Core Viewpoint - The pharmaceutical sector has shown significant divergence in performance, with innovative drugs outperforming while other segments like medical devices and traditional Chinese medicine lag behind [1][2][3] Group 1: Performance Disparity - As of July 28, the performance gap among pharmaceutical theme funds exceeded 120%, with funds focused on Hong Kong innovative drugs leading the pack [1][2] - The China Securities Index for Hong Kong innovative drugs recorded a year-to-date increase of 111.08%, while the medical index only rose by 14.74% [2][3] - A total of 393 pharmaceutical-related funds were tracked, with the highest fund showing a net value increase of over 120% and the lowest at -3.08% [3] Group 2: Market Trends - The A-share pharmaceutical stocks continued to rise, with CRO concept stocks leading the gains, and multiple stocks increasing over 5% [2] - Hong Kong's biotechnology and healthcare indices also performed well, with increases of 4.11% and 3.82% respectively [2] - Despite the overall strong performance, there is a clear divide between the booming innovative drug sector and the underperforming medical and traditional Chinese medicine sectors [2][3] Group 3: Investment Strategies - Some fund managers have reduced their holdings in high-performing sectors like innovative drugs, opting for a balanced approach across medical devices and consumer healthcare [4] - The focus on defensive positions and dividend stocks has been noted as a reason for underperformance in certain funds [3][4] - Analysts suggest that while innovative drugs are currently strong, there are opportunities for valuation recovery in medical devices and healthcare sectors [6][7] Group 4: Risks and Future Outlook - The innovative drug sector's recent surge is attributed to favorable policies, successful international business development, and improved fundamentals [6] - However, there are accumulating short-term risks, including high trading congestion and potential regulatory hurdles [6] - Analysts from CITIC Construction Investment predict a recovery in the medical device sector's overall valuation, with several companies expected to turn profitable by 2025-2027 [7]