Core Viewpoint - The investment opportunities in the pharmaceutical industry for 2026 are highlighted, particularly in innovative medical devices, innovative drugs, and high-growth CXO and upstream life sciences companies [1] Group 1: Investment Opportunities - Innovative medical devices are identified as a focus area, contingent on performance alignment [1] - After a correction in innovative drugs, certain high-quality targets are recommended for attention [1] - High-growth CXO and upstream life sciences companies are also considered worthy of attention if they can maintain robust business growth [1] Group 2: Market Conditions - The pharmaceutical sector has been at a low point since peaking in 2021, presenting current investment opportunities [1] - Institutional investors may reallocate resources when the fundamentals of pharmaceutical companies improve and performance aligns [1] Group 3: Stock Selection Strategy - The company aims to identify and predict significant turning points in the lifecycle of industries and companies [1] - The strategy involves early market positioning to capture excess returns as industry and company values become recognized, leading to simultaneous performance and valuation increases [1] - A preference for innovative drug industry chains (CXO, upstream life sciences) as a high-probability offensive base, while positioning medical devices as a defensive allocation [1]

Core Insights - Recently, the establishment of China Resources (Chengdu) Pharmaceutical Industry Equity Investment Fund Partnership (Limited Partnership) was announced, with a total investment of 1 billion RMB, focusing on venture capital in the pharmaceutical sector [1] Group 1: Fund Establishment - The fund is executed by China Resources Pharmaceutical Technology (Chengdu) Partnership (Limited Partnership) and has a registered capital of 1 billion RMB [1] - The fund's partners include Chengdu Major Industrialization Project Phase II Equity Investment Fund Co., Ltd., Boya Bio (300294), Dong-E E-Jiao (000423), China Resources Double Crane (600062), and Jiangzhong Pharmaceutical (600750) [1] Group 2: Investment Focus - In July, several listed companies under China Resources announced plans to jointly invest in the establishment of China Resources Pharmaceutical (Chengdu) Innovation Investment Fund Partnership (Limited Partnership) [1] - This new fund will focus on the main responsibilities of the pharmaceutical health sector and strategic emerging industries [1]

Group 1 - Company East China Pharmaceutical announced a joint investment of 2 billion yuan to establish a specialized pharmaceutical industry investment fund with Shanghai Fuguang Private Equity Fund and others [1] - The company will contribute 980 million yuan, accounting for 49% of the total investment, while the other partners will contribute 490 million yuan each, representing 24.5% [1] - The fund will focus on investing in innovative drugs, medical aesthetics, health, animal protection, and other related fields that align with Hangzhou's five major industrial ecosystems [1] Group 2 - For the first half of 2025, East China Pharmaceutical reported revenue of 21.675 billion yuan, a year-on-year increase of 3.39%, and a net profit attributable to shareholders of 1.815 billion yuan, up 7.01% [2] - The pharmaceutical industrial sector is the core business, but the medical aesthetics segment faced a 17.5% decline, generating revenue of 1.112 billion yuan [2] - Innovative drugs have become a key growth driver, with sales and agency service revenue reaching 1.084 billion yuan, a 59% increase, accounting for 14.8% of the pharmaceutical industrial revenue [2] Group 3 - The company increased its R&D expenditure by 33.75% to 1.484 billion yuan in the first half of the year, with direct R&D spending rising by 54.21% to 1.174 billion yuan [3] - Direct R&D spending accounted for 15.97% of the pharmaceutical industrial revenue [3]

Group 1 - The company, Huadong Medicine (000963.SZ), announced its participation as a limited partner in a new investment fund, "Hangzhou Fuguang Hongze Equity Investment Partnership (Limited Partnership)" [1] - The total committed capital for the fund is RMB 2 billion, with the company contributing RMB 980 million, representing a 49% stake [1] - The investment focus of the fund includes innovative pharmaceuticals, medical aesthetics, health and wellness, animal health, and other sectors related to biology, medicine, and health that align with Hangzhou's five major industrial ecosystems [1]

Investment Overview - The company, through its wholly-owned subsidiary, is participating in the establishment of the Zhaoying Huikang Fund, contributing 200 million yuan, which represents 20% of the fund [1][2] - The investment is part of the company's strategic development to enhance its core competitiveness while ensuring stable growth in its main business [2] Fund Registration Progress - The Zhaoying Huikang Fund has completed the private investment fund registration process with the China Securities Investment Fund Industry Association and has obtained the Private Investment Fund Registration Certificate [2] - The fund is managed by招商致远资本投资有限公司 and is custodied by招商银行股份有限公司 [2]