Core Viewpoint - The article discusses the significant performance differences in the biopharmaceutical sectors across Hong Kong, A-shares, and the US, highlighting the strong recovery of Hong Kong's innovative drugs and devices, while US biotech faces severe undervaluation [1][2][19]. Group 1: Market Performance - In the first half of 2025, the Hang Seng Medical Index surged by 47.9%, while the A-share medical index rose by only 3.5%, and the S&P 500 Healthcare Index fell by 2.0% [2]. - The performance of Hong Kong's medical sector contrasts sharply with the stagnation in A-shares and the decline in US stocks, indicating a significant market recovery for Hong Kong [2][4]. - The cumulative performance of the Hang Seng Medical Index since 2019 still lags behind the XBI and A-share indices, suggesting a return to previous valuations rather than future borrowing [2][4]. Group 2: Internal Differentiation in Hong Kong - There is a stark differentiation between innovative drugs and high-cost medical devices in Hong Kong, with the median price-to-book (PB) ratio for innovative drugs increasing from 1.6-1.7 to approximately 6.0, while high-cost devices rose more modestly from 1.2 to about 2.2 [4][5]. - The high-cost medical devices experienced a median decline of over 85% but have only seen a moderate recovery of around 100%, indicating substantial room for further recovery [5][6]. Group 3: US Biotech Landscape - The US biotech sector is experiencing a severe split, with significant declines in small-cap biotech stocks, while larger companies with strong commercial logic have seen substantial gains [7][19]. - Many US biotech stocks have dropped by 80% to 90% from their 2020-2021 highs, indicating a market that has been systematically undervalued [13][20]. - The article suggests that the US biotech sector, despite its challenges, may present numerous undervalued investment opportunities if the industry outlook improves [13][20]. Group 4: Future Outlook - The global biopharmaceutical industry is expected to continue advancing, particularly in cell-based technologies, which could unlock significant new growth potential [16][20]. - The US biotech sector is anticipated to benefit from new industry waves, with a strong competitive advantage in pioneering innovations [20]. - The potential for the Federal Reserve to lower interest rates in the coming months could provide a favorable environment for the recovery and revaluation of US biotech stocks [18][20]. Group 5: Chinese Innovative Drugs - The strong performance of Chinese innovative drugs is attributed to the ongoing industry reforms and the increasing recognition of Chinese innovations in both domestic and international markets [21][23]. - The article emphasizes that the pharmaceutical sector's dynamics favor innovative drugs over high-cost devices due to the latter's slower adoption and more complex commercialization processes [26][27]. - The company plans to adjust its portfolio by reallocating funds from fully valued Hong Kong innovative drugs to undervalued US biotech stocks and high-potential Chinese medical devices [25][31].