Investment Rating - The industry investment rating is "Outperform" [2] Core Views - The report emphasizes the continuous catalysts in the small nucleic acid industry for 2026, highlighting the potential investment opportunities within the industry chain [5][19] - The report suggests a positive outlook for innovative drugs and the industry chain, with expectations of increased global participation from domestic innovative drug companies and the introduction of more innovative projects in 2026 [11][30] - The report identifies the medical device sector as a potential area for capital inflow, with signs of improvement in leading companies and a reduction in the pressure from centralized procurement [13][34] Summary by Sections Industry Overview - The closing index for the industry is at 8657.19, with a 52-week high of 9323.49 and a low of 6876.88 [2] Recent Market Performance - The A-share pharmaceutical and biotechnology sector fell by 0.68% from January 12 to January 16, 2026, underperforming the CSI 300 index by 0.11 percentage points [9][28] - The medical research outsourcing sector performed the best among sub-sectors, rising by 3.69%, while the vaccine sector declined by 3.43% [10][28] Innovative Drugs and Industry Chain - The JPM conference highlighted the strengthening of industry development logic, with increased merger and acquisition activity among multinational corporations and breakthroughs in domestic innovative drugs [11][30] - The report recommends focusing on companies with high certainty and relatively low disruption expectations, such as Innovent Biologics and others [11][30] Medical Devices - The report notes that the medical device sector is showing signs of improvement, with leading companies reporting better performance in Q3 [13][34] - The report suggests that the pressure from centralized procurement is decreasing, which may lead to valuation recovery [13][34] Small Nucleic Acid Drugs - The report highlights several key clinical trials and data readouts expected in 2026 from companies like Alnylam, Arrowhead, and Wave Life Sciences, indicating a significant focus on the weight loss and CNS fields [6][8][27] - The report encourages attention to domestic small nucleic acid-related companies and upstream industry chains [27] Investment Recommendations - The report suggests focusing on companies in the CXO and life science services sectors, as demand for overseas R&D and production outsourcing is expected to recover steadily [12][31] - It also highlights the potential for valuation re-evaluation opportunities in the biopharmaceutical sector, particularly for blood products and vaccines [32][33]

Core Insights - The small nucleic acid drug sector in China is entering a "capital year" in 2026, with increasing market interest and significant transactions, such as the successful IPO of Rebio and the acquisition of Hegia Biotech by China National Pharmaceutical Group for 1.2 billion yuan [1] - The global small nucleic acid drug market is characterized by a "three strong" dominance, with Alnylam, Ionis, and Sarepta leading the industry due to their technological barriers and commercialization advantages [1][5] - The market for small nucleic acid drugs is projected to grow from $5.247 billion in 2024 to $46.7 billion by 2033, with a compound annual growth rate (CAGR) of 25% [10] Market Dynamics - In 2024, global sales of small nucleic acid drugs reached $5.247 billion, with Ionis and Biogen's Spinraza leading at $1.573 billion, followed by Alnylam's Amvuttra at $0.971 billion and Sarepta's DMD treatments at $0.967 billion [2] - The current landscape features two main technological routes: Antisense Oligonucleotides (ASO) and small interfering RNA (siRNA), each with distinct mechanisms and advantages [4][7] - Alnylam has established itself as a leader in RNAi therapy, with a high clinical conversion rate of 64.3%, significantly above the industry average of 5.7% [7] Competitive Landscape - Ionis focuses on ASO technology, having launched the first ASO drug in 1998 and currently holding nine of the twelve approved ASO drugs globally, including the top-selling Spinraza [7][8] - Sarepta has specialized in muscle diseases, particularly DMD, with four approved drugs and a revenue growth of over 50% in 2024, reaching $1.9 billion [9] - The competitive landscape is evolving, with multinational corporations (MNCs) increasingly entering the market through acquisitions and collaborations, reflecting a growing interest in the sector [16][19] Emerging Opportunities - The market is entering a commercialization phase, with potential blockbuster products needed to transition from niche to mainstream [10] - Alnylam's Amvuttra and Novartis's Leqvio are identified as strong candidates for future blockbuster status, with Amvuttra projected to exceed $2 billion in sales by 2025 [12][13] - New products like Arrowhead's Plozasiran and Alnylam's Zilebesiran are expected to broaden the treatment landscape, moving from rare diseases to more common conditions [15] Strategic Movements - MNCs are actively pursuing partnerships and acquisitions to enhance their presence in the small nucleic acid space, with notable transactions in 2025 exceeding $36.473 billion [16][18] - Companies like Novartis are building comprehensive pipelines across various therapeutic areas, including cardiovascular and rare diseases, to strengthen their competitive position [18] - Chinese biotech firms are emerging as significant players, leveraging unique delivery technologies and cost advantages, leading to increased collaborations with MNCs [19][20]

Group 1: AI in Pharmaceuticals - The application of artificial intelligence (AI) in the pharmaceutical sector has progressed beyond early trials to a systematic deployment phase aimed at creating core value [1] - The focus of competition is shifting from mere technical algorithms to how companies can restructure their data, processes, and organizational systems around key R&D and commercialization aspects [1] - Leading institutions are developing specialized AI systems embedded with compliance frameworks to optimize clinical trial management, enhance laboratory efficiency, and improve the timeliness of business decisions [1] Group 2: Small Nucleic Acid Drugs - The small nucleic acid drug industry is expanding its value narrative from breakthroughs in cardiovascular diseases to new areas such as kidney diseases, which is a key growth story for the sector [2] - The core driver of this trend is the anticipated readout of several key clinical data points in 2026, with therapies targeting important pathway targets showing significant potential to reduce proteinuria and stabilize kidney function [2] - The active clinical advancements by international leading companies provide strong concept validation for the entire sector, expected to drive a new wave of R&D focus and commercial collaborations [2] Group 3: JPMorgan Healthcare Conference - The JPMorgan Healthcare Conference serves as a strategic barometer for observing annual trends, gathering hundreds of global biopharmaceutical companies and investment institutions [3] - The participation and visibility of Chinese companies have significantly increased, showcasing China's advancing position in global pharmaceutical innovation [3] - Key topics at the conference revolve around capital allocation and strategic partnerships, with Chinese assets that possess "innovation upgrades" and "cost advantages" attracting considerable attention [3] Group 4: Market Outlook - The outlook for the innovative drug sector remains strong, with significant capital inflow driven by factors such as robust global competitiveness of Chinese innovations and ongoing domestic policy support for innovative drugs and commercial insurance [3] - The commercial profitability of leading biotech companies is improving, and the sector is characterized by low valuation advantages [3] - The CXO sector is expected to have a positive outlook leading up to 2026, while the medical device sector may see a recovery in the second half of the year, with bright spots in specific segments of medical services [3]

Group 1 - The year 2025 is significant for China's innovative drug exports, with a total transaction amount reaching $135.655 billion, a down payment of $7 billion, and a record 157 transactions [1] - The innovative drug sector not only provides R&D funding for companies but also reshapes the industry's valuation system, with the innovative drug index increasing by 35.31%, outperforming the CSI 300 index by 17.65% [1] - Breakthroughs in small nucleic acid drugs have been noted, with GSK's Bepirovirsen for chronic hepatitis B completing Phase III studies, and domestic companies like Yuyuan Pharmaceutical and Reborn Biotech making significant progress in liver-targeted drug development [1] Group 2 - In the oral autoimmune drug sector, Takeda's TYK2 inhibitor zasocitinib shows excellent performance in Phase III studies for psoriasis, with domestic companies such as Yifang Biotech and Nocare Biopharma also advancing related clinical trials [1] - Brain-computer interface technology is entering the industrialization phase, with Neuralink planning to mass-produce devices by 2026, supported by domestic policies accelerating medical application implementation [1] - The ZAP-X radiation therapy device brings new breakthroughs in brain tumor treatment, with domestic market demand potential reaching a scale of hundreds of billions [1] Group 3 - The commercialization path for AI in healthcare is becoming clearer, with pathology fee reforms establishing pricing mechanisms for AI-assisted diagnosis, leading to accelerated development in consumer applications [1]

Group 1: Market Overview - The A-share market experienced a strong start to the year, with major indices showing significant increases, indicating a rise in market risk appetite [5] - The financing amount increased significantly, reflecting a continued optimistic performance in the market [5] - The spring market rally is anticipated to continue, supported by improved market sentiment [5] Group 2: Fixed Income - In the credit bond market, 332 bonds were issued with a total issuance scale of 312.27 billion, marking a 30.6% increase compared to the previous period [6] - Credit spreads varied across industries, with the largest increase in the food and beverage sector (up 2.1 basis points) and the largest decrease in the telecommunications sector (down 8.3 basis points) [6] Group 3: Commodities - The TC spot price reached a historical low, indicating ongoing tightness in copper concentrate procurement, while domestic social inventory continues to grow [7] - Despite the pressure on demand from rising copper prices, the supply-demand situation is expected to remain tight, with a positive outlook for copper prices in 2026 [7] Group 4: Chemical Industry - The small nucleic acid drug market is projected to experience rapid growth in 2026, with key players like Bluestar Technology and Lonza leading breakthroughs in critical areas [8] - The Chinese Ministry of Commerce has introduced measures against Japan, increasing the urgency for domestic substitution of key semiconductor materials [8] Group 5: Renewable Energy and Environmental Protection - The photovoltaic industry is expected to focus on coordination and method restructuring, while the battery industry is advised to prevent oversupply in energy storage batteries [9] - Investment opportunities are identified in domestic computing power, hydrogen energy, and upstream energy storage sectors, with a positive outlook for lithium carbonate prices in the short term [9]

Investment Rating - The report maintains a "Recommended" rating for the pharmaceutical industry as of January 11, 2026 [3] Core Insights - 2025 marked a significant year for Chinese innovative drugs going overseas, with total transaction amounts reaching $135.655 billion, including $7 billion in upfront payments and 157 deals, setting historical highs [4] - The innovative drug index saw a 35.31% increase in 2025, outperforming the CSI 300 index by 17.65% [4] - The trend of Chinese innovative drugs going global is expected to strengthen in 2026, with significant deals such as the one between Yilian Biotech and Roche for the YL201 project, which includes a $570 million upfront payment [4] - The small nucleic acid drug sector is experiencing breakthroughs, with GSK's Bepirovirsen showing positive results in Phase III trials for chronic hepatitis B, potentially becoming the first drug to achieve functional cure [5] - The report highlights the importance of oral autoimmune drugs, with Takeda's TYK2 inhibitor showing promising results in treating moderate to severe plaque psoriasis [6] - The brain-computer interface technology is entering a critical industrialization phase, with companies like Neuralink set to produce devices in 2026, supported by favorable policies and clinical trials in China [8] - The ZAP-X radiotherapy device is expected to capture a significant market opportunity in China, with the non-invasive tumor radiotherapy market projected to grow from RMB 27.2 billion in 2018 to RMB 59.4 billion by 2024 [10] Summary by Sections 1. Pharmaceutical Market Tracking - The pharmaceutical industry index underperformed the CSI 300 index by 2.13% over the past week, ranking 25th among 31 industry indices [28] - Over the past month, the pharmaceutical industry index also lagged behind the CSI 300 by 5.42%, ranking 27th [29] 2. Pharmaceutical Sector Trends and Valuation - The current PE (TTM) for the pharmaceutical industry index is 36.95, above the five-year historical average of 31.12 [52] 3. Recent Research Achievements - The report includes various deep-dive studies on topics such as the growth of biological agents and oral drugs, and the impact of policy support on the inhalation drug industry [55] 4. Important Industry Policies and News - Recent policies include the issuance of the fourth batch of encouraged generic drug directories by the National Medical Products Administration [57] - Significant news includes GSK's announcement of positive Phase III results for Bepirovirsen and Yilian Biotech's licensing agreement with Roche [58][59]

Investment Rating - The report maintains a rating of "Buy" for the small nucleic acid drug industry, indicating an expected investment return exceeding 15% over the next 6-12 months [5]. Core Insights - The small nucleic acid drug market, primarily driven by SiRNA and ASO, is experiencing rapid growth from technological breakthroughs to large-scale commercialization, with a compound annual growth rate (CAGR) of 217.8% from 2016 to 2021, increasing from $0.1 billion to $3.25 billion [1]. - The global market for oligonucleotide drugs is projected to exceed $15 billion by 2026, with a CAGR of 35% from 2020 to 2025 [1]. - BlueX Technology is a key player in solid-phase synthesis carriers, developing a comprehensive "synthesis-purification" platform for small nucleic acids and peptides, with significant investments planned for expanding its capabilities [2]. - Lianhua Technology is leveraging its established small molecule CDMO system to expand into the small nucleic acid business, with the global CDMO market expected to surpass $120 billion by 2024, growing at a CAGR of approximately 9.5% [3]. Summary by Sections Small Nucleic Acid Drug Market - The small nucleic acid drug market is characterized by a variety of drug types, including SiRNA and ASO, with a significant increase in market size and growth rate [1]. - The market is expected to continue its upward trajectory, driven by advancements in technology and increased demand for oligonucleotide drugs [1]. BlueX Technology - BlueX Technology has established itself as a leader in solid-phase synthesis carriers, creating a full-chain supply capability for small nucleic acids and peptides [2]. - The company plans to invest 1.15 billion yuan in a new GMP-standard biopharmaceutical park and expand its international presence [2]. Lianhua Technology - Lianhua Technology is expanding its CDMO services to include small nucleic acids, capitalizing on the growing demand for biopharmaceuticals and small molecule intermediates [3]. - The company has made significant progress in international market expansion and is focusing on developing new business areas, including peptide CDMO and radioactive drugs [3].

Core Viewpoint - The article discusses the revolutionary shift in small nucleic acid drugs, highlighting their potential to transition from symptomatic treatment to addressing root causes, marking a significant advancement in the pharmaceutical industry [4]. Group 1: Small Nucleic Acid Drug Technology - Small nucleic acid drugs (siRNA, ASO, etc.) are considered the "third wave" of drug development, following small molecules and antibody drugs [4]. - These drugs are not limited by their molecular structure and can target a broader range of disease pathways, significantly increasing the probability of successful drug development [4]. - Current advancements in delivery technologies and chemical modifications have led to extended half-lives for these drugs, improving patient compliance in chronic disease management [4]. Group 2: Market Growth and Commercialization - The global small nucleic acid drug market is projected to reach $20.6 billion by 2029 and $54.9 billion by 2034, with a compound annual growth rate (CAGR) of 21.6% [5]. - Major players like Alnylam, Ionis, and Arrowhead are leading the market, with multinational corporations (MNCs) such as Novartis and Roche investing heavily in this sector [5]. - Alnylam's core product, Amvuttra, is expected to exceed $2 billion in sales by 2025, indicating strong market performance [6]. Group 3: Technological Breakthroughs - Arrowhead has developed RNAi therapies targeting various diseases through its TRiM platform, expanding the application of small nucleic acid drugs beyond liver diseases [7]. - Avidity Biosciences has made significant progress in muscle tissue delivery using antibody-oligonucleotide conjugates (AOC) technology, indicating a broader therapeutic potential [7]. Group 4: China's Small Nucleic Acid Drug Industry - The Chinese small nucleic acid drug industry is experiencing a qualitative leap, overcoming delivery patent barriers and demonstrating global competitiveness in target selection and molecular design [8]. - A complete industrial chain has emerged in China, with domestic raw materials achieving localization, thus reducing R&D costs [8]. - Significant business development (BD) transactions have occurred, including a record $5 billion deal between Wobang Pharmaceutical and Novartis, showcasing the global recognition of Chinese innovation [8].

Investment Rating - The report maintains an "Overweight" rating for the small nucleic acid drug industry [1] Core Insights - The small nucleic acid drug sector is experiencing a paradigm shift from "symptomatic treatment" to "root cause treatment," marking it as the "third wave of pharmaceutical innovation" following small molecules and antibody drugs. This innovation is driven by the ability of RNA drugs to overcome traditional drug development limitations, significantly expanding target ranges and improving drug development efficiency [4][5] - The global small nucleic acid drug market is projected to reach USD 20.6 billion by 2029 and USD 54.9 billion by 2034, with a compound annual growth rate (CAGR) of 21.6%, indicating high growth potential [5] - The industry is entering a commercialization phase, with key players like Alnylam, Ionis, and Arrowhead leading the market, supported by significant investments from multinational corporations (MNCs) [5] Summary by Sections Market Growth and Trends - The small nucleic acid drug market is expected to see rapid expansion, particularly in the fields of rare diseases and major diseases such as cardiovascular and metabolic disorders [5] - Alnylam's core product, Amvuttra, is projected to exceed USD 2 billion in sales by 2025, contributing to the company's profitability [5] - Domestic companies in China are overcoming delivery technology barriers and demonstrating global competitiveness in target selection and molecular design [7] Technological Advancements - Breakthroughs in delivery technologies and chemical modifications are enhancing the efficacy and half-life of small nucleic acid drugs, improving patient compliance in chronic disease management [4][5] - Arrowhead's TRiM platform has successfully developed RNAi therapies for various diseases, expanding the application of small nucleic acid drugs beyond liver diseases [5] Industry Ecosystem - The domestic small nucleic acid drug industry has established a complete industrial chain, with upstream raw materials achieving localization, thus reducing research and development costs [9] - Significant business development (BD) transactions have occurred, with notable collaborations between Chinese companies and global pharmaceutical giants, marking a historic high for the industry [9]

Core Viewpoint - The article highlights the successful IPO of Rebio Biotech (6938.HK), marking it as the first small RNA drug company listed on the Hong Kong Stock Exchange, with an opening price increase of over 23% and a market capitalization of HKD 11.8 billion [2]. Group 1: Company Overview - Rebio Biotech was founded in 2007 by Liang Zicai, who has extensive experience in the small RNA field, having established an independent laboratory for small RNA research in 1998 [6][7]. - The company has developed a comprehensive R&D platform with proprietary technology, successfully advancing multiple products into clinical phase II trials [7]. - Rebio Biotech has established international R&D centers in Kunshan, Beijing, and Gothenburg, Sweden, demonstrating its capability in global clinical development [7]. Group 2: Investment Background - Lenovo Star became one of the earliest institutional investors in Rebio Biotech in 2015, investing USD 1 million in its Series A financing [5][9]. - The investment strategy of Lenovo Star has focused on early-stage technology and healthcare, allowing them to identify and support leading projects in the small RNA drug sector before it gained significant attention [10]. - Over the years, Rebio Biotech has received support from various venture capital and private equity firms, including IDG Capital and Huaxia Fund, contributing to its growth and development [9]. Group 3: Market Context - The small RNA drug sector was initially considered less attractive, with only one drug approved before 2016, but it has since gained momentum following the approval of Biogen's Spinraza [9]. - The article emphasizes the growing interest and investment in the biopharmaceutical industry, particularly in regions like Suzhou, which has become a focal point for biotech investments [11]. - Lenovo Star's approach has evolved to focus on high-quality, cost-effective drugs and services, reflecting a shift in the healthcare investment landscape [12].