Investment Rating - The report maintains a neutral rating for the pharmaceutical industry, with specific sub-industry ratings indicating a neutral stance for biopharmaceuticals and other pharmaceutical sectors [4]. Core Insights - The industry is showing signs of stabilization and is expected to continue its recovery, with the CXO sector experiencing a revenue decline in 2024 but a rebound in Q1 2025 [5][14]. - The report highlights a decrease in per capita productivity and fixed asset turnover in 2024, indicating operational challenges [6][31]. - Demand is stabilizing with a slight recovery in orders, while capacity construction is slowing down [7][41]. - The onset of a rate-cutting cycle by the Federal Reserve is expected to improve liquidity and boost investment in the sector [7][49]. Summary by Sections 1. 2024 & 2025 Q1 Review - The CXO sector's revenue for 2024 was 897.20 billion, a 3.86% decline year-on-year, with a net profit of 137.56 billion, down 23.05% [14]. - In Q1 2025, the sector's revenue reached 223.46 billion, a 12.48% increase year-on-year, with a net profit of 50.69 billion, up 74.67% [14]. 2. Operational Efficiency - In 2024, per capita revenue was 746,000, down 3.97%, and per capita profit was 114,400, down 23.14% [6][31]. - Fixed asset turnover decreased to 1.91 times, a 13.24% decline year-on-year, reflecting reduced operational efficiency [6][36]. 3. Demand and Orders - Contract liabilities and advance payments for 2024 and Q1 2025 were 68.91 billion and 72.62 billion, respectively, showing a year-on-year increase of 3.10% and 9.54% [6][37]. 4. Capacity and Workforce - The construction of new capacity is slowing, with ongoing projects valued at 144.20 billion in 2024, a 6.01% decrease year-on-year [41]. - The total number of employees in the sector was 120,261 in 2024, a slight increase of 0.12% [41][47]. 5. Investment Outlook - The report suggests a medium to long-term positive outlook for the CXO sector, driven by improving domestic and international demand [7][65]. - Key areas of focus include the impact of Federal Reserve policies, changes in investment trends, and the recovery of overseas demand [7][65]. 6. Company Recommendations - Companies to watch include: - 泓博医药: Specializes in small molecule drug design, with a strong focus on AI-assisted drug development [68]. - 皓元医药: Offers integrated services in drug development and production, with increasing overseas revenue [72]. - 阳光诺和: Focuses on generic CRO services while expanding into innovative drug development [76]. - 诺思格: Provides comprehensive clinical CRO services, benefiting from the expanding clinical trial market [81].