Industry Overview - The Chinese clinical CRO industry is entering a recovery and stable growth phase, transitioning from an offshore outsourcing model to a global contributor of innovative assets over the past decade [2][13] - The industry experienced a growth phase from 2017-2019 and a rapid development period from 2020-2022, with a forecasted compound annual growth rate (CAGR) of over 12% from 2025 to 2028, expecting to exceed 75 billion RMB by 2028 [2][13] - As of December 2025, the average number of clinical trial projects undertaken by each clinical CRO in China increased by 20.6% year-on-year, reaching 42.9 projects, narrowing the gap with the U.S. [5][16] Investment Trends - The investment from multinational pharmaceutical companies in China's clinical trials remains stable, with 25%-30% of Phase III innovative drug trials initiated by these companies over the past eight years [6][17] - Local pharmaceutical companies are also actively investing in innovative drug clinical research, contributing 15%-20% of Phase III trials in China during the same period [6][17] - The financing channels for Chinese innovative drugs have diversified, with a significant increase in licensing and mergers and acquisitions (M&A) transactions, totaling 178 deals in 2024-2025 [9][20] Company Highlights - Tigermed has ranked first in market share in China's clinical CRO sector for several years, with a compound annual growth rate of 14.8% in new orders from 2019 to 2024, surpassing the market's growth rate of 12.5% [11][23] - The average price of domestic clinical trial services is stabilizing after fluctuations in 2022-2023, indicating strong business continuity and resilience [11][23] - In 2025, Tigermed aims for sustainable development, achieving an AAA rating in MSCI ESG, and enhancing its service capabilities through the acquisition of CRO company Micron [11][23] - The company is investing in AI applications and platforms, launching an AI medical translation platform and an AI medical writing platform in 2025 [11][23]

Investment Rating - The report maintains an "Outperform" rating for several companies, including Jiangsu Heng Rui Medicine, Hansoh Pharmaceutical Group, 3SBio, Sichuan Kelun Pharmaceutical, and Jiangsu Nhwa Pharmaceutical [6][7]. Core Insights - The annual J.P. Morgan Healthcare Conference concluded successfully, with positive information from global pharmaceutical companies, including new pipeline disclosures and major deals. The report highlights the high prosperity in the innovative drug sector and recommends continuous investment in innovative drugs and the industry chain [25][26]. - The A-Shares pharmaceutical sector underperformed the market in the third week of January 2026, with the Shanghai Composite Index falling by 0.4% and the SW Pharmaceutical and Biological sector declining by 0.7% [8][27]. - The Hong Kong stock pharmaceutical sector performed in line with the market, while the U.S. pharmaceutical sector underperformed. The Hang Seng Healthcare index increased by 2.4%, and the S&P 500 Healthcare Select Sector decreased by 1.1% [28]. Summary by Sections Section 1: Continuous Recommendation of Innovative Drugs and Industry Chain - The report emphasizes the high prosperity of innovative drugs and maintains overweight ratings for key pharmaceutical companies. It also recommends Biopharma/Biotech companies with promising pipelines and volume increases, as well as CXO and upstream companies benefiting from innovation [6][25]. Section 2: A-Shares Pharmaceutical Sector Performance - In the third week of January 2026, the A-Shares pharmaceutical sector's performance was ranked 17th among Shenwan primary industries, with a decline of 0.7%. The medical service sub-sector showed a positive performance of +3.3% [8][12][27]. Section 3: Hong Kong and U.S. Pharmaceutical Sector Performance - The Hong Kong pharmaceutical sector performed similarly to the market, while the U.S. sector underperformed. Notable gainers in the U.S. included MODERNA (+22%) and QUEST DIAGNOSTICS (+9%), while major decliners included BIOGEN (-12%) and BOSTON SCIENTIFIC (-10%) [28].

Investment Rating - The report maintains an "Overweight" rating for the pharmaceutical and biotechnology industry [2]. Core Insights - The report highlights the ongoing performance of the pharmaceutical sector, with a focus on the upcoming annual earnings forecasts and the potential for exceeding expectations. The sector has shown a return of 7.08% since the beginning of 2026, outperforming the CSI 300 index by 4.88% [8][12]. - Key catalysts in the industry include significant partnerships and acquisitions, such as AbbVie’s $6.5 billion upfront payment for RC148 and a $1 billion collaboration between Eli Lilly and NVIDIA to accelerate AI drug development [4][10]. - The report emphasizes the importance of innovative drug chains and the AI+ theme, suggesting that these areas will continue to attract investment and yield positive results [4][5]. Summary by Sections Industry Overview - The pharmaceutical sector's total market capitalization is approximately 74,744.70 billion yuan, with a circulating market value of 68,522.64 billion yuan [2]. - The report notes that the pharmaceutical sector is currently valued at 23.4 times PE based on 2026 earnings forecasts, which is a premium of 13.7% compared to the overall A-share market [15]. Market Dynamics - The report indicates that the pharmaceutical sector has experienced a mixed performance, with medical services up by 3.29% while other segments like medical devices and traditional Chinese medicine have seen declines [8][12]. - The report also mentions that the market is transitioning to a more rational and steady growth phase, moving away from the initial volatility seen at the start of the year [4]. Key Company Performances - Notable companies such as WuXi Biologics, Sangamo Therapeutics, and Tigermed have been highlighted for their strong performance, with WuXi Biologics showing a significant increase of 26.53% in January [24]. - The report suggests continued monitoring of companies involved in AI and small nucleic acid technologies, as they are expected to lead future growth in the sector [5][9]. Investment Recommendations - The report recommends focusing on companies that are well-positioned within the innovative drug chain and AI+ sectors, as these are anticipated to provide substantial returns [4][5]. - Specific stocks recommended include WuXi Biologics, Sangamo Therapeutics, and Tigermed, which have shown promising growth trajectories [24].

Investment Rating - The report maintains an "Overweight" rating for the pharmaceutical sector [6][26]. Core Insights - The report emphasizes the continuous recommendation of innovative pharmaceuticals and medical devices, highlighting the high growth potential in the sector. It maintains "Overweight" ratings for companies such as Heng Rui Medicine, Hansoh Pharmaceutical, Sanofi, Kelun Pharmaceutical, and Enhua Pharmaceutical. It also recommends Biopharma/Biotech companies like Kelun Biotech, BeiGene, and others, as well as CXO and upstream pharmaceutical companies [6][3]. Summary by Sections 1. Continuous Recommendation of Innovative Pharmaceuticals and Medical Devices - The report highlights the high growth potential of innovative drugs and recommends several companies for investment, including Heng Rui Medicine, Hansoh Pharmaceutical, Sanofi, Kelun Pharmaceutical, and Enhua Pharmaceutical. It also suggests Biopharma/Biotech companies like Kelun Biotech, BeiGene, and others, as well as CXO and upstream pharmaceutical companies [6][7]. 2. A-share Pharmaceutical Sector Performance - In the third week of January 2026, the A-share pharmaceutical sector underperformed the broader market, with the Shanghai Composite Index declining by 0.4% and the SW Pharmaceutical and Biotech index falling by 0.7% [8][11]. 3. Hong Kong and US Market Performance - The Hong Kong pharmaceutical sector performed in line with the market, while the US pharmaceutical sector underperformed. In the same week, the Hang Seng Healthcare index rose by 2.4%, and the S&P 500 healthcare sector fell by 1.1% [19][20].

Core Viewpoint - On January 15, Tiger Med experienced a slight decline of 0.38% with a trading volume of 700 million yuan, indicating a low level of financing and margin trading activity [1][2]. Financing Summary - On January 15, Tiger Med had a financing buy amount of 39.99 million yuan and a financing repayment of 40.44 million yuan, resulting in a net financing outflow of 446,300 yuan. The total financing and margin trading balance reached 675 million yuan [1]. - The current financing balance is 673 million yuan, which accounts for 1.45% of the circulating market value, indicating a low level compared to the past year [1]. Margin Trading Summary - On January 15, Tiger Med repaid 100 shares in margin trading and sold 1,300 shares, with a selling amount of 81,600 yuan based on the closing price. The margin trading balance is 1.59 million yuan, which is also low compared to the past year [1]. Company Overview - Tiger Med, established on December 15, 2004, and listed on August 17, 2012, is located in Hangzhou, Zhejiang Province. The company specializes in providing professional clinical research services for domestic and international pharmaceutical and health-related products [2]. - The main business revenue composition includes clinical trial-related services and laboratory services (52.60%), clinical trial technical services (45.21%), and other services (2.19%) [2]. Financial Performance - For the period from January to September 2025, Tiger Med reported a revenue of 5.026 billion yuan, a year-on-year decrease of 0.82%. However, the net profit attributable to the parent company was 1.020 billion yuan, reflecting a year-on-year increase of 25.45% [2]. Dividend Information - Since its A-share listing, Tiger Med has distributed a total of 2.458 billion yuan in dividends, with 1.154 billion yuan distributed over the past three years [3]. Shareholder Information - As of September 30, 2025, Tiger Med had 48,400 shareholders, a decrease of 6.01% from the previous period. The average circulating shares per person remained at 0 shares [2][3]. - The second-largest circulating shareholder is Hong Kong Central Clearing Limited, holding 48.3625 million shares, an increase of 25.0969 million shares from the previous period [3].

Investment Rating - The report maintains a positive outlook on the CXO sector, highlighting growth potential driven by new molecular developments and recovery in domestic market conditions [2]. Core Insights - The CXO sector is experiencing a recovery in demand due to increased research activities and funding from downstream pharmaceutical companies [3][15]. - The macroeconomic environment is improving, with a favorable investment climate for the pharmaceutical and biotechnology sectors as a result of the Federal Reserve's interest rate cuts [6][29]. - Domestic healthcare investment is showing significant growth, with a total investment amount of 93.54 billion yuan in 2025, reflecting an 83.7% year-on-year increase [22][24]. - The number of new drug IND applications in China is steadily increasing, indicating a robust pipeline for future drug development [34][37]. Summary by Sections Macroeconomic Dimension - The Federal Reserve's interest rate cuts are expected to enhance the investment environment for the pharmaceutical sector, benefiting outsourcing demand from pharmaceutical companies [6][29]. - Geopolitical uncertainties are gradually being alleviated, which is expected to positively impact leading CXO companies [3][12]. Industry Dimension - The demand for CXO services is closely linked to the research activities and funding of pharmaceutical companies, with a notable increase in domestic and global investment in healthcare [15][19]. - In 2025, the total investment in China's healthcare sector reached 93.54 billion yuan, with a significant increase in the number of investment events [22][24]. - The number of new drug IND applications in China reached 1,840 in 2025, marking a 15.0% year-on-year increase [34][37]. Company Performance - The CXO sector's revenue for the first three quarters of 2025 was 69.57 billion yuan, representing a 13.0% increase year-on-year, with a net profit of 16.54 billion yuan, up 60.0% [51][57]. - Major contributors to revenue include WuXi AppTec (47%), Kanglong Chemical (15%), and Tigermed (7%) [53][57]. - The overall gross margin for the sector improved to 40.3%, reflecting operational efficiencies and scale effects [51][58].

Core Insights - The 44th J.P. Morgan Healthcare Conference has highlighted significant industry developments, including a $1 billion investment by NVIDIA and Eli Lilly to establish a joint research lab in the San Francisco Bay Area to accelerate AI applications in the pharmaceutical sector [1] - The conference serves as a critical platform for domestic pharmaceutical companies to showcase core molecular product capabilities and advance overseas business development collaborations, indicating a return to global value validation for products [2] - The participation of over 8,000 global attendees and more than 500 listed companies underscores the strengthening global competitiveness of Chinese companies in the pharmaceutical sector [2] Group 1: Innovative Drugs - BeiGene focuses on oncology drug development and global commercialization, presenting progress on core products like CDK4 at the conference [2] - Rongchang Biologics has entered an exclusive licensing agreement with AbbVie for the novel PD-1/VEGF bispecific antibody drug RC148, granting AbbVie rights outside Greater China for development, production, and commercialization [2] - Hengrui Medicine, involved in the R&D, production, and sales of innovative and generic drugs, reported that over 50% of its revenue now comes from innovative drugs, with multiple self-developed products receiving approvals [2] Group 2: CRO/CMO - WuXi AppTec provides integrated CXO services covering the entire drug development and manufacturing process, projecting a 32.56% year-on-year growth in net profit for 2025 [3] - WuXi Biologics, specializing in biopharmaceutical CRDMO services, announced 209 new projects, bringing the total to 945, with potential milestone payments exceeding $4 billion from new research contracts [3] - Tigermed offers clinical trial CRO services and participated in the Asia-Pacific session of the conference, providing outsourcing services related to clinical trials for global pharmaceutical companies [3] Group 3: AI in Healthcare - NVIDIA and Eli Lilly's collaboration aims to build AI models to enhance new drug development, with a planned investment of $1 billion over the next five years [4] - RunDa Medical focuses on comprehensive medical testing services and is developing an automated testing interpretation system based on large models [4] - Anbiping has launched a digital pathology AI system and is exploring the registration and commercialization of AI medical devices in cervical cytology [4]

Group 1 - Citi has initiated a 90-day upward catalyst observation for Tigermed (03347.HK) with a target price of HKD 73 and a "Buy" rating [1] - Tigermed will participate in a healthcare conference in the U.S. and is expected to share optimistic industry trends and 2026 outlook due to strong performance in China's innovative drug research and a recovering funding environment [1] - The company is set to release its 2025 performance in March and provide guidance for 2026, with an anticipated 44% growth in operating profit by 2026 [1] Group 2 - As of January 14, 2026, Tigermed's stock closed at HKD 53.0, down 0.93%, with a trading volume of 3.6978 million shares and a turnover of HKD 199 million [1] - Tigermed's market capitalization is HKD 6.587 billion, ranking 12th in the healthcare services sector [1] - Key performance indicators for Tigermed compared to industry averages are as follows: ROE at 1.45% (industry average 1.62%), market capitalization at HKD 6.587 billion (industry average HKD 8.771 billion), revenue at HKD 6.495 billion (industry average HKD 3.901 billion), net profit margin at 11.16% (industry average -963.25%), gross margin at 30.09% (industry average 41.13%), and debt ratio at 15.93% (industry average 74.33%) [1]

Group 1 - The core viewpoint of the report is that Citigroup has initiated a 90-day upward catalyst observation for Tigermed (300347)(03347), setting a target price of HKD 73 and a "Buy" rating [1] - Tigermed is set to participate in a healthcare conference in the United States where it will deliver a presentation, which is expected to highlight optimistic industry trends and prospects up to 2026 due to strong performance in China's innovative drug research and a recovering funding environment [1] - The company is scheduled to release its 2025 performance results in March and provide guidance for 2026, with expectations of a cautious tone from management, but potential for upward revisions in the 2026 guidance, projecting a 44% increase in operating profit for that year [1]

Group 1 - Citi has initiated a 90-day upward catalyst observation for Tiger Medical (03347) with a target price of HKD 73 and a "Buy" rating [1] - Tiger Medical will participate in a healthcare conference in the US and deliver a presentation [1] - Due to the strong performance of China's innovative drug research and a recovering funding environment, it is expected that management will share optimistic industry trends and outlook for 2026 [1] Group 2 - The company is set to release its 2025 performance results in March and provide guidance for 2026 [1] - Management's tone is perceived as cautious, but there is potential for upward guidance for 2026, with an expected operating profit growth of 44% [1]