ZHONGTAI SECURITIES·2025-06-04 12:53Investment Rating - The report maintains an "Overweight" rating for the pharmaceutical and biotechnology sector [3] Core Insights - The report emphasizes the arrival of a new era for innovative drugs, highlighting the strong performance of the sector in May 2025, with a 6.4% increase in the pharmaceutical and biotechnology sector, outperforming the CSI 300 index by 4.6% [10][22] - It suggests a focus on companies transitioning from biotech to biopharma and those in traditional pharma that are innovating [9] - The report identifies significant investment opportunities in AI-driven healthcare and medical services, indicating that the industry is just beginning to harness the potential of artificial intelligence [9] - The report anticipates a recovery in performance and valuation for CRO&CDMO, upstream research, and specialty raw materials, with Q2 performance expected to improve [9][11] Summary by Sections June Industry Investment Outlook - The report encourages embracing the innovative drug era and actively positioning for Q2 performance [9] - It highlights key recommended stocks for June, including WuXi AppTec, Sangamo Therapeutics, Changchun High-tech, Betta Pharmaceuticals, Nanwei Medical, Kunming Pharmaceutical, Nuotai Biological, Dian Diagnostics, Tianyu Co., and Boan Biotechnology [12] Market Dynamics - In May 2025, the pharmaceutical sector saw all sub-sectors increase, with chemical pharmaceuticals rising by 9.77%, biological products by 7.29%, and medical services by 6.00% [10][22] - The report notes that the pharmaceutical sector's valuation is currently at 23.4 times PE, with a premium of 29.3% over the broader A-share market [27] Key Company Performances - The report highlights the record-breaking BD transaction of 1.25 billion USD by Sangamo Therapeutics, which has catalyzed investment enthusiasm in innovative drugs [10] - It mentions that 71 original research results from Chinese pharmaceutical companies were presented at ASCO, showcasing their growing international competitiveness [10] Investment Recommendations - The report recommends focusing on companies with strong growth potential, such as WuXi AppTec, Sangamo Therapeutics, and Changchun High-tech, among others [12][14] - It also suggests monitoring companies in the AI healthcare sector and those poised for recovery in the traditional pharmaceutical space [9][11]