Investment Rating - The report maintains an "Outperform" rating for the industry [7] Core Insights - The pharmaceutical sector experienced a significant rebound in 2025, driven by innovation, and is expected to reach new highs in 2026 [4][17] - The A-share market saw a 12.9% increase year-to-date, while the H-share market surged by 57% [18] - The report emphasizes the importance of tracking macroeconomic conditions and the potential for valuation recovery in the consumer healthcare sector [4][24] Market Review - The CITIC Pharmaceutical Index fell by 2.0% in the week of December 29, 2025, to January 2, 2026, underperforming the CSI 300 Index by 1.4 percentage points [3][32] - Year-to-date, the CITIC Pharmaceutical Index has risen by 12.9%, lagging behind the CSI 300 Index by 4.8 percentage points [32] - The top-performing stocks for the week included Duorui Pharmaceutical (+15.9%) and Mailland (+10.3%) [47] Sector Performance - The report highlights significant sector differentiation, with the medical services sector (including CXO and innovative supply chains) showing the highest growth, exceeding 50% [24] - The quarterly performance showed a strong start in Q1, followed by fluctuations in Q2 and Q4 due to various market catalysts [27] Investment Strategy - The report suggests focusing on innovative drugs, particularly those with revenue and performance exceeding expectations, as well as companies benefiting from technological advancements [5][4] - Specific stocks recommended for January include Kangfang Biotech, WuXi AppTec, and Aidi Pharmaceutical [5][4]

Economic Growth and Development - During the "14th Five-Year Plan" period, the GDP of Zhongshan is expected to exceed 420 billion yuan by 2025, having crossed the thresholds of 350 billion and 400 billion yuan [1] - The total number of business entities in Zhongshan has reached 740,000, marking a 60% increase over five years [1] - The scale of the top ten industrial clusters has surpassed 700 billion yuan, with industrial investment expected to double by 2024 compared to 2021 [1] Infrastructure and Transportation - The completion of the Shizhong Channel has led to an average daily traffic flow of 88,000 vehicles, facilitating integration into the Greater Bay Area [1] - Zhongshan plans to establish a 66 square kilometer economic cooperation zone, implementing 800 government services under the "Deep Zhongshan Office" initiative [1] Industry and Innovation - Zhongshan has been selected as a pilot city for the digital transformation of small and medium-sized enterprises, with 4,854 industrial enterprises achieving a digital transformation coverage rate of 93% [3] - The emerging industries, particularly in biomedicine and renewable energy, are experiencing significant growth, with the renewable energy sector achieving an annual output growth rate of 16% [3] - Research and development funding has exceeded 10 billion yuan for three consecutive years, with a growth rate of over 20% for two years [3] Environmental and Social Governance - Zhongshan has initiated a comprehensive water treatment campaign, investing 20 billion yuan to address water pollution, with over 7,000 kilometers of new sewage pipelines constructed [2] - The city has completed the renovation of over 60,000 rural houses, achieving 100% completion of beautiful and livable villages in rural areas [3] - Zhongshan has been recognized as a qualified city for modern social governance, with a stable and improving safety situation [3]

Investment Rating - The report maintains an "Overweight" rating for the innovative pharmaceutical and medical device industry chain [4][8]. Core Viewpoints - The report continues to recommend the innovative pharmaceutical and medical device industry chain, highlighting a selection of A-share and H-share stocks with an "Overweight" rating [2][8][11]. - The performance of the pharmaceutical sector in December 2025 was weaker than the broader market, with the SW Pharmaceutical Biotechnology index declining by 4.1% compared to a 2.1% increase in the Shanghai Composite Index [18][30]. - The report notes that the premium level of the pharmaceutical sector relative to the entire A-share market is currently at a normal level, with a relative premium rate of 63.2% as of December 31, 2025 [29][32]. Summary by Sections A-Share Recommendations - The report lists the following A-share stocks with an "Overweight" rating: - 恒瑞医药 (Hengrui Medicine) - 科伦药业 (Kelun Pharmaceutical) - 华东医药 (East China Pharmaceutical) - 恩华药业 (Enhua Pharmaceutical) - 特宝生物 (Tebao Biological) - 京新药业 (Jingxin Pharmaceutical) - 益方生物 (Yifang Biological) - 药明康德 (WuXi AppTec) - 泰格医药 (Tigermed) - 乐普医疗 (Lepu Medical) - 联影医疗 (United Imaging) - 微电生理 (Microelectrophysiology) [8][9]. H-Share Recommendations - The report maintains an "Overweight" rating for the following H-share stocks: - 翰森制药 (Hansoh Pharmaceutical) - 三生制药 (3SBio) - 科伦博泰生物 (Kelun-Botai Biological) - 康方生物 (CanSino Biologics) - 映恩生物 (InnoCare Pharma) - 百济神州 (BeiGene) [11][12]. Performance Analysis - The report indicates that the 国泰海通医药 monthly portfolio outperformed the pharmaceutical index in December 2025, with an average decline of 1.8% compared to a 3.9% decline in the overall pharmaceutical index [14][15]. - The report highlights the best-performing stocks in December 2025, with 泰格医药 (Tigermed) increasing by 11.2%, 特宝生物 (Tebao Biological) by 7.5%, and 惠泰医疗 (Huitai Medical) by 3.9% [15][18].

康 方 生 物 科 技（ 開 曼 ）有 限 公 司 （於 開 曼 群 島 註 冊 成 立 的 有 限 公 司） 香 港 交 易 及 結 算 所 有 限 公 司 及 香 港 聯 合 交 易 所 有 限 公 司 對 本 公 告 之 內 容 概 不 負 責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不就因本公告全部 或任何部分內容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 Akeso, Inc. 茲 提 述 本 公 司 日 期 為 2020 年 4 月 14 日 的 招 股 章 程 ， 內 容 有 關 中 山 康 方 與 正 大 天 晴簽訂合資協議成立合資企業，天晴康方。根據合資協議，（ 其中包括 ）單抗產 品的生產將由中山康方及正大天晴共同安排，並根據雙方生產設施各自的批准 時間表進行相應規劃。 於2021年12月21日，天晴康方與中山康方訂立委託生產協議，以載納委託生產 安排的條款及條件。根據委託生產協議，天晴康方同意(i)委託中山康方生產單 抗產品及(ii)就生產並交付的所有單抗產品支付相關生產成本。 （股 份 代 號：9926） 根據上市規則第14A .60條的持續關連交易 委託生產協議及 ...

Group 1 - The core achievement of Zhongshan during the "14th Five-Year Plan" period includes a continuous increase in GDP, surpassing 3500 billion and 4000 billion yuan, with an expected breakthrough of 4200 billion yuan by 2025 [2] - The total number of business entities in Zhongshan reached 740,000, marking a 60% growth over five years [2] - The number of provincial industrial parks increased from 3 to 11, and the total scale of the ten major industrial clusters exceeded 7000 billion yuan, with industrial investment expected to double by 2024 compared to 2021 [2] Group 2 - Zhongshan emphasizes innovation as the primary driving force for development, focusing on strengthening innovation supply, activating enterprise innovation, and improving financial support ecosystems [3] - The city invested nearly 5 billion yuan over five years to build high-level innovation platforms, collaborating with institutions like the Chinese Academy of Sciences and various universities [3] - R&D expenditure in Zhongshan has exceeded 10 billion yuan for three consecutive years, with a growth rate of over 20% for the last two years [3] - The biopharmaceutical industry in Zhongshan has established an ecosystem with a production value of 18 billion yuan, gathering over 650 related enterprises [3] - Special policies have been introduced to support innovative drug research and development, with funding support of up to 40% and a maximum of 65 million yuan per product [3] - R&D investment in the biopharmaceutical sector is expected to double from 2021 to 2024, with an average growth rate of over 30% in the last two years [3]

Core Viewpoint - The report highlights the significant achievements of Zhongshan during the "14th Five-Year Plan" period, showcasing its economic growth, urban-rural integration, and advancements in various sectors, positioning it as a model for high-quality development in Guangdong Province [2][5][11]. Economic Development - Zhongshan's GDP has consistently surpassed 350 billion and 400 billion yuan, with an expected breakthrough of 420 billion yuan by 2025 [5][6]. - The total number of business entities reached 740,000, marking a 60% increase over five years [6]. - The scale of the top ten industrial clusters exceeded 700 billion yuan, with industrial investment expected to double by 2024 compared to 2021 [7]. Urban-Rural Integration - The urban-rural income ratio has narrowed to 1.4:1, maintaining the best performance in the province for 11 consecutive years [36]. - Eight towns are being developed into modern cities that integrate industry and urban living [34]. - The city has achieved a 100% compliance rate with provincial standards for beautiful and livable villages [38]. Infrastructure and Transportation - The construction of the Shenzhen-Zhongshan Link has been completed, with daily traffic reaching 88,000 vehicles and over 200,000 passengers [16]. - A comprehensive transportation system is being established, with multiple rail and bus projects underway [18][19]. Technological Innovation - The digital transformation rate of large-scale enterprises reached 93%, a nearly 50% increase since the beginning of the "14th Five-Year Plan" [44][49]. - Zhongshan has invested nearly 5 billion yuan in high-level research institutions and has seen a significant increase in the number of provincial-level innovation platforms [53][54]. Environmental and Social Governance - Zhongshan has implemented a comprehensive water pollution control strategy, investing 20 billion yuan to improve water quality and eliminate black and odorous water bodies [100][110]. - The city has restored over 23,600 acres of farmland and optimized land use to enhance agricultural productivity [82][89]. Future Outlook - Zhongshan aims to leverage opportunities in the "15th Five-Year Plan" to further enhance its development as a beautiful and prosperous city in the Lingnan region [115].

Core Insights - Chinese innovative pharmaceuticals are transforming from global followers to pioneers in new treatment paradigms, with local biopharmaceutical companies leading this change [1] - The pipeline of innovative drugs and newly launched drugs from China now accounts for one-third of the global total, showcasing the rapid growth of the industry [1] Company Overview - Kangfang Biopharma was founded in 2012 by Xia Yu and colleagues, focusing on the underexplored dual-antibody (bi-specific antibody) field in tumor immunotherapy [6] - The company invested heavily in developing comprehensive drug development platforms, including ACE and TETRABODY technologies, to support its innovative approach [6][7] - In 2022, Kangfang's dual-antibody drug, Cardunili (PD-1/CTLA-4), became the first of its kind approved globally, marking a significant milestone for dual-antibody drugs in China [6][10] Strategic Development - Kangfang's early licensing of CTLA-4 monoclonal antibodies for $200 million to Merck and subsequent commercialization of PD-1 monoclonal antibodies were strategic moves to build resources and credibility [7] - The company has successfully transitioned from single-target antibodies to dual-antibody innovations, demonstrating a commitment to long-term strategic vision [10] Production and Infrastructure - The establishment of a modern biopharmaceutical production base in Guangzhou took only 18 months, showcasing the efficiency of local support [11] - The rapid construction of the production facility allowed Kangfang to meet market demand effectively, particularly after the launch of Cardunili [12] Clinical Development and Global Impact - Kangfang has achieved a high success rate in clinical trials, with all drugs in clinical phase II successfully approved, contributing to China's position as a leader in innovative drug development [16] - The company licensed exclusive development and commercialization rights for its drug Yiwosi to Summit for $5 billion, reflecting its enhanced negotiation position and the global potential of its products [16] - Kangfang is building its global operational capabilities, with a research center in Shanghai and over 10 products undergoing early clinical trials in various countries [18] Industry Recognition - The success of Yiwosi in clinical trials against the global leader, Pembrolizumab, has garnered significant international media attention, positioning Chinese biopharmaceuticals alongside advancements in artificial intelligence [17]

Group 1 - The Hong Kong innovation drug sector continues to experience a downturn, with leading companies like BeiGene and China Biologic falling over 1%, and Innovent Biologics and 3SBio dropping more than 3% [1][7] - The Hong Kong Innovation Drug ETF (520880) has seen a decline for four consecutive days, reaching a new low since July 10, with a premium rising inversely, indicating strong buying interest [8][1] - Recent analysis from Zhongyou Securities indicates that the innovation drug sector is in a continuous correction phase, primarily driven by a retreat from previously optimistic business development (BD) expectations [3][10] Group 2 - Looking ahead to 2026, the maturity of clinical data is expected to be a key factor driving the innovation drug market, with BD being a necessary outcome of enhanced competitiveness of domestic new drugs [3][10] - Dongwu Securities suggests that the current period may represent a favorable configuration window for the Hong Kong innovation drug sector, which has been in adjustment since September, lasting over three months [10] - The Hong Kong Innovation Drug ETF (520880) and its associated funds track the Hang Seng Hong Kong Innovation Drug Select Index, which has three unique advantages: it is purely focused on innovation drugs, has a high concentration of leading companies, and offers better risk control [10][11] Group 3 - The top ten holdings in the Hong Kong Innovation Drug ETF account for over 72% of the index, highlighting the dominance of leading companies in the sector [4][10] - The total market capitalization of the top ten companies in the ETF is approximately HKD 12.87 billion, with BeiGene having a weight of 11.51% and a market cap of HKD 3.07 billion [4][10] - For investors looking to reduce volatility while still focusing on innovation drugs, the only drug ETF in the market (562050) is recommended, which emphasizes both innovation drugs and traditional Chinese medicine [12][13]

Core Viewpoint - The year 2025 marks a structural bull market, with significant gains in major indices, including an 18.36% increase in the CSI 300 and a 51.47% rise in the ChiNext Index, both representing the largest annual gains since 2020. The total trading volume of A-shares exceeded 400 trillion yuan, setting a historical record [1]. Monthly Key Events - January-February: AI models driven by DeepSeek and humanoid robot performances during the Spring Festival gained attention [4]. - March: Recovery in consumer scenarios boosted retail and catering sectors [4]. - April: U.S. tariffs led to increased interest in gold, agriculture, and undervalued blue-chip stocks [4]. - May: The May Day consumption peak activated the consumption and logistics sectors [4]. - June: Military parades and geopolitical tensions strengthened the military industry, while green building policies positively impacted related sectors [4]. - July: The commercial launch of humanoid robots and surging demand for AI computing power boosted related stocks [4]. - August: Support policies for synthetic biology spurred interest in beauty and pharmaceutical sectors [4]. - September: Accelerated industrialization of solid-state batteries led to valuation recovery in the new energy sector [4]. - October-November: Recovery in storage chip prices initiated an industry cycle reversal, benefiting the semiconductor sector [4]. - December: The official launch of the Hainan Free Trade Port and the issuance of L3 autonomous driving permits led to increased activity in local stocks and related technologies [4]. Industry Performance - The mining, hardware, industrial trade, and comprehensive sectors saw annual gains exceeding 60% [5]. - The top three investment themes in 2025 were innovative drugs, AI, and robotics, with gold also performing exceptionally well due to a weaker dollar [6][9]. Investment Highlights - Innovative drugs experienced a valuation reshaping driven by policy support and industry upgrades, with the Hang Seng Biotechnology Index rising 70.02% [7]. - The AI sector exploded following the introduction of DeepSeek, with significant growth in demand for chips and computing power [8]. - The robotics sector gained momentum with increased policy support and the emergence of domestic giants [9]. Fund Performance - 华夏基金 (China Asset Management) achieved notable success in various fund categories, continuing its strong performance from 2023 [10]. - The 华夏北交所创新中小企业精选两年定开 fund recorded a return of 270.61% over three years, with a 75.28% return in 2025 [11]. - The 华夏数字产业混合 fund saw a 126.46% increase in 2025, benefiting from the structural bull market in the AI sector [9]. ETF Market Growth - The ETF market in China reached 6.03 trillion yuan by the end of 2025, a 60% increase from the beginning of the year, with 1,381 ETFs available [15]. - 华夏基金 played a significant role in the growth of the ETF market through innovative tools and reports aimed at enhancing investor experience [16][17]. Strategic Evolution - 华夏基金 has transitioned from "managing assets" to "defining assets," focusing on a multi-asset approach to meet diverse investor needs in the era of inclusive finance [18][19].

Core Insights - Chinese innovative pharmaceuticals are undergoing a significant transformation, with local companies like Kangfang Biotech leading the way in developing new therapies and capturing a substantial share of the global market [3][10] Strategy - Kangfang Biotech was founded in 2012, focusing on the underexplored area of dual-target antibodies in tumor immunotherapy, investing heavily in developing comprehensive drug development platforms [5][6] - The company achieved a major milestone in 2022 with the approval of its dual-target antibody, Cardunili, marking a significant advancement in China's biopharmaceutical landscape [5][10] Technological Challenges - Developing dual-target antibodies presents greater complexity compared to single-target therapies, requiring advanced molecular design and production capabilities [4] Development and Production - Kangfang Biotech established a modern biopharmaceutical production base in Guangzhou within 18 months, significantly accelerating its product commercialization process [7][8] - The rapid establishment of the production facility allowed the company to meet strong market demand for Cardunili following its launch [8] Clinical Success - All drugs in clinical phase II have achieved successful trial outcomes and received market approval, showcasing a high success rate in research and development [10] Global Expansion - In 2022, Kangfang Biotech licensed exclusive development and commercialization rights for its drug, Iwosi, to a U.S. company for a total of $5 billion, reflecting its enhanced negotiation position in the global market [10] - The company is building its global operational capabilities, with a research center in Shanghai and ongoing clinical trials in multiple countries [12] Industry Impact - The rise of Kangfang Biotech and similar companies has positioned China as a significant player in the global pharmaceutical industry, with over 30% of new drug pipelines and approvals [10] - The success of Iwosi against the leading drug, Pembrolizumab, has garnered international media attention, likening the moment to breakthroughs in artificial intelligence [11]