Core Viewpoint - The game rules for innovative drugs have changed by 2025, with overseas giants valuing early-stage R&D in China, prompting institutions to reassess their valuations and investment strategies [11] Group 1: Historical Context - Previously, investment institutions focused only on "quickly sellable drugs," disregarding early-stage pipelines due to high risks, with a failure rate of 90% in early projects [2] - Traditional valuation models, such as PE ratios, only considered current profits, leading to the neglect of early pipeline values in innovative drug companies [3] Group 2: Changes by 2025 - Starting in 2025, major pharmaceutical companies like Pfizer and Merck began aggressively acquiring Chinese innovative drug pipelines, especially early-stage projects, with notable transactions such as a $12.5 billion upfront payment for a PD-1/VEGF dual antibody from 3SBio, totaling $60.5 billion [4] - The technological advancements in Chinese innovative drugs have shifted from imitation to global leadership, exemplified by BeiGene's cancer drug generating $2.6 billion in annual sales in the U.S. [5] - The expiration of patents for major drugs has led to increased acquisitions from China [6] Group 3: Industry Reactions - Pharmaceutical companies are investing heavily in early-stage projects, with 35% of the 672 billion yuan spent on R&D in 2024 directed towards early-stage initiatives [7] - CRO companies are experiencing a surge in orders as pharmaceutical firms outsource early-stage research, with AI technologies reducing research timelines and increasing demand for CRO services [8] Group 4: Investment Logic Transformation - The investment logic has shifted from counting "fruits" (marketed drugs) to counting "buds" (potential future products), utilizing new algorithms like rNPV to assess pipeline success rates and future earnings [9] - The secondary market has responded positively, with the PE ratio for innovative drug stocks in Hong Kong rising from 15x to 22x [10]