Core Insights - The 2025 National Medical Insurance Negotiation has entered its fourth day, focusing on the price negotiation for innovative drugs, with 121 drugs passing the initial review and 24 entering the price negotiation phase [1][2] Group 1: Price Negotiation Process - A total of 10 companies participated in the price negotiation for 11 drugs, including major players like BeiGene and Huyuan Bio [1] - The negotiation process is divided into two groups, with each group negotiating separately with representatives from the National Medical Insurance Administration and insurance companies [3] Group 2: CAR-T Drug Negotiations - CAR-T drugs, known for their high prices, are receiving attention in the innovative drug directory negotiations, with several companies reporting positive experiences during negotiations [4][5] - The price of Huyuan Bio's CAR-T drug, previously set at 999,000 yuan per dose, is expected to be a focal point in the negotiations [5][6] Group 3: Expectations and Concerns - Companies are primarily concerned about the potential patient access to drugs through the innovative drug directory, rather than just price reductions [8][9] - There is uncertainty regarding the implementation and market access of the innovative drug directory, as companies are still exploring the commercial insurance payment mechanisms [8][9]

Investment Rating - The report maintains a "Buy" rating for the pharmaceutical and biotechnology sector [4][5]. Core Viewpoints - The proportion of public fund holdings in the pharmaceutical sector has decreased quarter-on-quarter, but the market is expected to experience a rebound [2][23]. - The investment focus should increasingly emphasize the clinical value of pharmaceuticals, driven by domestic and international policy changes [3][34]. - The report highlights the potential for continuous valuation recovery and upward movement in the pharmaceutical sector due to the opening of the US interest rate cut cycle and advancements in domestic innovative drugs [2][35]. Summary by Sections Market Review - Last week, the pharmaceutical and biotechnology index rose by 1.31%, outperforming the CSI 300 index by 1.74 percentage points [1][17]. - The Hong Kong Hang Seng Medical Health Index fell by 0.11%, but still outperformed the Hang Seng Index by 1.97 percentage points [1][17]. Company Updates - Notable clinical application approvals include Shanghai Lai Shi's SR604 injection and YKYY013 injection from Yuekang Pharmaceutical [39]. - Ongoing clinical trials include HRS-8080 from Heng Rui Pharmaceutical and ICP-332 from Nuo Cheng Jian Hua, both in Phase III [39]. Investment Strategy - The report emphasizes a three-stage clinical value investment strategy: "0 to 1" for technological breakthroughs, "1 to 10" for clinical validation, and "10 to 100" for efficiency in the Chinese market [34][35]. - Key recommended companies include Innovent Biologics (H), Eifang Biologics-U, Tian Shi Li, WuXi AppTec (A+H), and Mindray Medical [36]. Fund Holdings - As of Q3 2025, the market value of public funds heavily invested in pharmaceuticals is 11.93%, down by 0.32 percentage points from the previous quarter [2][24]. - The top 20 stocks by market value show significant upward movement for companies like Rongchang Biologics and BeiGene (H) [2][30]. Financial Performance - The pharmaceutical manufacturing industry reported a revenue decline of 2.0% year-on-year for the first nine months of 2025, totaling 182.11 billion yuan [59]. - The report indicates a positive trend in the valuation of the pharmaceutical sector, with a steady recovery in PE ratios since Q1 2025 [34].

Core Viewpoint - The technology sector experienced significant declines, prompting a structural shift in market funds towards the innovative drug sector, which saw notable gains on the same day [1][3]. Group 1: Market Performance - The innovative drug sector rose by 3.91% amidst a downturn in the technology sector, successfully breaking through the 20-day moving average with increased trading volume, signaling positive market sentiment [3]. - The innovative drug sector had been in a downward trend since August but began to stabilize and form a bottom pattern in October [3]. Group 2: Multiple Sclerosis (MS) Market - The global market for MS drugs is projected to reach approximately $18.5 billion in 2024, with a significant portion of sales coming from third-generation products, particularly CD20 monoclonal antibodies [6]. - CD20 monoclonal antibodies are expected to account for over 60% of the MS drug sales in 2024, with the drug Ocrelizumab projected to generate sales of 7.64 billion yuan, reflecting a year-on-year growth of 7.4% [6]. Group 3: Chemical Pharmaceutical Industry - The global chemical pharmaceutical market grew from $1,038 billion in 2019 to $1,128 billion in 2023, with expectations to reach $1,156 billion in 2024 [10]. - In China, the chemical pharmaceutical market size was 883.9 billion yuan in 2022, with a year-on-year growth of 4.4%, projected to increase to 945 billion yuan by 2024 [10]. Group 4: Innovative Drug Sector Performance - In the first half of 2025, 21 A-share innovative drug companies reported revenues of 28.69 billion yuan, a year-on-year increase of 42%, while net losses narrowed significantly [11]. - The second quarter of 2025 saw these companies achieve revenues of 15.34 billion yuan, a 39% increase year-on-year, with net losses reduced by 97% [11][12]. Group 5: Future Outlook - Continued policy support for innovative drugs is expected to enhance performance, with an increase in product launches anticipated to drive revenue growth [15]. - The active business development (BD) transactions in the innovative drug sector in the first half of 2025 are expected to bolster the apparent performance of related companies [15].

Macro Dynamics - In September, the bond market issued a total of 81,027.8 billion yuan in various bonds, including 14,904.9 billion yuan in government bonds, 8,519.1 billion yuan in local government bonds, 11,741.0 billion yuan in financial bonds, 13,407.3 billion yuan in corporate credit bonds, 365.7 billion yuan in credit asset-backed securities, and 31,627.8 billion yuan in interbank certificates of deposit [2] - In September, China's foreign exchange market had a total transaction volume of 26.87 trillion yuan (approximately 3.78 trillion USD), with the interbank market accounting for 22.44 trillion yuan (approximately 3.16 trillion USD) [3] - In the first three quarters, the revenue of large-scale internet and related service enterprises in China reached 14,420 billion yuan, showing a year-on-year growth of 2.8% [4][5] Financial Institutions - China Taiping announced the sale of minority stakes in four companies for a total consideration of 6.5 billion yuan [8] - Hangzhou Bank received approval to issue capital instruments not exceeding 40 billion yuan [9] Market Data - On October 31, A-shares saw a collective decline, with the Shanghai Composite Index down 0.81%, the Shenzhen Component down 1.14%, and the ChiNext Index down 2.31% [11] - The financing balance in the two markets decreased by 7.392 billion yuan, with the Shanghai Stock Exchange reporting a balance of 12,535.78 billion yuan and the Shenzhen Stock Exchange reporting 12,196.92 billion yuan [12] Company Dynamics - China National Petroleum Corporation announced the resignation of Zhou Song as the chairman of the supervisory board [14] - InSai Group decided to terminate a major asset restructuring plan due to changes in the external environment [15] - Tianqi Co., Ltd. signed a strategic cooperation framework agreement with Foxconn Automotive to deploy at least 2,000 embodied intelligent robots over the next five years [17] - Li Auto announced a recall of 11,411 units of the MEGA 2024 electric vehicle due to potential safety hazards [18] - Qingyue Technology is under investigation by the China Securities Regulatory Commission for suspected false financial reporting [19]

Core Points - The Medical Health R Index (480016) closed at 7755.61 points, up 1.68%, with a total transaction volume of 40.103 billion yuan and a turnover rate of 1.25% [1] - Among the index constituents, 43 stocks rose, with Zai Jian Pharmaceutical leading with a 16.14% increase, while 6 stocks fell, with Kailai Ying leading the decline at 4.33% [1] Index Constituents Summary - The top ten constituents of the Medical Health R Index include: - WuXi AppTec (603259) with a weight of 14.37%, latest price at 99.40 yuan, and a 2.41% increase, total market value of 296.585 billion yuan [1] - Hengrui Medicine (600276) with a weight of 11.45%, latest price at 64.15 yuan, and a 2.02% increase, total market value of 425.776 billion yuan [1] - Mindray Medical (300760) with a weight of 8.07%, latest price at 215.04 yuan, and a 0.76% decrease, total market value of 260.723 billion yuan [1] - United Imaging Healthcare (688271) with a weight of 4.32%, latest price at 139.92 yuan, and a 0.79% decrease, total market value of 115.316 billion yuan [1] - Pianzai Shou (600436) with a weight of 3.59%, latest price at 178.13 yuan, and a 0.64% increase, total market value of 107.469 billion yuan [1] - Aier Eye Hospital (300015) with a weight of 3.21%, latest price at 12.25 yuan, and a 1.16% increase, total market value of 114.236 billion yuan [1] - Kelun Pharmaceutical (002422) with a weight of 2.54%, latest price at 35.00 yuan, and a 2.19% increase, total market value of 55.932 billion yuan [1] - Changchun High-tech (000661) with a weight of 2.35%, latest price at 112.26 yuan, and a 2.55% decrease, total market value of 45.795 billion yuan [1] - Fosun Pharma (600196) with a weight of 2.28%, latest price at 29.20 yuan, and a 2.46% increase, total market value of 77.977 billion yuan [1] - New Hope Liuhe (002001) with a weight of 2.22%, latest price at 24.30 yuan, and a 0.04% increase, total market value of 74.684 billion yuan [1] Capital Flow Summary - The net inflow of main funds into the Medical Health R Index constituents totaled 406 million yuan, while speculative funds saw a net outflow of 644 million yuan, and retail investors had a net inflow of 237 million yuan [1] - Specific capital flow details for key stocks include: - Mindray Medical (300760) with a main fund net inflow of 262 million yuan and a speculative fund net outflow of 127 million yuan [2] - BeiGene (688235) with a main fund net inflow of 233 million yuan and a speculative fund net outflow of 225 million yuan [2] - Haizhi Pharmaceutical (002653) with a main fund net inflow of 92.778 million yuan and a retail net outflow of 95.916 million yuan [2] - New Hope Liuhe (002001) with a main fund net inflow of 90.378 million yuan and a speculative fund net outflow of 43.538 million yuan [2] - Renfu Pharmaceutical (600079) with a main fund net inflow of 71.683 million yuan and a speculative fund net outflow of 41.302 million yuan [2]

Core Insights - The article discusses the significant growth and potential of China's innovative pharmaceutical sector, highlighting key trends and market dynamics that suggest a promising future for the industry [6][7][30]. Group 1: Market Performance - The overseas licensing transaction amount reached $84.5 billion, accounting for 33% of global transaction volume [2]. - The Hang Seng Healthcare Index has seen a year-to-date increase of 100.7%, while the Hang Seng Hong Kong Stock Connect Innovative Drug Index has risen nearly 115.9% [3]. - The Hong Kong healthcare sector has raised more capital through IPOs this year than in the past three years combined [4]. Group 2: IPO Activity - Since September, over 12 pharmaceutical companies have submitted IPO applications to the Hong Kong Stock Exchange [5]. - As of October 23, 2025, the Hong Kong Stock Exchange is processing approximately 300 listing applications, with half from new economy sectors such as artificial intelligence and biotechnology [5]. Group 3: Innovative Drug Development - In the first three quarters of 2025, China's innovative drug company Legend Biotech's CAR-T therapy Carvykti achieved sales of $1.332 billion in the U.S., marking it as the first domestic innovative drug to surpass $1 billion in sales [6]. - The first half of 2025 saw the National Medical Products Administration approve 40 innovative drugs, nearing the total for the entire year of 2024 [6]. Group 4: Future Outlook - The innovative drug sector is expected to continue its growth trajectory into 2026, driven by favorable policies and improving market conditions [7][30]. - The differentiation within the pharmaceutical sector is anticipated to persist, with innovative drugs likely to outperform traditional sectors [31][32]. Group 5: Investment Strategies - Investors are advised to focus on the trends of "innovation, overseas expansion, and demand improvement" as key areas for potential growth [7]. - The article emphasizes the importance of understanding the dynamics of the innovative drug market, including the potential for high returns despite inherent risks [27][30]. Group 6: Challenges and Risks - Concerns remain regarding whether Chinese innovative drug companies can successfully commercialize their products overseas, which is seen as a significant risk factor [23][24]. - The article notes that the current phase of overseas expansion is characterized by a reliance on licensing agreements rather than joint development or independent market entry [15][18]. Group 7: Competitive Landscape - The article highlights the competitive nature of the innovative drug sector, with a significant number of companies vying for leadership in key therapeutic areas [25][26]. - The emergence of a "2.0" phase in overseas expansion indicates a shift towards more collaborative and independent development strategies among Chinese pharmaceutical companies [15][16]. Group 8: Future Opportunities - The article identifies several promising areas for growth, including innovative drugs, medical devices, and sectors benefiting from demand recovery [30][33]. - The potential for Chinese companies to establish themselves in global supply chains, particularly in emerging markets, is also noted as a significant opportunity [29].

公司資料表 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資料表的內容概不負 責，對其準確性或完整性亦不發表任何聲明，並明確表示概不就因本資料表全部 或任何部分內容而產生或因依賴該等內容而引致的任何損失承擔任何責任。 公司名稱（股份代號）：百濟神州有限公司(06160)（「本公司」） 股份簡稱：百濟神州 本資料表旨在向公眾提供有關本公司於指定日期的資料。該等資料無意作為本公 司及╱或其證券之完整資料摘要。 摘要內容 文件類型 日期 | A.豁免 | 於2025年5月27日的最新版本 | | --- | --- | | B.存託協議 | 於2025年5月27日的最新版本 | | C.稅項 | 於2025年5月27日的最新版本 | | D.法律及規例 | 於2025年5月27日的最新版本 | 責任聲明 於本公告日期，本公司董事謹此共同及個別對本資料表所載資料的準確性承擔全 部責任，並在作出一切合理查詢後確認，據彼等所深知及所確信，資料在所有重 大方面均屬準確及完整，並無誤導或欺詐成分，亦無遺漏任何其他事項而導致任 何資料不準確或產生誤導。 董事亦共同及個別承諾，於上次刊發後資料有重大變動時公佈經修訂的公司資 ...

Core Insights - The chemical pharmaceutical sector experienced a significant increase of 3.77% on October 31, with Shutaishen leading the gains [1] - In contrast, the Shanghai Composite Index closed at 3954.79, down 0.81%, and the Shenzhen Component Index closed at 13378.21, down 1.14% [1] Stock Performance - Notable gainers in the chemical pharmaceutical sector included: - Shutaishen (300204) with a closing price of 38.30, up 19.99% on a trading volume of 680,900 shares [1] - Kangla Pharmaceutical (300086) closed at 8.74, up 17.47% with a trading volume of 1,481,300 shares [1] - Zema Pharmaceutical (688266) closed at 103.88, up 16.14% on a trading volume of 93,300 shares [1] - Other significant performers included Yifang Bio (688382) up 15.30%, and Deyuan Pharmaceutical (920735) up 13.09% [1] Capital Flow - The chemical pharmaceutical sector saw a net inflow of 2.785 billion yuan from institutional investors, while retail investors experienced a net outflow of 974 million yuan [2] - The main stocks with significant capital inflow included: - Shutaishen with a net inflow of 472 million yuan, accounting for 19.44% of its trading volume [3] - Lianhuan Pharmaceutical (600513) with a net inflow of 338 million yuan, representing 39.88% of its trading volume [3] - Guangshengtang (300436) with a net inflow of 303 million yuan, making up 11.37% of its trading volume [3]

Summary of Key Points from the Conference Call Industry and Company Focus - The conference call discusses the strategic sectors in China, particularly focusing on innovative growth companies that are expected to emerge as "China Next Winners" in the context of the country's five-year plans [1][3][4]. Core Insights and Arguments 1. **Five-Year Plans as Investment Roadmaps**: China's five-year plans have historically served as effective roadmaps for investors, highlighting key sectors that are prioritized for growth. Significant alpha generation is often observed in the initial years following the prioritization of these sectors [3][12][13]. 2. **Key Growth Areas Identified**: - **Technology and Innovation**: Growth in semiconductors and artificial intelligence (AI) is anticipated, with a focus on self-reliance and high-tech innovation [3][4]. - **Advanced Manufacturing and Automation**: Chinese companies are expanding in mature automation areas, with new entrants in humanoid robotics benefiting from a large customer base and lower development costs [3]. - **Green Technology Leadership**: China has achieved 50% penetration of electric vehicles, with expectations for full electrification by the end of the decade. Rapid development in solar, wind, and nuclear energy is also anticipated [3]. - **Healthcare and Drug Development**: The aging population is expected to create greater opportunities in healthcare, with the industry catching up to global standards in R&D capabilities [3]. - **Domestic Consumption Boost**: A shift in consumer behavior from material ownership to experiential wealth is noted, benefiting companies focused on experiences rather than goods [3]. - **Urban Air Mobility**: China aims to dominate the low altitude economy, with proactive regulations and infrastructure development supporting this market [3]. 3. **Investment Implications**: The report emphasizes that growth stocks and innovative companies have historically provided the best returns for long-term investors, with a focus on high-growth and highly innovative firms [4][12]. 4. **Top Stock Recommendations**: Key stocks highlighted include Tencent, CATL, Alibaba, Trip.com, Luxshare, Hengrui, and Innovent as potential investment opportunities [4]. Additional Important Insights 1. **Historical Performance of Strategic Industries**: Industries identified as strategic in five-year plans have historically shown an average alpha of 30-40% in the first two years post-inclusion, although returns tend to decline after five years [13][17]. 2. **Characteristics of Historical Winners**: Successful companies typically emerged from mid-cap stocks (around $5 billion adjusted for today's market size), with reasonable valuations (13x PE), operating margins of 6-9%, and long-term earnings growth expectations exceeding 12% [12][50]. 3. **Long-Term Trends**: The report indicates that high-growth and innovative companies have generated significant annualized alpha, with the top 20% of the market leading in innovation yielding 8.5% p.a. alpha over the last decade [12][50]. 4. **Geopolitical and Macroeconomic Influences**: The evolving geopolitical landscape and domestic structural challenges are shaping China's economic and policy environment, emphasizing self-reliance and technological innovation [14][29]. This summary encapsulates the key points discussed in the conference call, focusing on the strategic sectors and companies poised for growth in China, as well as the historical context and investment implications derived from the five-year plans.

Core Viewpoint - Despite significant business development (BD) agreements exceeding $10 billion, the stock prices of innovative pharmaceutical companies remain sluggish, indicating a disconnect between positive news and market performance [2][3]. Market Performance - The Hong Kong Stock Connect innovative drug index has declined from over 1240 points on October 9 to 1110 points, reflecting a drop of approximately 10.5% [3]. - Over the past month, the innovative drug sector has seen a 16% decline from a peak of 1326 points on September 8 [3][4]. - Notable declines in stock prices include over 21% for Innovent Biologics and over 19% for CanSino Biologics in the last 20 trading days [3]. Business Development Agreements - Recent BD agreements include a $11.4 billion collaboration between Innovent Biologics and Takeda Pharmaceuticals, which failed to boost market confidence, with Innovent's stock dropping by 1.96% on the announcement day [3][4]. - The trend of BD agreements previously led to significant stock price increases, with 17 innovative drug companies reaching new highs between July and September [4]. Financial Performance - Most innovative drug companies have reported revenue growth, but profitability remains a concern, with only four out of eleven companies showing positive net profits [6][10]. - For instance, CanSino Biologics reported a staggering 812.1% increase in revenue, while others like BeiGene and Innovent also showed substantial growth [7][8]. Industry Dynamics - The innovative drug sector is characterized by high failure rates, with nearly half of the companies that went public on NASDAQ between 2004 and 2018 no longer in operation [10]. - The long-term nature and uncertainty of BD projects contribute to market hesitance, as evidenced by a 40% termination rate of license-out agreements [10]. Future Outlook - Analysts suggest that the recent stock price adjustments may be a correction from overly optimistic BD expectations, with a potential for recovery as new catalysts emerge [12][13]. - The competitive advantage of domestic assets being "value for money" is highlighted, with ongoing BD transactions expected to continue despite market fluctuations [13].