Investment Rating - The industry investment rating is "Outperform" [2] Core Insights - The report highlights a significant mismatch in supply and demand within the oral medication market for autoimmune diseases, indicating a potential shift driven by new molecular entities (NME) [6][15] - The overall market for psoriasis is valued at $27 billion, with oral medications currently holding only a 9% market share, suggesting substantial growth potential as demand shifts towards oral therapies [6][15] - The report emphasizes the long-term growth potential of innovative drugs in China, supported by a robust pipeline and increasing global competitiveness [8][20] Summary by Sections 1. Autoimmune Oral Medication Market - There is a large demand for oral medications in the autoimmune sector, with 75% of patients willing to switch from injectable therapies to oral options [6][15] - Current oral therapies are insufficient in efficacy and safety compared to biological agents, leading to a significant gap in market share [6][15] - New Tyk2 inhibitors and other NMEs are identified as having promising potential to meet this demand [6][15][16] 2. Industry Overview and Investment Recommendations - The A-share pharmaceutical sector saw a decline of 2.4% from November 3 to November 7, 2025, underperforming the CSI 300 index by 3.22 percentage points [7][17] - The report recommends focusing on innovative drug companies, CXO services, and companies with strong R&D capabilities as key investment opportunities [8][20][22] 3. Market Performance - The report notes that the pharmaceutical sector's overall valuation as of November 7, 2025, is 30.05, with a relative valuation premium of 122.72% over the CSI 300 index [40] - The report provides insights into the performance of various sub-sectors, highlighting the relative strength of the biopharmaceutical and medical device sectors [35][40] 4. Specific Sector Insights - **Innovative Drugs**: The report is optimistic about the long-term trends in innovative drugs, citing strong growth and global competitiveness [8][20] - **CXO Services**: The report indicates a recovery in the CXO sector, driven by increased demand and improved profitability [22][23] - **Medical Devices**: The report suggests that the medical device sector is showing signs of recovery, with opportunities arising from policy changes and procurement improvements [27][28] - **Traditional Chinese Medicine**: The report highlights the potential for growth driven by innovation and favorable policy changes [30][31]