Core Viewpoint - A proposed executive order from the Trump administration is causing significant turmoil in the biopharmaceutical market, with major declines in stock prices for several companies [1][6]. Market Reaction - In the A-share market, companies such as Nossger, Huyou Pharmaceutical, and Tigermed saw declines exceeding 5%, with others like Yaoshi Technology and WuXi AppTec also following suit [1][2]. - The Hong Kong market's innovative drug concept index initially dropped over 7%, later narrowing to a 4.39% decline by midday [2]. Proposed Policy Impact - The New York Times reported that the proposed policy would require the FDA to conduct stricter reviews of clinical trial data from China, with companies submitting such data facing higher regulatory fees [3]. - If implemented, these restrictions could disrupt the U.S. pharmaceutical industry and affect the supply of all types of drugs, from generics to advanced therapies [6]. Industry Concerns - Analysts express that this "black swan" event could lead to a global supply chain restructuring, similar to the trade war during Trump's first term [7]. - The potential for drug shortages and rising prices in the U.S. market is a significant concern, particularly for generic drugs [7]. Investment Sentiment - Investor sentiment is divided, with some viewing the situation as a short-term emotional shock, while others worry that the end of the U.S. market could signal the end of the Chinese innovative drug bull market [9]. - Historical data suggests that after similar events, the pharmaceutical sector typically experiences a rebound within 2-4 weeks, with potential gains of 15%-20% [9].

Investment Rating - The investment rating for Genscript Biotech Corp. is "Buy" with a 12-month price target of HK$27.34, indicating an upside potential of 84.5% from the current price of HK$14.82 [8]. Core Insights - Management highlighted that ProBio revenues are expected to bottom out, driven by the LaNova deal, with a projected revenue of US$95 million in FY24, reflecting a 13% year-over-year decline [5]. - The protein segment is anticipated to become the second growth engine for the life science group, with a significant increase in revenue contribution from 23% in 2023 to nearly 30% [6]. - The company expects a steadily improving bottom line, with share buybacks and dividends under consideration as profitability improves starting from 2025 [6]. Summary by Sections ProBio Performance - ProBio revenues are projected to recover, with management confident that the revenue is bottoming out due to factors such as improved funding for biotech clients and stabilizing pricing in China [5]. - The LaNova/Merck deal is expected to contribute significantly, with US$235 million booked in the first half and an additional US$75 million milestone expected in 2H25 [5]. Life Science Group Growth - The life science group has shown steady growth of 10-20% over the years, with gene synthesis having a total addressable market (TAM) of US$1-2 billion, while customized protein synthesis is expected to have a TAM 10 times larger [6]. - The company is reallocating resources to enhance growth in the protein synthesis sector, which is expected to be a major growth driver in the coming years [6]. Financial Outlook - Excluding the impact from Legend deconsolidation, the adjusted net profit for the ex-Legend businesses is expected to reach US$60 million in FY24, with consistent profitability anticipated starting in 2025 [6]. - Management expects the EBITDA break-even point for ProBio to be achieved when revenues reach US$150-200 million, with Bestzyme remaining at break-even until 2027 [6].

Group 1 - The Hong Kong pharmaceutical ETF (513700.SH) has risen by 1.34%, reaching a new high of 1.038 billion yuan, with major constituent stocks like Kangfang Biotech up 6.07% and WuXi Biologics up 3.11% [1] - Recently, 3SBio entered a licensing agreement with Pfizer for the PD-1/VEGF dual antibody SSGJ-707, granting Pfizer global rights outside of mainland China, with 3SBio receiving an upfront payment of $1.25 billion and potential milestone payments of up to $4.8 billion, along with royalties [1] - The only remaining PD-1/VEGF pipeline in China currently in Phase II clinical trials is RC148 from Rongchang Biotech, which is based on the Hibody dual antibody technology platform and is expected to enter Phase I clinical trials for treating advanced malignant solid tumors by July 2024 [1] Group 2 - Rongchang Biotech is in discussions for multiple collaborations with various companies, and there is speculation that RC148 may also attract interest from overseas pharmaceutical giants, similar to other companies in the PD-1/VEGF dual antibody space [2] - According to Zhongtai Securities, the pharmaceutical and biotechnology industry is experiencing rapid thematic opportunities due to diverse external policy changes, with recent positive developments in US-China tariff policies alleviating pessimism [2] - The firm maintains an "overweight" rating for the pharmaceutical and biotechnology sector, particularly highlighting 3SBio among Hong Kong Stock Connect pharmaceutical constituents as a "buy" recommendation, suggesting that policy changes will create structural opportunities in the industry [2]

Group 1 - The company provides comprehensive technical solutions in various fields, including CRO/CDMO drug impurity analysis, medical testing, food safety testing, and environmental monitoring [2] - The company has a strong technical foundation and credibility, enabling it to serve global partners effectively [2] - The company has not reported any preferred stock profit distribution plan for the reporting period [2] Group 2 - The company has changed its accounting firm to Lixin Certified Public Accountants (Special General Partnership) for the current reporting period [1] - The company has not experienced any need to restate or adjust previous accounting data [3] - There are no significant differences between the financial indicators disclosed in the quarterly and semi-annual reports [3]

Group 1 - The biopharmaceutical industry is a rapidly growing strategic emerging industry globally, with significant government support and innovation driving its development [5][7] - The global biopharmaceutical market grew from $261.1 billion in 2018 to $363.8 billion in 2022, with a compound annual growth rate (CAGR) of 8.6%, and is expected to reach $783.2 billion by 2030, with a CAGR of approximately 10.1% from 2022 to 2030 [5] - In China, the biopharmaceutical market is projected to grow from $45.2 billion in 2019 to $66.5 billion in 2023, with a CAGR of 10.13%, and is expected to reach $162.8 billion by 2030, with a CAGR of approximately 13.64% from 2023 to 2030 [7] Group 2 - The company specializes in the production and sales of biopharmaceuticals, including the first commercialized nerve growth factor product, Jinlujie, which has been widely used in clinical applications for nerve injury repair [15][16] - The company’s subsidiary, Tianjin Hankan, is a well-known CRO-CDMO integrated service provider, offering a comprehensive range of drug development services from research to clinical trials and production [11][22] - The company has developed over 200 products for more than 600 enterprises, with significant achievements in the development of generic drugs and innovative drugs [12][11] Group 3 - The company has received various accolades, including being recognized as a "National Specialized and New 'Little Giant' Enterprise" and ranking among the top 50 innovative enterprises in the pharmaceutical industry [13] - The company’s product pipeline includes innovative drugs such as injection of Epinavamine, a targeted anti-tumor drug, and other pharmaceutical products that address various medical needs [17][18][20] - The company has made significant advancements in drug registration, with several products receiving approval from the National Medical Products Administration [37]