Core Viewpoint - The pharmaceutical sector is experiencing a significant rebound after three years of stagnation, driven by overseas licensing deals, advancements in R&D capabilities, and supportive policies, presenting multiple opportunities for investors [1] Group 1: Industry Outlook - The long-term excess returns in the pharmaceutical industry are fundamentally driven by technological growth and value creation, with innovative drugs expected to be the fastest-growing sub-sector [1][6] - The industry is transitioning from a phase of investment (2015-2024) to a harvest phase (2025-2029), with innovative drugs moving from the initial stage to a more advanced stage of development [6][7] - The next phase for innovative drugs is anticipated to be a "1-10" growth stage, with more products entering the market and global competitiveness being validated through partnerships with major overseas pharmaceutical companies [6][8] Group 2: Fund Performance - Since its inception, the Oriental Red Medical Upgrade Fund has achieved a return of 36.12% against a benchmark decline of 16.94%, resulting in an excess return of 53.06% [2][3] - Over the past year, the fund has increased by 47.54%, significantly outperforming the benchmark's 14.37% return, leading to an excess return of 33.17% [2][3] - The fund ranks third among 40 similar funds in terms of net value growth over the past three years [2][3] Group 3: Investment Strategy - The core investment strategy focuses on "combination, cycle, and growth," emphasizing a diversified portfolio to navigate industry complexities while adjusting allocations based on sub-sector cycles [3][4] - The approach includes dynamic allocation between low-risk and high-growth investments, prioritizing companies with growth potential while avoiding purely undervalued but stagnant firms [4][8] - Continuous learning and forward-looking research are essential for identifying investment opportunities in the rapidly evolving innovative drug sector [9][8]

Core Viewpoint - The Hong Kong Innovation Drug Index has shown a remarkable increase of 101.33% this year, indicating a strong performance in the sector, with a focus on pharmaceutical research and development [1][10]. Group 1: Market Performance - The Hong Kong Innovation Drug Index will undergo adjustments effective from August 12, enhancing its focus on pharmaceutical R&D [1]. - The pharmaceutical sector, particularly innovative drugs, is identified as a clear trend with significant growth potential [1]. - The overall net profit of listed companies in the pharmaceutical and biotechnology sector reached 50.674 billion yuan in Q1 2025 [1]. Group 2: Cost Management - The pharmaceutical industry has successfully reduced sales and financial expense ratios, with sales expense ratio decreasing from 14.33% in 2021 to 12.18% in Q1 2025, and financial expense ratio dropping from 0.69% to 0.38% [5][1]. - The management expense ratio has remained stable, increasing slightly from 5.10% to 5.11% during the same period [5][1]. - The increase in R&D expense ratio from 4.26% to 4.37% reflects ongoing investment in innovation [5]. Group 3: Regulatory Environment - In the first half of this year, 43 innovative drugs were approved, marking a 59% increase compared to the previous year, nearing the total of 48 approvals for the entire year of 2024 [3]. - The acceleration in drug approval processes is attributed to reforms initiated in 2018, which have significantly shortened the approval timeline [3]. Group 4: International Expansion - Chinese pharmaceutical companies completed 94 overseas licensing transactions in 2024, totaling $51.9 billion, a 36% increase from the previous year [6]. - In the first half of 2025, the total amount for overseas licensing transactions exceeded the previous year's total, reaching $60.8 billion, indicating a strong growth trajectory [6]. Group 5: Investment Opportunities - The Hong Kong Innovation Drug ETF has outperformed, with a year-to-date increase of 101.33%, making it the top performer among eight indices tracking Hong Kong innovative drugs [10]. - The upcoming share split of the Hong Kong Innovation Drug ETF is expected to lower the investment threshold, allowing for more flexible participation [10]. - The domestic innovation drug ETF has also shown a year-to-date return of 31.06%, indicating continued upward potential in the sector [11].

Core Insights - The National Healthcare Security Administration (NHSA) is intensifying support for innovative drugs and medical devices, signaling a shift towards fostering genuine and differentiated innovation in the industry [1][2][3] - Recent meetings have highlighted the significant policy advantages, research capabilities, manufacturing strengths, and market potential of China's innovative drug sector, leading to increased confidence in its future development [1][2] Group 1: Policy Support and Measures - NHSA has organized five meetings focused on supporting innovative drugs, covering topics such as comprehensive value assessment, new technology development, and investment in the pharmaceutical sector [2][3] - The newly released "Several Measures to Support the High-Quality Development of Innovative Drugs" indicates a strong commitment from the NHSA to enhance the innovation landscape in the pharmaceutical industry [2][3] Group 2: Direction of Support - NHSA has outlined five key directions for supporting innovative drug development: leveraging policy guidance, promoting genuine innovation, encouraging differentiated innovation, comprehensive evaluation of value, and enhancing communication between policy departments and the industry [3] - New pricing policies are being introduced to facilitate the entry of high-level technological innovations into clinical applications and to encourage drug research and development [3] Group 3: Industry Sentiment and Market Response - Industry insiders express that the recent policy support is akin to a much-needed "rain" for companies that have faced a prolonged "winter" in the innovative drug sector [4][5] - The innovative drug market in China has historically been undervalued, with prices significantly lower than international benchmarks, resulting in a mere 3% market share in the global pharmaceutical market [5] - Recent favorable policies have led to a clearer and more stable policy outlook for the innovative drug industry, with notable market performance reflected in the Hang Seng Hong Kong Stock Connect Innovative Drug Index, which has risen over 94% year-to-date [5]

机构表示，展望2025全年，随着全链条支持创新药发展、医疗设备更新等行业利好政策的推进落地，医 药生物行业全年业绩有望持续企稳向上。对于投资者来说，创新药ETF及其联接基金能分散个股风险， 精准捕捉行业成长红利，或可助力高效覆盖创新药市场。 港股创新药ETF(159567)及其联接基金(A类：023929；C类：023930)跟踪的国证港股通创新药指数 (987018.CNI)，今年年初以来强势上涨。该指数选取港股通中涉及"创新药研发、生产"等业务领域的公 司，有望分享港股创新药企增长红利。根据银华基金公告，港股创新药ETF(159567)将于8月8进行份额 拆分权益登记，份额一拆二后，单位净值减半，现有基金份额持有人资产总值不变。此次拆分将有效降 低投资门槛，投资者可更灵活地参与投资。 此外，创新药ETF(159992)及其联接基金(A类：012781；C类：012782)跟踪CS创新药指数 (931152.CSI)，在国内创新药整体向好趋势下，指数向上或仍有空间。该指数覆盖A股创新药产业链龙 头企业，汇聚全球CXO龙头和国内仿创药企龙头，可助力投资者一键把握A股创新药投资机遇。(王宇 露) 其次，创新药获 ...

Core Insights - The series of meetings organized by the National Healthcare Security Administration (NHSA) reflects a strong commitment from the decision-making level to support the development of innovative drugs and medical devices, providing clearer and more stable policy expectations for the industry [2][4]. Group 1: Policy Support for Innovative Drugs - The NHSA has held five meetings focusing on various aspects of supporting innovative drugs, including comprehensive value assessment, new technology development, real-world research, and investment strategies [2][4]. - The NHSA emphasizes a multi-departmental approach to optimize collaboration and support for the innovative drug ecosystem [1][2]. Group 2: Key Directions for Support - The NHSA outlined five key directions for supporting innovative drugs: providing policy guidance for R&D, supporting true innovation based on clinical outcomes, encouraging differentiated innovation, comprehensive evaluation of clinical and economic value, and enhancing communication between policy departments and the industry [5][6]. - The NHSA also highlighted the importance of collaboration between basic medical insurance and commercial insurance to create a multi-tiered support system for innovation [5]. Group 3: Data Utilization in Drug Development - The NHSA plans to leverage healthcare data to support innovative drug development by reducing investment costs, enhancing investment prospects, and mitigating risks [6][7]. - Experts at the meetings expressed the need for improved data utilization to transition drug development from experience-based to data-driven approaches, which could significantly reduce time and resource costs [7]. Group 4: Encouraging Long-term Investment - The NHSA reported that since its establishment in 2018, the cumulative expenditure of the healthcare fund has reached 18.04 trillion yuan, with an annual growth rate of 11%, supporting both demand and supply in the healthcare sector [8]. - There is a call for encouraging long-term patient capital to invest in early-stage R&D and key technologies rather than short-term speculative investments [8][9]. Group 5: Innovations in Pricing and Market Access - The NHSA introduced new pricing policies to facilitate the entry of innovative drugs into the market, including a mechanism for the first price of newly listed drugs and optimizing service access [9][10]. - Medical institutions and pharmaceutical companies shared insights on the clinical application of new technologies and the development of innovative drugs during the meetings [10].

Investment Rating - The industry investment rating is maintained at "Overweight" [2][26] Core Views - The medical consumables sector saw a weekly increase of 5.04%, outperforming the CSI 300 index by 0.21 percentage points [4][12] - The current PE (ttm) for the medical consumables sector is 35.7X, with a PB (lf) of 2.59X, indicating a slight increase in valuation metrics [5][19][20] - The National Healthcare Security Administration held a meeting to support the development of innovative drugs and medical devices, emphasizing the importance of integrating healthcare data with innovation [6][23] Summary by Sections Industry Performance - The medical consumables sector reported a weekly increase of 5.04%, with the overall medical sector trending upwards [4][12] - The sector's PE has risen by 1.82 percentage points compared to the previous week, with a one-year range of 28.42X to 41.66X [5][19] Industry Dynamics and Key Announcements - The National Healthcare Security Administration's meeting aimed to enhance the quality of innovative drug development and address diverse healthcare needs [6][23] - The meeting highlighted the potential of healthcare data in supporting innovation and improving the efficiency of the pharmaceutical industry [6][23] Investment Recommendations - The report suggests closely monitoring the performance forecasts of companies in the medical consumables sector, particularly those recovering from the impact of centralized procurement [7][24] - Two main investment themes are identified: recovery opportunities post-centralized procurement and increased penetration of innovative products [7][26]

Core Insights - The pharmaceutical and biotechnology industry in China is at a crossroads of cyclical adjustment and innovative transformation in 2024, with a slow recovery process despite a rebound trend [1][14] - The industry is experiencing significant changes in market value management logic and practices due to tightening policies, accelerated innovation, and reshaped market dynamics [1][14] Industry Overview - The industry is facing multiple challenges including tightened policy environment, innovation impacts, changing demand structures, and price restructuring [14][17] - In 2024, the focus of pharmaceutical policies is on six core areas: supporting innovative drug development, deepening medical reform, expanding the opening of wholly-owned hospitals, improving multi-level medical insurance systems, enhancing centralized procurement, and refining drug pricing mechanisms [17][18] Innovation and Market Dynamics - Innovation is the core growth engine, with a record 48 innovative drugs and 65 innovative medical devices approved in 2024, positioning China as the second globally in new drug research [2][18] - The market is shifting towards high-end and differentiated demands domestically, while international strategies are transitioning from "bringing in" to "going out," covering various categories including chemical drugs and monoclonal antibodies [2][19] Market Capitalization and Valuation - As of May 31, 2025, there are 495 pharmaceutical and biotechnology companies listed in A-shares, with a total market capitalization of 6.6 trillion yuan, accounting for 6.62% of the total A-share market [20][22] - The distribution of market capitalization shows that 187 companies fall within the 2-5 billion yuan range, making up 37.78% of the industry, while there are 9 companies with market caps exceeding 100 billion yuan [22][24] Value Management Strategies - The value creation ability of listed companies is under pressure, scoring 45.65 out of 100, which is below the A-share average, indicating a need for improvement in profitability and operational efficiency [3][15] - Value shaping is lagging, with a score of 36.88, highlighting the need for companies to enhance their communication of investment value to the capital market [3][15] Changes in Value Management Practices - M&A activities have slowed down, with total M&A amounting to 4.364 billion yuan in 2024, while share buybacks have increased significantly, indicating a shift towards returning value to shareholders [4][15] - The proactive nature of value management has increased, with a notable rise in stock buybacks and share incentive plans, reflecting a focus on long-term value [4][15] Expectations and Market Feedback - The industry has seen an increase in institutional attention, but this has not yet translated into substantial investment decisions, indicating a need for improved expectation management [4][15][16] - The overall performance in terms of investment returns and growth certainty is declining, but remains better than the A-share average [16]

Core Viewpoint - The innovation drug sector is experiencing positive developments with the official launch of the 2025 National Basic Medical Insurance, Maternity Insurance, and Work Injury Insurance Drug Directory and the Commercial Health Insurance Innovation Drug Directory adjustment [1][4]. Group 1: Policy Changes - The National Healthcare Security Administration (NHSA) has initiated the adjustment of the drug directories, allowing eligible applicants to submit online applications from July 11 to July 20 [4]. - The newly added commercial health insurance innovation drug directory focuses on high innovation, significant clinical value, and substantial patient benefits, which cannot be included in the basic directory due to exceeding the "basic protection" scope [4][5]. - The NHSA has released a series of documents outlining the adjustment work plan, including guidelines for the new commercial health insurance innovation drug directory [2][4]. Group 2: Market Reactions - The innovation drug sector has shown strong performance in the secondary market, with the Wind Innovation Drug Index rising over 2% on July 11, and several companies like Yifang Bio and Changshan Pharmaceutical seeing significant stock price increases [3][4]. - Multiple brokerages express optimism about the innovation drug sector and its related industrial chain, indicating a positive outlook for future investments [3][6]. Group 3: Institutional Support - The NHSA and the National Health Commission have issued measures to support high-quality development of innovation drugs, encouraging the use of healthcare data for drug research and promoting investment in innovation drugs by commercial health insurance [6][7]. - The measures also propose the establishment of a commercial health insurance innovation drug directory, which will include drugs that exceed basic insurance coverage but have high innovation and clinical value [6][7]. Group 4: Industry Growth Potential - Analysts highlight that the innovation drug sector has maintained rapid growth in product revenue and external licensing over the past three years, with significant business development (BD) transactions occurring this year [7][8]. - The increasing international competitiveness of Chinese innovation drug assets is noted, with clinical data gaining prominence at academic conferences and BD transactions on the rise [8][9].

Group 1 - The National Healthcare Security Administration and the National Health Commission released measures to support the high-quality development of innovative drugs, proposing 16 comprehensive support policies [1] - The government emphasizes the importance of pharmaceutical innovation, with plans to establish a commercial health insurance directory for innovative drugs by 2025 [1] - The measures allow the use of healthcare insurance data for innovative drug research and development, promoting genuine and differentiated innovation [1] Group 2 - The time for innovative drugs to enter the healthcare insurance system has significantly decreased, now averaging around one year from approval to inclusion, with approximately 80% of innovative drugs included within two years of market launch [1] - The commercial health insurance market is rapidly growing, with projected premium income reaching 977.3 billion yuan in 2024, reflecting an 8.2% year-on-year increase [1] - The measures propose 16 initiatives across five areas, including research support, healthcare insurance access, and clinical application, to foster the high-quality development of innovative drugs [1] Group 3 - The Vaccine ETF tracks the Vaccine Biotechnology Index, which includes listed companies involved in vaccine research, production, sales, and biotechnology, covering all aspects of the vaccine industry chain [2] - The index aims to reflect the overall performance of listed companies in China's vaccine and biotechnology sector, showcasing its professionalism and growth characteristics [2]

Group 1: Pharmaceutical and Biotechnology Industry - The pharmaceutical and biotechnology sector saw an overall increase of 3.64% from June 30 to July 4, outperforming the CSI 300 index by 2.1 percentage points [7] - The sector's year-to-date growth is 10.10%, ranking fourth among 31 industries, with a current PE valuation of 28.44 times, indicating a 127% premium over the CSI 300 [7] - Key sub-sectors that performed well include chemical pharmaceuticals, medical services, and biological products, with respective increases of 5.03%, 4.47%, and 4.40% [7] - The National Healthcare Security Administration and the National Health Commission have introduced measures to support the high-quality development of innovative drugs, emphasizing a full-chain support approach [8] - The approval of innovative drugs like Dize Pharmaceutical's Shuwotini in the U.S. highlights the international competitiveness of domestic innovative drugs [9] Group 2: Food and Beverage Industry - The food and beverage sector experienced a decline of 0.62%, underperforming the CSI 300 index by 0.92 percentage points, ranking 20th among 31 sectors [11] - The liquor segment, particularly Moutai, showed signs of stabilization with a price increase, while the overall industry is expected to undergo a clearing process due to macroeconomic pressures [12] - The snack segment is experiencing high growth, driven by consumer demand for healthier options and the rise of new retail channels [26] - The dairy sector is expected to improve as raw milk prices stabilize, leading to enhanced profitability for leading dairy companies [26] Group 3: Electronics Industry - The electronics sector is witnessing a mild recovery, with domestic GPU companies like Moer Thread and Muxi Technology receiving IPO approvals, indicating a capital market push for the domestic GPU industry [20] - The easing of EDA sales restrictions from the U.S. is expected to provide short-term relief, but long-term development of domestic EDA remains critical [23] - The sector's overall performance lagged behind the CSI 300 index, with a PE ratio of 52.63 times, indicating a need for cautious investment [24] Group 4: Consumer Goods Industry - The consumer goods sector is facing slow recovery, with traditional food and beverage demands under pressure, but structural opportunities are emerging in high-growth segments like snacks and beer [25] - The beer segment is expected to benefit from improved demand and cost reductions, with leading brands like Qingdao Beer and Yanjing Beer showing strong growth potential [26] - The dairy industry is poised for recovery as supply-demand dynamics improve, with a focus on profitability among leading companies [26] Group 5: Refrigeration Equipment Industry - The household refrigeration equipment market is entering a phase of competition driven by replacement demand, with leading companies leveraging supply chain advantages [28] - The potential for overseas expansion is significant, particularly in emerging markets, as domestic companies adapt to changing global trade policies [29] - The demand for specialized refrigeration solutions in data centers is increasing, necessitating enhanced design and operational capabilities [30]