutions, including the issuance of debt financing tools and extending the validity of H-share issuance [5]. Group 4: Strategic Collaborations - Innovent Biologics entered a strategic partnership with Eli Lilly to advance the global development of innovative drugs in oncology and immunology, receiving an upfront payment of $350 million and potential milestone payments totaling up to $8.5 billion [5]. Group 5: Industry Growth and Trends - The Chinese innovative drug sector is transitioning from "pipeline expectations" to "performance realization," with over 70% of companies projected to achieve revenue growth by 2025 [8]. - The total value of License-out transactions for Chinese innovative drugs skyrocketed from $2.562 billion in 2017 to an estimated $140.274 billion by 2025, indicating a significant increase in global recognition [6]. Group 6: Investment Opportunities - Three key investment themes for 2026 in the innovative drug sector include: 1. Accelerated BD (Business Development) overseas, focusing on ADC, dual antibodies, and GLP-1RA [9]. 2. Policy support for innovative drug development, enhancing commercialization opportunities [9]. 3. Monitoring critical clinical data and commercialization milestones for new drugs [10].

Investment Rating - The report maintains a "Buy" rating for the medical services industry, suggesting a positive outlook for investment opportunities in this sector [10][64]. Core Insights - The medical services sector has shown resilience, with a recent increase in the sector's PE ratio to 34.43X and PB ratio to 3.49X, indicating a positive trend in valuation metrics [4][29]. - The approval of internet medical first diagnosis trials in Beijing marks a significant regulatory breakthrough, potentially accelerating the online medical service process and providing new market opportunities for private medical institutions [5][62][63]. - The report highlights the importance of digital regulation and standardization in enhancing service capabilities for private medical institutions, particularly in consumer healthcare sectors like pediatrics and dermatology [5][62]. Summary by Sections Industry Performance - The pharmaceutical and biological sector increased by 0.14%, ranking 15th among 31 primary industries, outperforming the Shanghai Composite Index by 1.47 percentage points [2][12]. - The medical services sub-sector reported a 1.31% increase, closing at 6827.17 points, with a year-to-date performance of 41.41% [24][27]. Company Performance - Top-performing companies in the medical services sector include Meidisi (+18.0%), Tongce Medical (+8.1%), and Nuosige (+5.7%), while underperformers include Haoyuan Pharmaceutical (-6.2%) and Baicheng Pharmaceutical (-4.5%) [3][27]. Valuation Metrics - The medical services sector's PE ratio has increased by 0.56X from the previous week, while the PB ratio has risen by 0.06X, indicating a strengthening in market confidence [4][29]. Investment Recommendations - The report suggests focusing on high-growth areas such as ADC CDMO and peptide CDMO in the pharmaceutical outsourcing sector, as well as companies like WuXi AppTec and Haoyuan Pharmaceutical [10][64]. - It also recommends monitoring private medical service providers with compliance experience, such as Aier Eye Hospital, as they are expected to benefit from the evolving regulatory landscape [5][64].

Core Viewpoint - The company is actively advancing its GMP certification process for new production capacities and has successfully passed FDA certification, indicating a commitment to international quality standards and market-oriented quality management systems [1] Group 1: GMP Certification Progress - The company has established a comprehensive cGMP system at its Ma'anshan industrial base, which is crucial for regulatory compliance and operational efficiency [1] - The Shandong Heze industrial base has obtained ISO "three systems" certification, while the Jiangsu Qidong GMP production base has passed ISO 14001 and ISO 45001 certifications, enhancing its operational standards [1] - The Chongqing antibody-conjugated CDMO base successfully passed the EU QP audit in June 2025, meeting EU GMP standards, which supports its international GMP system development [1] Group 2: Future Plans and Customer Focus - The company aims to enhance its international GMP certification process and improve its ability to undertake high-end overseas product orders, driven by a customer value-oriented approach [1] - The company emphasizes continuous technological advancement and service optimization to better meet customer needs [1]

Investment Rating - The investment rating for the healthcare industry is "Positive" and maintained [14] Core Insights - The funding levels for Chinese innovative pharmaceutical companies are increasing, leading to a gradual improvement in the research and development (R&D) investment sentiment within the industry. This is expected to usher in a new cycle of prosperity for the innovative drug industry chain [5][12] - The trend of external business development (BD) is likely to benefit the domestic early-stage research industry significantly, as new business models allow early-stage projects to become tradable and monetizable assets, enhancing R&D investment returns [13] Summary by Sections Innovative Chain Development Review - Before 2020, multiple factors converged to initiate a significant rise in China's innovative drug sector, leading to the rapid development of the innovative chain, including CXO and life sciences services [10][30] - From 2020 to the first half of 2022, the global public health crisis accelerated capital inflow into the biopharmaceutical sector, resulting in high demand and a leap in the innovative chain segment, which also triggered a wave of IPOs and substantial supply-side expansion [10][39] - The second half of 2022 to 2024 saw a transition from a heated to a cooling phase, with a significant shift in supply-demand dynamics leading to industry internal competition and pressure on revenues and profit margins [10][54][57] Improvement in R&D Investment Sentiment - Starting from 2025, the R&D investment sentiment in China's innovative drug sector is expected to improve, with companies experiencing increased funding levels. The total amount raised through IPOs and additional offerings in 2025 is projected to reach 201.5 billion yuan, a 145% year-on-year increase [11][62] - The potential milestone payments from external BD are expected to reach 880.5 billion yuan in 2025, marking a 185.9% year-on-year increase, indicating a robust funding environment for innovative drug companies [11] Benefits to Early-stage Research Industry - The new external BD business model enhances the R&D investment return rates for Chinese innovative drug companies, thereby increasing their willingness to invest in R&D [11][13] - The early-stage research industry, including drug discovery CROs and clinical trial services, is expected to benefit significantly from the external BD trend, with leading companies in these segments poised for rapid growth [13]