Investment Rating - The investment rating for the pharmaceutical industry is "Positive" (maintained) [4] Core Views - The report emphasizes the potential opportunities in the autoimmune dual-antibody sector amidst the ongoing trend of international expansion. It highlights the increasing interest from multinational corporations (MNCs) in Chinese innovative drugs, particularly in the context of patent cliffs faced by leading MNCs [3][8] - The report suggests that the pharmaceutical sector is poised for growth in 2025, driven by several factors including the successful transition from traditional to innovative growth drivers, the increasing capabilities of Chinese companies in international markets, and the rising demand due to an aging population [4][47] Summary by Sections Market Performance - From August 4 to August 8, the pharmaceutical index declined by 0.84%, underperforming the CSI 300 index by 2.07%. Notable gainers included Nanmo Biology (+42.48%), Haichen Pharmaceutical (+41.29%), and Sino Medical (+39.52%). Conversely, Nanxin Pharmaceutical (-18.5%) and Qizheng Tibetan Medicine (-16.11%) were among the largest decliners [5][24] BD Opportunities - The report notes a surge in BD (business development) transactions, particularly in the autoimmune sector, with a total of over 100 license-out transactions in China from January 1 to August 7, 2025, amounting to $840.5 billion. The focus of these transactions has been primarily on oncology and metabolic fields, with a notable lack of activity in the autoimmune sector [9][8] Investment Recommendations - The report recommends focusing on innovative drugs and medical devices, particularly those with low valuations and potential for marginal improvement. Key companies to watch include Heng Rui Pharmaceutical, Keren Pharmaceutical, and Innovent Biologics [4][49] - It also highlights the importance of the aging population and the increasing demand for chronic disease treatments, suggesting that companies like Kunming Pharmaceutical and Yuyue Medical could benefit from this trend [48][47] Valuation Insights - As of August 8, 2025, the overall PE valuation for the pharmaceutical sector stands at 38.77X, indicating that the sector is still at a relatively low historical valuation compared to other sectors [36][47] Future Outlook - The report anticipates a rebound in the pharmaceutical sector in 2025, driven by innovative drugs and the ongoing internationalization of Chinese pharmaceutical companies. It emphasizes the need to focus on sectors with structural growth potential, such as innovative drugs, medical devices, and the aging population market [47][48]