Investment Rating - The report maintains a "Positive" investment rating for the innovative drug industry [12]. Core Insights - The innovative drug industry is experiencing a convergence of policy, industry, and performance factors, indicating a potential new cycle of value reassessment [4][9]. - The previous valuation methods under "bear market thinking" may no longer be applicable, necessitating a re-evaluation of the valuation system for innovative drug companies [9][10]. Policy Insights - The pharmaceutical industry is characterized by strong regulation and exhibits a certain "policy cyclicality." Since 2024, supportive policies for the entire innovative drug industry chain have gradually been implemented, including the introduction of incremental insurance funds and adjustments to centralized procurement [7][24]. - From 2018 to 2024, the sales of newly negotiated drugs during the agreement period exceeded 540 billion yuan, accounting for only 2% of the total expenditure of the medical insurance fund during this period, indicating significant room for growth [32]. Industry Insights - Chinese innovative drugs are gaining global recognition, with a record number of 126 companies showcasing nearly 300 research results at the 2025 AACR conference, marking a historical high for both participation and achievements [33][35]. - The quality and quantity of business development (BD) transactions for Chinese innovative drugs have significantly improved, with substantial out-bound deals in areas such as ADCs and dual antibodies [33][40]. - The number of original innovative drugs developed in China has surpassed that of the United States, with the proportion of first-in-class (FIC) drugs increasing to 24% globally [36]. Performance Insights - The leading biopharma companies are showing improved performance, with the total net profit of A/H innovative drug-related companies projected to reach 11.67 billion yuan in 2024, a significant increase from 670 million yuan in 2023 [70]. - Companies like Innovent Biologics and BeiGene are expected to achieve profitability by 2025, while others like Rongchang Biologics and Kelun-Biotech are narrowing their loss trends [70]. - The BD business for domestic innovative drug companies has become a sustainable profit-generating business, contributing positively to cash flow and overall profitability [72].