Group 1 - The core driving force behind the recent surge in the innovative drug sector is the explosive growth in external business development (BD), which has led to increased valuations and heightened market sentiment [1] - The structure of BD transactions has evolved, moving from traditional license-out models to NewCo models, allowing for deeper binding between buyers and sellers [1] - The proportion of upfront payments in domestic pharmaceutical BD transactions has significantly increased, reaching new highs [1] Group 2 - 2025 is expected to be a turning point for domestic innovative drugs in terms of profitability, which will strengthen valuation logic [2] - Upfront payments from pipeline BD are providing better cash flow for many innovative drug companies, reducing their reliance on external financing [2] - The approval process for clinical trials for innovative drugs is accelerating, and the introduction of DRG 2.0 and prepayment systems is alleviating financial pressure on medical institutions [2] Group 3 - The pharmaceutical sector has been recovering since the first quarter of this year after a prolonged decline [3] - The Guotai innovative drug ETF (517110) is recommended for investors, as it covers leading innovative drug companies in both A-shares and Hong Kong stocks, providing a balanced long-term investment option [3]