Market Overview - The pharmaceutical and biotechnology index increased by 1.50% over the past two weeks, underperforming the CSI 300 index by 0.06 percentage points and the ChiNext index by 2.80 percentage points, ranking 16th among 31 sub-industries, indicating average performance [3] - The Hong Kong Hang Seng Healthcare Index decreased by 1.48%, underperforming the Hang Seng China Enterprises Index by 4.31 percentage points [3] Company R&D Progress Tracking - Recent clinical application advancements include: - BeiGene's BG-C9074 and East China Pharmaceutical's HDM2005 are in the new application stage - BeiGene's BGB-45035 tablet has a new IND application - Enhua Pharmaceutical's NH600001 and Baillie Tianheng's BL-M07D1 are in Phase III clinical trials - Yifang Biotech's D-2570 is in Phase II clinical trials - Haosen Pharmaceutical's HS-20118 is in Phase I clinical trials [4] Investment Outlook - The company is optimistic about the domestic substitution of high-end reagents in the upstream life sciences sector, driven by multiple factors including: - Strong product quality as a foundation for domestic substitution - Emerging downstream demands such as anti-tumor and CAR-T therapies providing opportunities for domestic and foreign competition - Policy support facilitating domestic substitution - The increasing emphasis on supply chain security amid rising de-globalization trends acting as a catalyst for domestic substitution [5] 2025 Annual Investment Strategy - The company emphasizes the need to reshape underlying logic and identify investment opportunities from a payment perspective, considering complex trends in population structure, policy frameworks, and economic environments - The core contradiction lies in the willingness to pay versus the ability to pay, leading to a structured selection of investment opportunities [6][7] Payment Channels Analysis - The company identifies three main payment channels within the pharmaceutical industry: - Hospital payments supported by policies (innovative drugs and devices) - Out-of-pocket payments driven by expanding public demand (blood products, home medical devices, weight loss drug supply chain) - Increasing overseas payment cycles (heparin, respiratory joint inspections) [7]

Investment Rating - The report maintains an "Accumulate" rating for the pharmaceutical and biotechnology sector [5]. Core Viewpoints - The report is optimistic about the domestic substitution of high-end reagents in the upstream life sciences sector, driven by factors such as product quality, emerging demands in oncology and CAR-T therapies, policy support, and the increasing emphasis on supply chain security amid rising global protectionism [2][24]. Summary by Sections Market Review - Over the past two weeks, the pharmaceutical and biotechnology index increased by 1.50%, underperforming the CSI 300 index by 0.06 percentage points and the ChiNext index by 2.80 percentage points, ranking 16th among 31 sub-industries [1][17]. - The Hong Kong Hang Seng Healthcare Index fell by 1.48%, lagging behind the Hang Seng China Enterprises Index by 4.31 percentage points [1][17]. Company Updates - Recent clinical application updates include new undertakings for injectable BG-C9074 by BeiGene and HDM2005 by Huadong Medicine, as well as IND applications for BGB-45035 tablets by BeiGene [27]. - Companies such as Enhua Pharmaceutical and Bide Pharmaceutical are currently in Phase III clinical trials for NH600001 and BL-M07D1, respectively [27]. Investment Recommendations - The report suggests focusing on companies like Titan Technology, Novozymes, Aladdin, Bide Pharmaceutical, Baipusais, and Yiqiao Shenzhou, which are well-positioned to benefit from the domestic substitution trend in high-end life science reagents [2][24]. Financial Forecasts and Valuations - Key company forecasts include: - Hengrui Medicine: EPS of 1.07 in 2025E with a PE of 48, rated as "Accumulate" [4]. - Mindray Medical: EPS of 10.62 in 2025E with a PE of 22, rated as "Buy" [4]. - United Imaging Healthcare: EPS of 2.39 in 2025E with a PE of 59, rated as "Buy" [4]. - Yuyue Medical: EPS of 2.32 in 2025E with a PE of 15, rated as "Buy" [4].