Core Insights - The Chinese innovative drug sector is on the rise and is currently in the early stages of realizing innovation成果 [1] - There remains a significant opportunity for independent development success and large-scale BD authorization transactions in the future [1] Industry Focus - In the oncology field, two main directions are highlighted: 1. The multidimensional iteration of ADCs (Antibody-Drug Conjugates), focusing on innovations in targets, antibody structures, and toxin combinations [1] 2. Innovations in the molecular components and spatial structures of immunotherapy, which may lead to breakthroughs with new combinations of ICI, TAA, cytokines, and TME-related chemotactic factors [1] Potential Products - The next potential blockbuster products may emerge from specific segments such as TCE (T-cell engagers), other bispecific/multispecific antibodies, and innovative ADCs, along with leading clinical enterprises in these fields [1]

Core Viewpoint - The Shanghai Stock Exchange Sci-Tech Innovation Board Biopharmaceutical Index has shown positive performance, with significant gains in constituent stocks, indicating a bullish trend in the biopharmaceutical sector [1][4]. Group 1: Index Performance - As of July 16, 2025, the Sci-Tech Innovation Board Biopharmaceutical Index increased by 0.21%, with notable rises in stocks such as Yifang Bio (+4.83%) and Nanwei Medical (+3.93%) [1]. - Over the past week, the Jiashi Sci-Tech Medical ETF has accumulated a rise of 4.76%, ranking first among comparable funds [1]. Group 2: Liquidity and Trading Activity - The Jiashi Sci-Tech Medical ETF recorded a turnover rate of 10.5% during trading, with a transaction volume of 21.6692 million yuan, reflecting active market participation [4]. - The average daily transaction volume for the Jiashi Sci-Tech Medical ETF over the past week was 31.1046 million yuan, also ranking first among comparable funds [4]. Group 3: Fund Growth and Performance - The Jiashi Sci-Tech Medical ETF has seen a significant growth of 12.5 million yuan in size over the past year, leading among comparable funds [4]. - The fund's net value increased by 41.50% over the past year, placing it in the top 17.15% among 2,909 index equity funds [4]. - The highest monthly return since inception was 23.29%, with the longest consecutive monthly gain being 5 months and an average monthly return of 7.43% [4]. Group 4: Major Stocks in the Index - As of June 30, 2025, the top ten weighted stocks in the Sci-Tech Innovation Board Biopharmaceutical Index accounted for 50.3% of the index, with leading companies including United Imaging Healthcare (8.97%) and BeiGene (7.05%) [4][6]. Group 5: Policy Developments - The innovative drug industry is set to benefit from favorable policies, with the adjustment of the national medical insurance drug catalog officially starting on July 11, 2025 [6]. - The National Healthcare Security Administration plans to announce the results of the drug catalog adjustments between October and November 2025 [6]. Group 6: Future Outlook - The year 2025 is anticipated to be significant for domestic innovative drugs entering the market, as companies transition from generic to innovative drugs following the "4+7" procurement policy implemented in 2018 [7].

Investment Rating - The report maintains a "Recommended" rating for the healthcare industry, indicating that the industry index is expected to outperform the benchmark index by more than 10% [7][24]. Core Insights - The pharmaceutical sector has shown a slight outperformance against the CSI 300 index, with the Shenwan Pharmaceutical Bio Index rising by 1.40% from June 9 to June 13, 2025, outperforming the CSI 300 by 1.65 percentage points [2][12]. - Year-to-date, the Shenwan Pharmaceutical Bio Index has increased by 9.33%, surpassing the CSI 300 by 11.13 percentage points, ranking 4th among 31 Shenwan primary industry indices [2][14]. - As of June 13, 2025, the valuation of the pharmaceutical sector stands at 28.29 times (TTM overall method, excluding negative values), with a valuation premium of 153.19% compared to the CSI 300 [2][17]. Summary by Sections 1. Market Performance - The pharmaceutical sector has outperformed the CSI 300 index, ranking 5th among 31 primary industry indices during the specified period [2][12]. - The sector's valuation reflects a significant premium over the broader market, indicating strong investor interest [2][17]. 2. Important Events - On June 13, 2025, a State Council meeting emphasized the need for enhanced evaluation of drug and consumable procurement policies, aiming for a more standardized and institutionalized approach to procurement [4][21]. - The meeting also highlighted the importance of improving public hospital compensation mechanisms and supporting pharmaceutical companies in enhancing innovation capabilities [4][21]. 3. Industry Perspective - The report notes that the procurement process in China's pharmaceutical sector has been ongoing for nearly a decade, expanding from solid oral formulations to include various drug categories and medical devices [5][22]. - There is a positive outlook for innovative drugs, overseas expansion, and sectors where procurement impacts have been cleared, suggesting potential growth opportunities [5][22]. - The report encourages attention to specific segments such as insulin and orthopedics, as well as certain generic drug companies, due to the ongoing acceleration of procurement processes [5][22].