Investment Rating - The report maintains an "Increase" rating for the pharmaceutical and biotechnology sector [6]. Core Insights - The report highlights that the pharmaceutical index increased by 1.90% during the week of July 21-25, underperforming the ChiNext index but outperforming the CSI 300 index [11]. - The focus of the market has shifted towards anti-involution sectors, with low-position innovative drugs performing relatively well, particularly in the latter half of the week [12]. - The report expresses optimism for innovative drugs in 2025, emphasizing the importance of identifying low-position assets with changes while continuing to explore innovative drugs [13]. Summary by Sections 1. Recent Performance - The pharmaceutical sector ranked in the middle of the market performance, with CXO and low-position innovative drugs showing better results [12]. - The report notes that the market's focus has been on anti-involution sectors, with innovative drugs facing temporary pressure but still holding long-term potential [12][13]. 2. Fund Holdings Analysis - As of Q2 2025, the number of A-share pharmaceutical companies held by public funds decreased to 283, while the market value of these holdings increased to 235 billion yuan [21]. - Non-pharmaceutical active funds have shifted from underweight to overweight positions in pharmaceuticals, indicating potential for further allocation [23][27]. 3. Investment Strategy - The report outlines a strategy focusing on innovative drugs, including overseas major pharmaceuticals and small-cap technology revolutions [14]. - Specific companies highlighted for investment include Innovent Biologics, 3SBio, and others in the innovative drug space [14][15]. 4. Sector Allocation - The report indicates that chemical preparations have the highest allocation among sub-sectors, with significant increases in holdings for innovative drug-related companies [19][31]. - The report also notes a preference for other biological products and medical devices among non-pharmaceutical active funds [31][32]. 5. Future Outlook - The report anticipates continued optimism for innovative drugs in 2025, with a focus on new technologies such as brain-computer interfaces and AI in healthcare [13][15]. - The report suggests that the market environment is conducive to asset rotation, particularly for low-position assets that show changes [12][13].

Investment Rating - The report suggests a positive outlook on the pharmaceutical industry, particularly focusing on innovative drugs and potential treatments for cancer cachexia [1][11]. Core Insights - The report highlights the complexity of cancer cachexia and the limited treatment options currently available, emphasizing the importance of developing targeted therapies [17][18]. - It identifies key companies to watch, including Changchun High-tech, Kexing Pharmaceutical, Sunshine Nuohuo, Shiyao Group, and Jinfang Pharmaceutical, which are involved in promising drug candidates [1][17]. - The report anticipates a structural bull market in the pharmaceutical sector, driven by innovative drugs and new technologies [3][14]. Summary by Sections 1. Industry Performance - The pharmaceutical index increased by 1.27% during the week of May 12-16, underperforming the ChiNext index but outperforming the CSI 300 index [1][12]. 2. Cancer Cachexia Insights - Cancer cachexia affects 60%-80% of cancer patients, with approximately 20% of these patients dying from it, highlighting the critical need for effective treatments [17]. - The report discusses the mechanisms of cancer cachexia, including metabolic abnormalities and inflammatory responses, which complicate treatment options [18][21]. 3. Potential Drug Targets - The report identifies GDF15/GFRAL and GHSR as key potential drug targets for cancer cachexia, with several companies developing therapies targeting these pathways [27][35]. - Notable drug candidates include ponsegromab by Pfizer, which has shown promising results in clinical trials [33]. 4. Investment Strategies - The report outlines investment strategies focusing on innovative drugs, including overseas big pharma, early-stage research, and undervalued generics [15][16]. - It emphasizes the importance of self-sufficiency and restructuring the supply chain within the pharmaceutical industry [5][14]. 5. Future Outlook - The report predicts a favorable trading atmosphere for the pharmaceutical sector in 2025, with a high likelihood of structural growth driven by innovative drugs and new technologies [3][14].