Investment Rating - The overall industry rating has been upgraded to "Buy" [32] Core Viewpoints - The innovative drug sector has achieved significant excess returns due to ongoing improvements in domestic medical policies and overseas licensing transactions [31][32] - The generic drug and raw material drug sectors are expected to recover as the centralized procurement policy continues to optimize [31][32] - The industry is transitioning from capital-driven to profit-driven growth, indicating a potential turning point for performance and valuation recovery [31][32] Market Analysis and Outlook - In the first half of 2025, the pharmaceutical manufacturing industry chain's innovative drug sector has shown strong performance, with a 1.9% increase last week, ranking 19th among all primary industries [6][9] - The absolute return for the pharmaceutical sector over the past 12 months is 19.4%, outperforming the market benchmark by 3.3% [4][11] - The overall valuation level for the pharmaceutical sector as of July 25, 2025, is a PE-TTM of 30.66X and a PB of 2.91X, both above the negative one standard deviation [11][14] Investment Recommendations - Two main investment themes are recommended: 1. **Innovation-driven**: Focus on companies with significant technological platforms and product advantages, such as Huadong Medicine, Aosaikang, and Health元 [31][32] 2. **Recovery-driven**: Target bottom assets with significant safety margins that are expected to gradually recover, such as Changchun High-tech, Weixin Kang, and China Resources Sanjiu [31][32] - The industry is entering a high-quality development phase characterized by research and development upgrades and international integration [32]

Investment Rating - The investment rating for the industry is "Positive" and the rating has been maintained [2] Core Insights - The pharmaceutical and biotechnology industry index increased by 5.89%, ranking third among 31 primary industries, outperforming the CSI 300 index which rose by 1.92% [5][17] - The sub-industries of medical research outsourcing and chemical preparations saw significant gains of 13.94% and 8.43% respectively, while offline pharmacies experienced a decline of 3.91% [5][17] - As of July 18, 2025, the overall PE (TTM) for the pharmaceutical and biotechnology industry is 30.09x, up from 28.52x in the previous period, indicating an upward trend in valuation but still below the average [6][22] - The top three sub-industries by PE (TTM) are vaccines (57.37x), hospitals (37.75x), and other biological products (36.95x), while pharmaceutical circulation has the lowest valuation at 15.84x [6][22] Industry Review - The report highlights that 37 listed companies in the pharmaceutical and biotechnology sector experienced a net reduction in shareholder holdings amounting to 2.182 billion yuan, with 4 companies increasing their holdings by 145 million yuan and 33 companies reducing theirs by 2.328 billion yuan [6] Important Industry News - The National Medical Products Administration (NMPA) approved the BCL-2 inhibitor "Lisatinib" for market entry, marking it as the first domestic product of its kind [8] - The NMPA also approved "Recombinant Human Albumin Injection (Rice)" as the first of its kind in China [8] - The eleventh batch of national procurement rules has been optimized, significantly reducing policy uncertainty for innovative drugs [9] Investment Recommendations - The report suggests continued attention to pharmaceutical companies with innovative capabilities and those with high-end and cost advantages in generic drugs, especially in light of the optimized procurement rules that favor high-quality production and cost-effective generics [9]

Core Viewpoint - The A-share market experienced a mixed performance with the ChiNext index declining by 0.22%, while the innovative drug sector showed resilience and strength against the market trend [1] Market Performance - The three major A-share indices showed fluctuations, with the Shanghai Composite Index down by 0.03%, the Shenzhen Component Index down by 0.22%, and the ChiNext Index also down by 0.22% [1] - The total trading volume in the Shanghai and Shenzhen markets was 1.44 trillion yuan, a decrease of 170 billion yuan compared to the previous trading day [1] Sector Performance - The innovative drug and generic drug sectors performed strongly, with nearly ten stocks including Ha Sanlian, Rundu Co., Aosaikang, and Wanbangde hitting the daily limit [1] - The banking and insurance sectors faced declines, with the banking sector experiencing a notable drop, particularly Qilu Bank which fell over 2% [1] - The liquor sector saw a rebound in the afternoon, with Jiugui Liquor rising by over 5% [1]

Company and Industry Summary Company Overview - The company is engaged in the pharmaceutical industry, focusing on the development, production, and sales of chronic disease treatment drugs, particularly in the endocrine field, with over 20 years of experience in this area [3][14]. Financial Performance - In Q1, the company reported a revenue growth of 21.59% year-over-year, with net profit increasing by 30% [2]. - For the year 2024, the company expects sales of 868 million, a year-over-year increase of approximately 22.5%, and a net profit of 177 million, up 28% [5]. - The earnings per share for the year is projected at 2.28 yuan [5]. - R&D expenditure for 2023 was 109.56 million, with 38.4 million allocated to innovative drugs and 71.16 million to generic drugs [5]. Product Development and Pipeline - The company has a robust pipeline, including a new drug DYX-116 developed in collaboration with Yaoming Kande, which has garnered significant investor interest [2]. - The R&D team consists of approximately 150 members, with 100 focused on generic drug development and nearly 50 on innovative drug research [3]. - The company is transitioning from a focus solely on generic drugs to a combination of generic and innovative drugs, aiming to mitigate risks associated with market competition and price reductions from national procurement policies [14][16]. Market Position and Strategy - The company has successfully passed consistency evaluations for several products, positioning itself as a leader in the market [8][9]. - The product portfolio includes treatments for diabetes, hypertension, and related complications, with a comprehensive range of offerings in the diabetes treatment category [20]. - The company is actively expanding its market presence by targeting large hospitals, provincial hospitals, and community healthcare facilities [23]. Challenges and Risks - The company acknowledges the competitive landscape, particularly concerning the upcoming 11th round of national procurement, which may impact pricing and market share [24][33]. - There is a focus on maintaining and expanding the sales of existing products while also preparing for the introduction of new products to sustain growth [33]. Future Outlook - The company aims for a 20% growth in sales revenue for 2025, with expectations for continued growth in key products [33]. - Plans for overseas expansion and partnerships with leading companies are in place to enhance product promotion and funding opportunities [26]. Additional Insights - The company is cautious about the risks associated with innovative drug development, emphasizing a balanced approach between generic and innovative drug strategies [14][16]. - The management is committed to ensuring that the generic drug segment remains a strong pillar for cash flow and profitability while exploring innovative avenues for growth [14][16].

Core Viewpoint - Jingze Biopharma has submitted an application for listing on the Hong Kong Stock Exchange, focusing on assisted reproductive and ophthalmic drugs, with eight candidate drugs in its pipeline [1][3]. Group 1: Company Overview - Jingze Biopharma aims to commercialize its first product, JZB30, a recombinant human follicle-stimulating hormone (FSH) lyophilized powder injection, expected to generate revenue by 2026 [1][3]. - The company has previously attempted to list on the Shanghai Stock Exchange's Sci-Tech Innovation Board but faced delays in completing the necessary guidance [1][3]. Group 2: Product Pipeline and Market Competition - All of Jingze Biopharma's late-stage products are generic drugs, with JZB30 competing against established products like Follitropin [4][6]. - The domestic market for recombinant human FSH is dominated by companies like Merck and Jinsai Pharmaceutical, which have significant market shares [6][9]. - The market for injectable recombinant human FSH has shown limited growth, with sales fluctuating between 1.12 billion and 2.02 billion from 2015 to 2023 [6][9]. Group 3: Financial Situation - Jingze Biopharma has been operating at a loss, with projected losses of approximately 246 million and 243 million for 2023 and 2024, respectively [9][10]. - The company has raised about 930 million through six rounds of financing, with a significant portion raised during the C+ round [9][10]. - As of the end of 2024, the company's cash reserves were critically low, with only 68.6 million and 27.08 million remaining [10].

Core Insights - Shijiazhuang Four Pharmaceutical Co., Ltd. and Fosun Wanbang (Jiangsu) Pharmaceutical Group Co., Ltd. have submitted applications for the marketing of the generic drug Finerenone tablets, which have been accepted by the CDE [1][2] Group 1: Product Overview - Finerenone is a "first-in-class" non-steroidal, selective mineralocorticoid receptor antagonist (MRA) developed by Bayer, approved by the FDA in July 2021 and in China for chronic kidney disease (CKD) associated with type 2 diabetes in June 2022 [3] - The cumulative sales of Finerenone in China have exceeded 400 million yuan, with a significant increase in sales after being included in the medical insurance list in January 2023, showing a year-on-year growth of 234.68% in 2024, reaching 322 million yuan [4][17] Group 2: Market Potential - Chronic kidney disease (CKD) is a major global chronic disease, with approximately 116 million type 2 diabetes patients in China as of 2021. About 40% of these patients may progress to diabetes-related CKD, indicating a large patient base for Finerenone [9][10] - The drug has been recommended in the "Clinical Practice Guidelines for Diabetic Kidney Disease in China" for reducing urinary albumin and managing cardiovascular complications in diabetic kidney disease patients [6] Group 3: Competitive Landscape - Finerenone's compound patent is set to expire on February 19, 2028, while its crystal form patent will expire on July 29, 2035, allowing for potential generic competition in the future [12][13] - Currently, Bayer holds the production license for Finerenone, with 14 other companies, including Shijiazhuang Four Pharmaceutical and Fosun Pharma, in the review stage for production [14] Group 4: Pricing and Accessibility - The price of Finerenone was significantly reduced from 445.2 yuan to 98.42 yuan after being included in the national medical insurance directory, a decrease of 78%, making the daily treatment cost as low as 7.03 yuan [17] - Following a successful renewal in 2025, the price is expected to drop further, enhancing the drug's accessibility [17] Group 5: Future Outlook - With the reduction in medical costs and the increasing number of domestic pharmaceutical companies entering the market, Finerenone is expected to benefit more patients with type 2 diabetes-related CKD [19] - The first generic application from Hunan Mingrui Pharmaceutical is anticipated to be submitted in September 2024, with potential approval in 2025 [19]

Market Overview - The main indices showed mixed performance today, with the Shanghai Composite Index up by 0.02%, the Shenzhen Component down by 0.7%, and the ChiNext Index down by 1.21% [1] - Among the Shenwan first-level industry sectors, the top performers were comprehensive, public utilities, and real estate, while household appliances, electronics, and food and beverage lagged behind [1] - Concept sectors overall performed well, particularly in continuous boards, board hitting, and pre-increase concepts, whereas generic drugs, medical services, and CRO concepts performed relatively poorly [1]

Market Overview - The A-share market showed mixed performance today, with the Shanghai Composite Index rising by 0.39% to close at 3457.75 points, while the Shenzhen Component Index increased by 0.11% to 10476.29 points. However, the Sci-Tech Innovation 50 Index fell by 0.86% to 994.80 points, and the ChiNext Index decreased by 0.24% to 2147.92 points. Overall, 2628 stocks rose, 2542 fell, and 247 remained unchanged across the market [1]. - The total trading volume in the Shanghai and Shenzhen markets was 14660 billion, a decrease of 208.42 billion compared to the previous trading day [1]. Industry Performance - Among the Shenwan first-level industries, sectors such as comprehensive, pharmaceutical biology, banking, non-ferrous metals, public utilities, and building materials led the gains, while computer, retail, telecommunications, media, power equipment, and real estate sectors experienced declines [1]. Sector Highlights - The top-performing concept sectors today included China Shipbuilding System, innovative drugs, antibiotics, vitamins, generic drugs, low-priced stocks in the ChiNext, hydropower, biotechnology, advanced packaging, superhard materials, pet economy, CRO, medical material exports, selected banks, and brain-computer interfaces [1].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HK$10.59, representing a potential upside of 20% from the current price of HK$8.84 [1][8][18]. Core Insights - The company has faced revenue declines in its core pharmaceutical business but has offset some of this through strong licensing income, demonstrating its ability to commercialize its pipeline effectively [6][15]. - The report highlights a strategic partnership with AstraZeneca, which includes an upfront payment of US$110 million, indicating strong collaboration in innovative drug development [6][15]. - Adjustments to earnings per share (EPS) forecasts reflect a cautious outlook on the growth of the company's core generic drug business, with 2025 and 2026 EPS estimates reduced by 14% [2][11]. Financial Performance - The company reported a revenue of RMB 70.15 billion in Q1 2025, a year-on-year decline of 21.9%, while net profit was RMB 14.95 billion, down 8.3% [6][10]. - The revenue forecast for 2025 has been adjusted down to RMB 28.306 billion, a decrease of 12% from previous estimates, with a further decline expected in 2026 [12][15]. - The report anticipates a gross margin of 70% for 2025, slightly lower than previous forecasts, reflecting ongoing challenges in the market [11][12]. Research and Development - The company continues to invest in R&D, with expenditures reaching RMB 13 billion in Q1 2025, representing an 11.4% increase year-on-year [7][11]. - The R&D intensity remains high at 23.7% of revenue, indicating a strong commitment to innovation [7][11]. - The company has nearly 90 products in various stages of clinical development, with several already submitted for registration, enhancing future approval efficiency [7][11]. Valuation - The report employs a two-stage DCF model for valuation, adjusting the WACC to 8.5% and increasing the perpetual growth rate to 4% [8][17]. - The target price of HK$10.59 is based on the DCF analysis, suggesting that the current valuation does not fully reflect the company's growth potential in innovative drugs and licensing income [8][17]. - The company's projected P/E ratio for 2025 is 21, slightly above the industry average of 20, indicating a potential undervaluation relative to its peers [8][17].

Market Overview - The main indices showed positive performance today, with the Shanghai Composite Index increasing by 0.35%, the Shenzhen Component Index rising by 0.41%, and the ChiNext Index up by 0.66% [1] - Among the Shenwan first-level industry sectors, Media, Communication, and Computer sectors performed well, while Textile & Apparel, Pharmaceutical & Biological, and Automotive sectors lagged behind [1] - Concept sectors showed varied performance, with Digital Currency, Financial Technology, and First Board concepts performing relatively well, while Gold & Jewelry, Generic Drugs, and Chemical Fiber concepts underperformed [1]