Soochow Securities·2025-06-23 01:04Investment Rating - The report maintains an "Overweight" rating for the pharmaceutical and biotechnology industry [1] Core Insights - The report highlights that the turning point for research services has arrived, with a focus on companies such as Haoyuan Pharmaceutical, Bidai Pharmaceutical, and Baiaosaitu [1] - The A-share pharmaceutical index has seen a decline of 6.3% this week and an increase of 4.6% year-to-date, underperforming the CSI 300 by 3.9% and outperforming it by 2.3% respectively [4][9] - The report emphasizes the positive impact of recent policies accelerating the development of innovative drugs, which benefits upstream companies involved in research and production [4][18] Summary by Sections Industry Trends - The A-share pharmaceutical index has decreased by 6.3% this week and increased by 4.6% year-to-date, while the H-share biotechnology index has dropped by 8.2% this week but increased by 48% year-to-date [4][9] - The report notes that the pharmaceutical sector has experienced significant declines, particularly in innovative drugs, with H-shares showing more pronounced drops due to previous high gains [4][9] Research and Development Progress - Recent policies have accelerated the approval processes for innovative drugs, with the FDA reducing NDA approval times from 10-12 months to 1-2 months, and China's CDE shortening IND review times from 60 days to 30 days [18][19] - The report indicates that the demand from the industrial sector is recovering, which will benefit early-stage research suppliers [20] Market Insights - The report suggests focusing on companies that are expected to benefit from the early-stage research demand, mergers and acquisitions, and the commercialization of innovative drugs [19] - Specific companies to watch include Haoyuan Pharmaceutical, Bidai Pharmaceutical, Baiaosaitu, and others in the life sciences service sector [4][19] Investment Strategy - The report recommends a ranking of sub-sectors for investment: innovative drugs > CXO > traditional Chinese medicine > medical devices > pharmacies > pharmaceutical commerce [11] - It highlights specific companies for investment based on growth potential, low valuations, and high dividend yields, particularly in the traditional Chinese medicine sector [11][13]