Core Viewpoint - The article discusses the initiation of a Phase III clinical trial for HDM1002 tablets, aimed at evaluating its efficacy and safety compared to Dapagliflozin in adult patients with type 2 diabetes who have inadequate blood sugar control after Metformin treatment [2][3]. Group 1: Clinical Trial Details - The clinical trial is registered under CTR20252647 and involves a multicenter, randomized, double-blind, positive drug parallel-controlled study [3]. - The primary objective of the trial is to verify that HDM1002 is not inferior to Dapagliflozin in terms of blood sugar control [2][3]. - HDM1002 is developed by Huadong Medicine and is a potent, selective GLP-1 receptor agonist with global intellectual property rights [3]. Group 2: Mechanism and Previous Research - Preclinical studies indicate that HDM1002 effectively activates GLP-1R, promotes cAMP production, significantly improves glucose tolerance, lowers blood sugar, and aids in weight loss while demonstrating good safety [3]. - In March of this year, another Phase III clinical trial (registration number CTR20251246) was initiated to assess HDM1002's potential in weight management among overweight or obese populations [3]. Group 3: Future Expectations - The weight management study is based on controlled dietary caloric intake and increased physical activity, with the first subject already enrolled and the primary endpoint expected to be completed by June 30 of the following year [3].

Core Viewpoint - Huadong Medicine Co., Ltd. reported a solid performance in Q1 2025, with operating revenue and net profit showing year-on-year growth, while facing challenges in cash flow from operating activities and certain segments like aesthetic medicine [4][10][12]. Financial Performance - The company achieved operating revenue of 10.736 billion yuan, a 3.12% increase year-on-year [4][10]. - Net profit attributable to shareholders reached 914.7 million yuan, marking a 6.06% year-on-year increase [4][10]. - After deducting non-recurring gains/losses, net profit was 897.3 million yuan, reflecting a 7.04% year-on-year increase [4][10]. - Net cash flows from operating activities were -832.7 million yuan, a decline of 71.87% compared to the previous year [4][10]. Segment Performance - The pharmaceutical business segment generated 6.934 billion yuan in revenue, up 3.23% year-on-year, with a net profit of 115 million yuan, up 7.33% year-on-year [12]. - The aesthetic medicine segment faced challenges, with revenue of approximately 238 million yuan, down 12.29% year-on-year, but up 24.37% quarter-on-quarter [13]. - The industrial microbiology segment saw significant growth, with revenue increasing by 29.98% year-on-year [15]. R&D and Product Development - The company invested 880 million yuan in pharmaceutical R&D, a 49.60% increase year-on-year, with direct R&D expenditure reaching 600 million yuan [15]. - Key products like CAR-T Zevorcabtagene Autoleucel Injection and Sailexin® are driving sales growth, with the former covered by over 70 insurance plans [10][11]. - The company is advancing multiple clinical trials for innovative medicines, including HDM1002 and HDM1005, targeting various indications [20][21][24]. Shareholder Information - The total number of common shareholders at the end of the reporting period was 75,847, with China Grand Enterprises holding 41.67% of shares [7][8]. - The company has no preferred shareholders with restored voting rights [7]. Strategic Initiatives - The company is focused on enhancing treatment accessibility and expanding market presence, particularly for its innovative medicines [10][11]. - Following the acquisition of Guizhou Hengba Pharmaceutical, the company established a dedicated team to boost market penetration of its products [11]. Market Outlook - The company anticipates sustained growth in its innovative medicine segment, supported by expanding insurance coverage and positive clinical feedback [10][11]. - The aesthetic medicine segment is expected to recover as new products are launched and market strategies are refined [13][14].

| Corporate Governance | 26 | | --- | --- | | Robust Operation | 30 | | Business Ethics | 31 | Huadong Medicine Co., Ltd. Environmental, Social and Governance (ESG) Report 2024 Contents Governance Forging Ahead with Our 106 Looking Ahead Original Aspiration Environmental Green Development and 01 02 03 04 05 Ecological Harmony | Environmental Management | 36 | | --- | --- | | Actions against Climate Change | 41 | | Emissions Management | 49 | | Green Operations | 53 | Product Excellence in Innovation, Qualit ...

Investment Rating - The report rates the China Healthcare industry as Attractive [4][47]. Core Insights - The NHSA and NHC have released measures to support the high-quality development of innovative drugs, including establishing a new drug list for commercial insurance and encouraging investment funds for innovative drug development [2]. - Sino Biopharma has received approval for anlotinib in combination with chemotherapy for the first-line treatment of advanced or metastatic soft tissue sarcoma, marking a significant milestone as the first combination therapy approved globally for this indication [2]. - Hengrui has gained approval for an additional indication for its JAK1 inhibitor, ivarmacitinib, now also indicated for severe alopecia areata [2]. Summary by Sections Regulatory Developments - New measures from NHSA and NHC include a drug list for commercial insurance that will not count towards DRG/DIP budgets and a commitment to ensure hospital access for newly listed drugs within three months [2]. Company Updates - Sino Biopharma has achieved multiple approvals, including for anlotinib and recombinant human coagulation factor VIIa N01, enhancing its product portfolio [2]. - Hengrui's ivarmacitinib has expanded its indications, showcasing the company's innovative capabilities in the biopharmaceutical sector [2]. Market Trends - The report highlights ongoing R&D progress among covered companies, indicating a robust pipeline and potential for future growth in the healthcare sector [10].

Investment Rating - The investment rating for the pharmaceutical and biotechnology industry is "Positive" and the rating has been maintained [2] Core Insights - The pharmaceutical and biotechnology industry index increased by 5.30%, outperforming the CSI 300 index which rose by 3.52% during the reporting period [3][14] - The PE ratio (TTM, excluding negative values) for the pharmaceutical and biotechnology industry as of July 4, 2025, is 28.52x, up from 27.28x in the previous period, indicating an upward trend in valuation [3][19] - Notable sub-industries include "Other Biological Products" and "Medical R&D Outsourcing," which saw increases of 11.20% and 9.37% respectively, while "Medical Equipment" and "Blood Products" lagged with increases of only 0.98% [3][14] Industry Trends - The report highlights significant policy measures from the National Healthcare Security Administration and the National Health Commission aimed at supporting the high-quality development of innovative drugs [5][6] - The introduction of a commercial health insurance innovative drug directory is a key breakthrough, facilitating better pricing and reimbursement mechanisms for high-value drugs [6] - The report emphasizes the importance of the innovative drug industry chain, particularly focusing on platform pharmaceutical companies, clinical CROs, and high-barrier CDMOs [6] Important Industry News - The approval of several innovative drugs, including "ZEGFROVY" by Dize Pharmaceutical and "TQG203" by Zhengda Tianqing, marks significant advancements in the industry [41][42][46] - The report notes that the global number of hemophilia patients is expected to increase by 25% by 2025, highlighting the growing market for innovative treatments [42] - The approval of "Mastrudep" by Innovent Biologics for weight management in adults showcases the expanding therapeutic applications of GLP-1R/GCGR dual agonists [49][50] Investment Recommendations - Continuous attention is recommended for the innovative drug industry chain, particularly for companies that can navigate the new dual directory system and have international expansion capabilities [6] - The report suggests that the recent policy changes and the successful IPO of a biotech company signal a positive outlook for the innovative drug sector [6]

Core Insights - The light medical beauty market in China has surpassed half of the overall medical beauty market, becoming the mainstream beauty method by 2024, with significant contributions from non-invasive and minimally invasive procedures [1][2] Market Overview - Light medical beauty is defined as professional medical beauty projects that fall between surgical procedures and lifestyle beauty, utilizing non-invasive or minimally invasive methods for skin management, contour modification, and anti-aging effects [1] - The rapid growth of the light medical beauty market is attributed to its advantages such as minimal trauma, quick recovery, significant results, and relatively low risks, aligning with modern consumers' dual demands for beauty and quality of life [2] Consumer Trends - The penetration rate of the light medical beauty market is increasing, with 34% of consumers planning to engage in light medical beauty services in the coming year, marking a 36% increase from the previous year [4] - Among the interested consumer group, over one-third are new entrants, injecting fresh growth vitality into the Chinese medical beauty industry [4] Popular Products - Injectable and photothermal products are the main attractions for light medical beauty consumers, with ultrasound-based products (e.g., ultrasound scalpel) rapidly gaining popularity [5] Consumption Behavior - Consumers are increasingly rational in their light medical beauty choices, prioritizing needs-based combinations of projects and products, with over half selecting options based on specific needs [7] - The average planned consumption has increased to 2.4 projects per consumer, reflecting a 14% year-on-year growth [7] Consumer Demographics - The consumer base for light medical beauty exhibits high retention and strong growth, with seasoned consumers making up 35% of the existing market, indicating their essential role in the market [10] - Among the new consumer group, high-end novices represent 38%, characterized by high standards for beauty and a willingness to pay, with a focus on facial anti-aging solutions [10]

Core Insights - The oral hypoglycemic drug market is expanding rapidly due to the increasing prevalence of diabetes globally, with an estimated 589 million patients aged 20-79 by 2024, projected to reach 853 million by 2050 [4][6] - China has the highest number of diabetes patients at 148 million, accounting for 25% of the global total, with a significant rise in prevalence over the past 30 years [4][6] - The market for oral hypoglycemic drugs in China is expected to reach approximately 36.1 billion yuan by 2024, driven by both foreign and domestic companies [10][18] Industry Overview - Oral hypoglycemic drugs can be categorized into those that promote insulin secretion and those that lower blood sugar through other mechanisms [2][4] - The main classes of oral hypoglycemic drugs include sulfonylureas, meglitinides, DPP-4 inhibitors, GLP-1 receptor agonists, biguanides, TZDs, alpha-glucosidase inhibitors, and SGLT2 inhibitors [2][12] Market Dynamics - The oral hypoglycemic drug market in China is dominated by foreign companies such as AstraZeneca, MSD, and Bayer, which collectively hold over 50% market share [18] - The market is experiencing a shift with the rise of domestic companies, as they continue to innovate and develop new products [18][20] Recent Trends - The national centralized procurement policy has significantly impacted the pricing and availability of oral hypoglycemic drugs, with average price reductions reaching 88.5% in recent procurement rounds [15][16] - There is a growing trend towards the development of combination therapies and new mechanism drugs, such as glucose kinase activators and PPAR agonists, which are expected to become mainstream in diabetes treatment [20][22] Future Outlook - The DPP-4 inhibitors market is anticipated to expand further as domestic manufacturers increase their market penetration, potentially altering the current dominance of imported and generic drugs [20]

Investment Rating - The report maintains an "Outperform" rating for A-Shares including Jiangsu Heng Rui Medicine, Sichuan Kelun Pharmaceutical, Huadong Medicine, WuXi AppTec, Asymchem Laboratories, Hangzhou Tigermed Consulting, and APT Medical [6][32] - The report also maintains an "Outperform" rating for H-Shares including PATEO, Hansoh Pharmaceutical Group, Innovent Biologics, WuXi XDC Cayman, Luye Pharma Group, and BeiGene [6][32] Core Insights - The commercial insurance innovative drug list is expected to be released soon, which is anticipated to improve the domestic market significantly [33] - The National Healthcare Security Administration and National Health Commission have released measures to support the high-quality development of innovative drugs, focusing on high-innovation drugs with significant clinical value [33] - The pharmaceutical sector underperformed the market in June 2025, with the Shanghai Composite Index rising by 2.9% while the SW Pharma Bio index rose by only 0.7% [34] - The Hang Seng Healthcare sector outperformed the market with an increase of 8.4% in June 2025, while the U.S. S&P Healthcare Select Sector underperformed with a rise of only 1.9% [35] Summary by Sections - **Investment Highlights**: Continuous positive outlook for innovative drugs and industry chain, with specific A-Shares and H-Shares recommended for investment [32][6] - **Market Performance**: In June 2025, the pharmaceutical sector's performance was weak compared to the overall market, ranking 19th among Shenwan primary industries [34] - **Sub-sector Analysis**: The best-performing sub-sectors included medical services (+4.8%), chemical preparations (+0.8%), and chemical raw materials (+0.5%) [34][20] - **Stock Performance**: Top gainers in the pharmaceutical sector included Zhejiang Anglikang Pharmaceutical (+146.4%) and Hubei Huaqiang High-Tech Co., Ltd. (+67.4%), while top losers included Kexing Biopharm Co., Ltd. (-28.7%) [34][23]

Group 1 - The majority of consumers in the medical beauty market spend between 10,000 to 50,000 yuan annually, indicating a diverse range of services from basic skincare to moderately complex cosmetic procedures [1] - First-tier cities dominate the medical beauty consumption market, accounting for approximately 69% of total spending, driven by concentrated medical resources and advanced consumer capabilities [3] - The average age of consumers in the medical beauty sector is around 35 years, with over 72% of high-end consumers aged 30 and above, reflecting a mature and stable consumption mindset [5][7] Group 2 - There is a notable increase in male consumers seeking medical beauty services, with 43% planning to increase their spending in this area, highlighting a shift in self-image management among men [7][8] - The demand for outbound medical beauty services is rising, particularly in Japan and South Korea, with about 31% of middle to high-income consumers planning to seek these services abroad in 2024 [10]

Investment Rating - The investment rating for Huadong Medicine Co. is Neutral, with a 12-month price target of Rmb41, indicating a potential upside of 1.5% from the current price of Rmb40.39 [7][11]. Core Insights - The company has shown slight growth in its business performance, particularly in innovative drugs and aesthetics, with expectations for improvement in H2 2025 driven by new product launches [2][6]. - Huadong Medicine anticipates additional revenue of Rmb1 billion from innovative drugs and new biosimilars in 2025, with hospital sales of ELAHERE and Arcalyst expected to start in Q3 2025 [6][7]. - The aesthetics segment is expected to launch new products such as MaiLi HA filler injection and V30 in H2 2025, aiming to support growth despite a weak consumption environment [6][7]. Summary by Sections Recent Business Performance - The company expects higher revenue growth from its manufacturing business and stable growth from aesthetics in Q2 2025 compared to Q1 2025, with optimism for H2 due to new product launches [2][6]. Innovative Drugs - Huadong Medicine plans to initiate hospital sales of ELAHERE and Arcalyst in Q3 2025, projecting an additional Rmb1 billion in revenue from innovative drugs and new biosimilars in 2025 [6][7]. - The company is cautious about the development of its oral GLP-1 asset (HDM1002) due to concerns over liver toxicity, although no adverse events have been observed in over 800 enrolled patients [6]. Aesthetics - The company aims to launch several new aesthetic products in China in H2 2025, including MaiLi HA filler injection and Preime DermaFacial, to drive growth in a challenging consumption environment [6][7]. Industrial Microbiology - Huadong Medicine is developing APIs for pharmaceutical and biotech companies, expecting sales ramp-up following the launch of these assets [10]. Policy Impact - The company is actively engaging with national healthcare insurance to include its innovative drugs in the National Reimbursement Drug List (NRDL) and anticipates limited impact from potential volume-based procurement (VBP) on certain products due to patent protections [10].