2025-06-09 08:05Investment Rating - The report maintains an "Overweight" rating for the pharmaceutical industry, specifically recommending innovative drugs and increasing focus on Pharma [1][3]. Core Insights - The report expresses a positive outlook on innovative drugs, highlighting the potential for revaluation in Pharma transitioning from generics to innovative products. Key companies mentioned include Jiangsu Heng Rui Medicine, Hansoh Pharmaceutical Group, Sichuan Kelun Pharmaceutical, Huadong Medicine, and CSPC Pharmaceutical Group [6][27]. - The report emphasizes the promising performance of Biopharma/Biotech companies with innovative pipelines, such as Innovent Biologics, CSPC Innovation Pharmaceutical, Shanghai Allist Pharmaceuticals, and Betta Pharmaceuticals. It also notes the improving profit growth of CXO companies like Wuxi Biologics Cayman, WuXi AppTec, and WuXi XDC Cayman [6][27]. - Recent business development (BD) activities are frequent, indicating strong multinational demand for Chinese innovative drug assets, which outweighs geopolitical risks. This trend supports the stable logic of innovative drug globalization [28]. Summary by Sections Innovative Drugs and Pharma - The report continues to favor innovative drugs and suggests attention to Pharma companies that are transitioning from generics to innovative products. The report lists several companies expected to perform well in this sector [6][27]. A-Shares Performance - In the first week of June 2025, the A-Shares pharmaceutical sector performed in line with the overall market, with the Shanghai Composite Index rising by 1.1% and the SW Pharmaceutical and Biological Technology index also rising by 1.1%. The report ranks the pharmaceutical sector 16th among Shenwan primary industries [29][9]. Hong Kong and U.S. Market Performance - The Hong Kong pharmaceutical sector outperformed the market, with the Hang Seng Healthcare index rising by 4.1% and the Biological Technology index by 5.3%. In contrast, the U.S. pharmaceutical sector performed similarly to the market, with the S&P 500 healthcare sector rising by 1.3% [30][29]. Premium Levels - As of June 6, 2025, the pharmaceutical sector's premium relative to all A-Shares is at a normal level, with a current relative premium rate of 86.84% [20][29].