Core Insights - The current flu outbreak in Japan is driven by the H3N2 strain, which has strong transmissibility and immune evasion characteristics, leading to a potential increase in infection rates compared to previous years [1][5][9] Group 1: Virus Characteristics - The H3N2 strain is similar to seasonal flu but can lead to severe cases, including myocarditis and encephalitis if it enters the bloodstream or brain [3][4] - There is a general lack of immunity among the population against the H3N2 strain, which accelerates the spread of the virus [5][7] Group 2: Infection Rates and Impact - The infection rate for seasonal flu is typically around 50%, suggesting that this year could see even higher rates of infection due to the H3N2 strain's increased transmissibility [7] - The flu season has started over a month earlier than usual, putting significant pressure on Japan's healthcare system, with reports of flu alerts and school closures increasing [9][10]

Core Insights - The flu epidemic in Japan is rapidly expanding, with a reported 84,183 cases from November 3 to 9, which is 1.5 times the previous week [1] - The Ministry of Health has declared a flu epidemic season earlier than usual, starting on October 3, 2023, which is five weeks earlier than in 2024 [4] Summary by Sections Flu Cases and Impact - Over 3,800 medical institutions reported an average of over 30 cases per institution in certain regions, reaching "alert" levels [1] - In Tokyo, the average reported cases per institution were 29.03, prompting the local government to issue a flu epidemic alert [1] - Approximately 1,125 schools and kindergartens in Tokyo have closed since September, which is 11 times more than the same period last year [3] Severity and Symptoms - Many children are experiencing severe symptoms, with some requiring emergency medical attention due to complications like meningitis [3] - Symptoms reported include confusion and seizures, indicating urgent medical situations [3] Contributing Factors - Experts attribute the severity of the flu epidemic to several factors, including a lack of preventive measures such as handwashing and mask-wearing, as well as fluctuating temperatures affecting immune responses [5] - The public is urged to adopt preventive measures, including wearing masks, frequent handwashing, and timely vaccination to reduce infection risks [6]

Investment Rating - The report maintains an "Overweight" rating for the pharmaceutical and biotechnology industry [1]. Core Insights - The incidence of influenza-like illness (ILI) has increased, with southern provinces reporting an ILI percentage of 4.6% in the 44th week of 2025, up from 4.1% the previous week and higher than the same period in 2022 (3.1%) and 2024 (3.3%), but lower than 2023 (5.9%). Northern provinces reported an ILI percentage of 5.1%, also higher than previous years [3][4]. - The report indicates a significant rise in flu cases compared to historical levels, suggesting a potential risk for a severe flu season in 2025 due to changes in circulating strains and the possibility of breaching herd immunity [3]. Summary by Sections Influenza Vaccine - The report highlights the low penetration rate of influenza vaccines in China, suggesting that the anticipated rise in flu cases could lead to increased demand for vaccines. Companies such as Hualan Biological Engineering, Baike Biological, and Gendik are recommended for investment [4]. Virus Detection - There is an expected increase in demand for respiratory virus diagnostic products due to the rise in respiratory infections. Companies with relevant products, such as Innotec, Shengxiang Biological, Botao Biological, and Wanfu Biological, are highlighted as potential beneficiaries [4]. Cold and Specialty Drugs - The demand for cold medications is expected to rise in Q4 2025, with sales likely exceeding market expectations. Companies such as Zhongsheng Pharmaceutical, China Resources Sanjiu, Kangyuan Pharmaceutical, Fangsheng Pharmaceutical, Jichuan Pharmaceutical, Yiling Pharmaceutical, Dongyangguang Pharmaceutical, Jian Kangyuan, and Te Yi Pharmaceutical are recommended for investment [5].