Investment Rating - The report rates the industry as "Overweight" indicating that the industry index is expected to outperform the CSI 300 index by 10% or more over the next six months [39]. Core Insights - The pharmaceutical and biotechnology sector has shown strong performance, with a 1.78% increase in the last week, outperforming the CSI 300 index by 1.96 percentage points. Year-to-date, the sector has risen by 4.30%, ranking 6th among 31 industries [11][12]. - The sector's current PE valuation stands at 27.51 times, which is at a historically low level, with a 132% premium over the CSI 300 index [19]. - Notable individual stock performances include Sangfor Technologies, which surged by 99.96%, and Haicheng Pharmaceutical, which increased by 51.55% [26]. Market Performance - The pharmaceutical and biotechnology sector ranked first among 31 industries with a weekly increase of 1.78% [11]. - Year-to-date, the sector has increased by 4.30%, outperforming the CSI 300 index by 5.64 percentage points [12]. - The top three sub-sectors in terms of weekly growth were chemical pharmaceuticals (3.58%), biological products (1.74%), and medical services (1.42%) [11]. Industry News - On May 20, 2025, Sangfor Pharmaceuticals announced a deal with Pfizer, granting exclusive rights for the global development and commercialization of SSGJ-707, with an upfront payment of $1.25 billion and potential milestone payments of up to $4.8 billion [28]. - The 2025 ASCO annual meeting highlighted the strong performance of Chinese pharmaceutical companies, with over 70 research outcomes presented, marking a 33% increase from the previous year [29][30]. Investment Recommendations - The report suggests focusing on innovative drugs as the core investment theme, highlighting the significant competitive advantages and market potential of domestic innovative drugs [37]. - Recommended stocks include Betta Pharmaceuticals, Teva Biopharmaceuticals, Lingrui Pharmaceutical, Lao Baixing, and Baipusais [37]. - Additional stocks to watch include Kelun Pharmaceutical, Lijun Group, Kaili Medical, Huaxia Eye Hospital, and Qianhong Pharmaceutical [37].