Group 1 - A-shares experienced a decline on June 6, with the Sci-Tech Medicine Index ETF (588700) showing a fluctuation, down 0.45% and with a turnover rate exceeding 8%, and a trading volume over 18 million [1] - The Sci-Tech Medicine Index ETF closely tracks the Shanghai Stock Exchange Sci-Tech Board Biomedicine Index, which selects 50 large-cap companies in biomedicine and related fields, reflecting the overall performance of representative biomedicine companies listed on the Sci-Tech Board [1] - Notable stocks within the ETF include Maiwei Biotech-U, which rose over 3%, along with several others such as Dongfang Bio, Borui Pharma, and Shenzhou Cell, indicating active trading in the sector [1] Group 2 - The National Healthcare Security Administration has revised the medical price and procurement credit evaluation system to combat improper trading behaviors like commercial bribery, aiming to enhance market integrity and resource allocation [2] - Longcheng Securities suggests that the frequent favorable policies for the pharmaceutical sector may lead to a steady recovery in industry sentiment, particularly in the hospital market, which has been affected by previous anti-corruption measures [2] - The focus on innovative therapies is expected to drive significant growth, with domestic BIC/FIC innovative drugs improving in quantity and quality, indicating a broad space for domestic innovation and international expansion [2] Group 3 - Zhongtai Securities emphasizes the importance of embracing innovation, highlighting record-breaking BD transaction amounts and strong performances of Chinese pharmaceutical companies at ASCO, suggesting a potential revaluation of the sector [3] - The recommendation includes actively investing in segments expected to recover, such as CRO&CDMO, upstream research, specialty raw materials, chain pharmacies, and branded OTC products [3] - The overall business situation for Q2 is anticipated to become clearer, providing opportunities for strategic investments in the pharmaceutical industry [3]

Core Viewpoint - The article highlights the ongoing corruption issues in the medical industry, particularly focusing on the allegations against Xintian Pharmaceutical Co., Ltd. and its high sales expenses, which may indicate potential commercial bribery risks [2][3][7]. Group 1: Allegations and Investigations - A leaked notification from the Sichuan Provincial Health Commission revealed that over 100 doctors from more than 30 medical institutions are suspected of accepting commercial bribes related to Xintian Pharmaceutical [2]. - The notification mandates local health commissions to investigate and report findings by May 25, 2025, emphasizing the need for compliance with health regulations [5]. - Allegations include the use of false case collections, lavish dinners, and excessive lecture fees to facilitate bribery, with evidence provided in the form of financial records and meeting materials [5][6]. Group 2: Financial Performance and Sales Expenses - Xintian Pharmaceutical's sales expenses have been notably high, with 2024 sales expenses projected at 372 million yuan, accounting for 43.34% of total revenue [3][6]. - Despite a reduction in sales expenses over the past two years, the percentage of sales expenses relative to revenue remains significant, indicating potential underlying issues [6][7]. - The company reported a decline in revenue from 954 million yuan in 2022 to 858 million yuan in 2024, alongside a drop in net profit [8]. Group 3: Compliance and Industry Context - The article emphasizes the importance of compliance in the pharmaceutical industry, especially in light of increasing regulatory scrutiny and anti-corruption efforts [3][10]. - Industry experts suggest that high sales expense ratios often correlate with risks of commercial bribery, highlighting the need for transparent marketing practices [7][10]. - The ongoing anti-corruption campaign has led to significant disciplinary actions within the medical sector, with thousands of cases reported [9].

Core Viewpoint - A recent whistleblower letter has reignited discussions on corruption in the medical industry, particularly involving Guizhou Xintian Pharmaceutical's Chengdu branch, which is accused of bribing over a hundred doctors across more than 30 medical institutions [1][3]. Group 1: Company Overview - Guizhou Xintian Pharmaceutical, established in August 1995 and listed on the Shenzhen Stock Exchange in May 2017, focuses on the research, production, and sales of traditional Chinese medicine, particularly for urological and gynecological diseases [1]. - In 2023, Xintian Pharmaceutical ranked second in hospital sales and eighth in pharmacy sales for gynecological traditional Chinese medicine, with a comprehensive ranking of second [1]. Group 2: Financial Performance - Despite a reform in its sales and production system initiated at the end of 2022, Xintian Pharmaceutical's sales expenses remain high, amounting to 372 million yuan in 2024, which is 43.34% of its revenue [2][4]. - The company's sales expenses decreased by over 15% year-on-year for two consecutive years, yet they still represented a significant portion of total revenue, with 2022 sales expenses at 532 million yuan (48.93% of revenue) and 2023 at 438 million yuan (45.86% of revenue) [4]. - Revenue for 2023 and 2024 was reported at 954 million yuan and 858 million yuan, respectively, reflecting year-on-year declines of 12.29% and 10.11% [6]. Group 3: Compliance and Regulatory Issues - The Sichuan Provincial Health Commission has mandated investigations into the allegations against Xintian Pharmaceutical, requiring reports on any violations of health laws by May 25, 2025 [3]. - The company is accused of using various covert methods for bribery, including fake case collections and excessive speaker fees for medical seminars [3][5]. - Xintian Pharmaceutical has stated that it is cooperating with investigations and claims that its operations are compliant [3]. Group 4: Industry Context - The pharmaceutical industry is under increasing scrutiny for high sales expenses, which are often linked to risks of commercial bribery and compliance issues [5]. - The industry is experiencing a push towards compliance, with regulatory bodies intensifying efforts to combat corruption, including a report indicating that over 52,000 cases were filed in the medical sector [7]. - Analysts suggest that the ongoing anti-corruption efforts will compel pharmaceutical companies to adopt more compliant marketing strategies and digital methods for market activities [8].

Investment Rating - The report maintains an investment rating of "Outperform the Market" for the pharmaceutical sector [2][5]. Core Views - The pharmaceutical sector has seen a 0.49% increase this week, outperforming the CSI 300 index by 0.93 percentage points, ranking 9th among 31 first-level industries [8][28]. - The report highlights the positive impact of favorable policies on the pharmaceutical sector, suggesting a gradual recovery in industry sentiment. It recommends focusing on high-quality targets in the formulation sector and emphasizes the potential of innovative therapies and domestic drug replacements [5][28]. Summary by Sections Industry Performance - The pharmaceutical sector's performance this week was a 0.49% increase, with sub-sectors such as pharmaceutical commerce rising by 3.12% and medical services by 1.69%. In contrast, biological products and traditional Chinese medicine II saw declines of 0.87% and 1.01%, respectively [8][28]. Key News - Baiyi Shenzhou's BCL-2 inhibitor "Sonrotoclax" has been submitted for market approval, targeting specific types of lymphoma and leukemia [28][29]. - Merck KGaA announced a $3.9 billion acquisition of SpringWorks, enhancing its portfolio in the oncology space [28][30]. Key Announcements - Baili Tianheng received approval for two Phase II clinical trials for its innovative drug BL-B01D1, aimed at treating recurrent or metastatic cervical cancer and advanced endometrial cancer [32][33].

Investment Rating - The report indicates a stable outlook for the pharmaceutical manufacturing industry, with expectations for revenue recovery and profit stabilization in 2024 [1][4]. Core Insights - The pharmaceutical manufacturing industry is experiencing a recovery in revenue and stabilization in profit levels due to the normalization of policies such as medical insurance cost control and volume-based procurement [1][3]. - The industry is heavily influenced by policies that promote innovation in drug research and development, as well as the regulation of the market through anti-corruption measures [7][8]. - The demand for pharmaceuticals is expected to continue growing, supported by an aging population and improvements in medical insurance payment capabilities [16][17]. Industry Overview - In 2024, the pharmaceutical manufacturing sector is projected to see a rebound in revenue, with total revenue for large-scale enterprises estimated at 25,298.50 billion, a slight increase from the previous year [4]. - The number of pharmaceutical manufacturing enterprises in China reached 9,793 by the end of 2024, with an increase in the number of loss-making companies, indicating a growing industry divide [12][13]. - The medical insurance fund's income and expenditure are expected to rise, enhancing the overall financial health of the pharmaceutical sector [16]. Policy Impact - Recent policies have reinforced the integration of medical, insurance, and pharmaceutical sectors, encouraging the development of innovative drugs and high-quality traditional Chinese medicine [7][8]. - The implementation of volume-based procurement has led to significant price reductions for many drugs, impacting the profitability of pharmaceutical companies [13][14]. - The government is focusing on optimizing drug pricing mechanisms and enhancing the regulatory framework to support innovation and prevent irrational price competition [17][18]. Industry Challenges - The pharmaceutical manufacturing industry faces structural challenges, including a high number of small and fragmented companies, which limits competitiveness and innovation [12][13]. - Research and development investment remains insufficient compared to developed countries, hindering the industry's ability to innovate and adapt to market demands [13][19]. - The concentration of new drug approvals remains high in certain therapeutic areas, particularly oncology, indicating a need for diversification in drug development [19][20].

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的內容概不負責，對其準確性或完整性亦不 發表任何聲明，並明確表示，概不對因本公告全部或任何部份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。 上 海 復 星 醫 藥（ 集 團 ）股 份 有 限 公 司 Shanghai Fosun Pharmaceutical (Group) Co., Ltd.* （於中華人民共和國註冊成立的股份有限公司） （股份代號：02196） 海外監管公告 本公告乃根據香港聯合交易所有限公司證券上市規則第13.10B條而作出。 茲載列上海復星醫藥（集團）股份有限公司（「本公司」）在上海證券交易所網站刊登的《2024 年年度報告摘要》，僅供參閱。 承董事會命 上海復星醫藥（集團）股份有限公司 董事長 吳以芳 中國，上海 2025 年3 月2 5 日 於本公告日期，本公司之執行董事為吳以芳先生、王可心先生、關曉暉女士及文德鏞先生；本公司之非執 行董事為陳 啟 宇先生、徐曉亮先生、潘東輝先生及陳玉卿先生；以及本公司之獨立非執行董事為李玲女士、 湯谷良先生、王全弟先生及余梓山先生。 * 僅供識別 上海复星医药（集团）股份有限公 ...

Investment Rating - The report maintains a "Strong Buy" rating for the pharmaceutical sector, indicating a positive outlook for investment opportunities in this industry [2]. Core Insights - The pharmaceutical sector has shown a recovery in valuation, with the pharmaceutical and biological sector rising by 1.77%, outperforming the CSI 300 index by 0.18 percentage points. This places it 15th among 31 primary industry sectors [6][4]. - The report highlights that favorable policies are emerging for the pharmaceutical sector, suggesting a steady recovery in industry sentiment. It recommends focusing on high-quality targets in the formulation sector and biotech companies with efficient management and strong product pipelines [4][24]. Summary by Sections 1. Pharmaceutical Sector Performance - The pharmaceutical sector's performance includes a 1.77% increase, with sub-sectors such as pharmaceutical commerce rising by 6.44% and traditional Chinese medicine II by 2.63% [6][4]. - Notable stock performances include: - **Top Gainers**: - Pharmaceutical commerce: Seer Medical (+34.47%), Lao Bai Xing (+22.47%) [17]. - Chemical pharmaceuticals: Jincheng Pharmaceutical (+42.43%), Kangzhi Pharmaceutical (+20.50%) [13]. - **Top Losers**: - Chemical pharmaceuticals: Shuangcheng Pharmaceutical (-16.56%), Haichuang Pharmaceutical (-12.21%) [11]. 2. Key Company Recommendations - The report recommends focusing on companies such as: - Aosaikang, which is advancing in the development of domestic CLDN18.2 targeted drugs [4]. - Cloudtop New Medicine-B, which is expected to see significant sales growth from its major product [4]. - Dizhe Pharmaceutical, which is poised for market expansion with its core products [4]. - Renfu Pharmaceutical, recognized as a leader in anesthesia [4]. 3. Industry News Highlights - Recent approvals include: - The approval of the fourth indication for the PD-1 inhibitor by Zhengda Tianqing/Kangfang Biotech for treating recurrent or metastatic nasopharyngeal carcinoma [24][25]. - Roche's PI3Kα inhibitor, Inavolisib, has been approved for use in combination therapy for hormone receptor-positive, HER2-negative breast cancer [26][27]. - The first domestic solid tumor cell therapy, Aikelong, is set for priority review for preventing postoperative recurrence of liver cancer [29][30]. 4. Market Trends - The report notes a positive trend in the pharmaceutical sector, with a focus on innovative therapies and domestic drug development, indicating a robust growth potential in both domestic and international markets [4][24].