Summary of Key Points from Conference Call Records Industry Overview - **Industry**: Pharmaceutical and Medical Devices - **Performance**: The pharmaceutical sector showed strong performance in July, with the Shenwan Biopharmaceutical Index rising by 13.9%, and over 20% year-to-date increase, indicating a positive market sentiment towards the sector [1][3][12]. Core Insights and Arguments - **Innovation Drug Market**: The innovation drug sector is experiencing active trading, with significant business development (BD) collaborations among companies like Heng Rui, Shi Yao, and San Sheng. New therapies such as small nucleic acids, stem cells, and AAV are gaining attention, with upcoming WCLC and ESMO conference results expected to catalyze further growth [1][5][4]. - **CRO and Medical Devices**: The CXO (Contract Research Organization) sector, particularly domestic CROs, is expected to recover as policy impacts diminish. High-value medical devices are also anticipated to see performance improvements due to policy optimizations [1][6][11]. - **Investment Recommendations**: Investors are advised to focus on mainstream, high-quality stocks with growth potential in the innovation drug sector. Specific recommendations include companies like San Sheng Pharmaceutical and He Huang Pharmaceutical, which are expected to maintain profit growth rates above 20% [1][9][12][17]. Additional Important Content - **High-Value Consumables**: There are significant recovery opportunities in high-value consumables, with stabilization of procurement impacts and accelerated growth in overseas markets. Products like endoscopic consumables and aortic stents are expected to see valuation recovery [1][13][14]. - **Market Trends**: The overall sentiment remains optimistic for the pharmaceutical sector, with expectations of continued growth driven by innovation and recovery in previously struggling segments. The upcoming mid-year report season is anticipated to further boost market confidence [7][10][11]. - **Specific Company Updates**: - **He Huang Pharmaceutical**: Recently approved for a major indication and has a global registration phase III clinical trial completed, with expected profit growth of over 20% [1][17]. - **Mei Nuo Hua**: The company is focusing on a breakthrough project in synthetic biology that significantly enhances GLP-1 analog production, with commercialization expected in Europe next year [2][36][37]. - **Warner Pharmaceuticals**: The company is developing a new antidepressant, VG001, which shows promise in reducing addiction side effects compared to existing treatments [22][23]. Conclusion The pharmaceutical and medical device sectors are poised for growth, driven by innovation, recovery in high-value segments, and strategic collaborations. Investors are encouraged to focus on quality stocks with clear growth trajectories and to remain vigilant about upcoming market catalysts.

Group 1 - The core viewpoint is that the bull market is ongoing, but it is essential to focus on the main line of investment to avoid poor performance [5] - The market rhythm is becoming faster, suggesting an adjustment of the RSR parameters for better alignment with current market conditions [5] - The article emphasizes the importance of understanding market trends and having a broad perspective, rather than relying on formulas for buying points [2][3] Group 2 - The "Lonely Three Styles" and the "Four Major Laws of the Main Line" are mentioned as frameworks for understanding market dynamics [3] - A strong continuation pattern is observed in the market, indicating a potential bullish trend [3] - The article suggests that the market's current state aligns with the author's initial expectations for a strong market continuation [3]

Group 1: Industry Overview - The domestic preclinical CRO, clinical CRO, and CDMO business prices have stabilized, with new orders gradually recovering, indicating a potential industry turnaround [1] - In the international CDMO sector, the pricing system remains reasonable, and the impact of high pandemic baselines has been absorbed [1] - Chinese companies possess comprehensive advantages in small molecule CRDMO due to talent dividends, chemical capabilities, compliant production capacity, and intellectual property protection [1] Group 2: Large Molecule CDMO - Major domestic companies include WuXi Biologics and WuXi AppTec, while international players include Lonza, Samsung Biologics, and Fujifilm [2] - Samsung Biologics is expected to have a revenue growth rate of 19-25% for 2024, surpassing WuXi Biologics' guidance of 12-15% [2] - The order growth for Samsung Biologics exceeds that of WuXi Biologics, indicating intense competition in the large molecule CDMO sector [2] Group 3: Small Molecule CDMO - Key domestic companies include WuXi AppTec, Kelun Pharmaceutical, and Boteng Pharmaceuticals, with over 70% of their business overseas [3] - WuXi AppTec's order backlog is expected to grow by 47% year-on-year by the end of 2024, ensuring mid-term performance [3] - Capital expenditure among domestic companies shows divergence, with some leaders like WuXi AppTec expected to increase spending [3] Group 4: Clinical/Preclinical CRO - Major domestic companies include Tigermed, Pruis, and Medpace, with a high proportion of domestic business [4] - Both domestic and international CROs are currently in an adjustment phase, with 2022-2023 funding challenges impacting 2024 performance [4] - Domestic order prices have bottomed out, with a growth trend in order volume and value since 2025 [5]

Investment Rating - The report maintains a "Recommended" investment rating for the pharmaceutical industry as of August 4, 2025 [1] Core Insights - The innovation environment in the pharmaceutical industry continues to improve, with significant growth in global pharmaceutical transactions, particularly involving Chinese companies, which contributed nearly 50% of the total transaction value [2] - The report emphasizes the importance of weight loss direction in authorized collaborations, highlighting recent partnerships and clinical advancements in GLP-1 dual receptor agonists [3] - The CXO sector is expected to gradually recover following a supply-side cleansing, with an increase in license-out transactions and a notable rise in biotech funding [4] - TCE technology is being continuously updated, with promising clinical data emerging from various trials, indicating a strong market potential for TCE-based therapies [5] - The report highlights the growing trend of business development (BD) in the autoimmune sector, with significant clinical data supporting new treatments [6] Summary by Sections 1. Pharmaceutical Market Tracking - The pharmaceutical sector outperformed the CSI 300 index by 4.70 percentage points in the last week, with a 2.95% increase in the pharmaceutical and biotechnology index [19] - Over the past month, the pharmaceutical sector outperformed the CSI 300 index by 10.20 percentage points, with a 13.02% increase [22] 2. Pharmaceutical Sector Trends and Valuation - The current PE (TTM) for the pharmaceutical and biotechnology industry index is 39.10 times, above the 5-year historical average of 31.99 times [41] 3. Recent Research Achievements - The report lists various recent research achievements by the Huaxin pharmaceutical team, including deep reports on the growth trends in the blood products industry and the impact of policies on inhalation formulations [46] 4. Recent Industry Policies and News - The report discusses recent policies aimed at supporting the high-quality development of innovative drugs, including measures to enhance the entry of innovative drugs into basic medical insurance [48]

中国银河证券指出，医药板块估值经历较长时间调整，近期已呈现显著结构性修复趋势，但公募基金重 仓持仓水平仍低于历史均值，2025年在支持引导商保发展的政策背景下，支付端有望边际改善，创新药 械有望获益。1）持续看好医药创新：下半年创新药BD预计仍将持续，国内丙类目录及商保政策有望推 动估值继续提升。2）医药投融资有望复苏：二级市场繁荣有望带来一级市场投融资回升，CXO及上游 景气度向好。3）医疗器械有望触底回升：招投标数据已开始回暖，以旧换新积压需求逐步释放。 ...

Core Viewpoint - The pharmaceutical sector has undergone a significant structural recovery trend after a prolonged period of valuation adjustment, with public fund holdings still below historical averages, and the policy environment in 2025 is expected to improve payment conditions, benefiting innovative drugs and medical devices [1] Group 1: Pharmaceutical Innovation - Continued optimism for pharmaceutical innovation: The second half of the year is expected to see ongoing business development (BD) for innovative drugs, with domestic Class B catalog and commercial insurance policies likely to drive further valuation increases [1] Group 2: Investment and Financing in Pharmaceuticals - Pharmaceutical investment and financing are expected to recover: A prosperous secondary market is anticipated to lead to a rebound in primary market financing, with positive trends in CXO and upstream sectors [1] Group 3: Medical Devices - Medical devices are likely to reach a bottom and recover: Tendering data has begun to show signs of improvement, and pent-up demand from replacement needs is gradually being released [1]

Group 1 - The core viewpoint of the article emphasizes that the CXO industry is entering a new cycle and starting point, with optimism about the growth of the pharmaceutical sector driven by macroeconomic factors and innovation [1][9][12] - The article highlights that the overall valuation of the pharmaceutical sector is currently low, and public funds are under-allocated to this sector, suggesting potential for recovery and growth [12][34] - The report indicates that the domestic innovative drug industry is experiencing a wave of growth, with significant increases in the number of new drug applications and approvals in recent years [33][34] Group 2 - The article reviews the performance of the medical sector, noting that the CITIC Medical Index rose by 2.73%, outperforming the CSI 300 Index by 4.48 percentage points, ranking second among 30 primary industries [8][12] - It lists the top-performing stocks in the medical sector, including Nanjing New Pharmaceutical and Lide Man, with significant percentage increases [6][8] - The report discusses the impact of the new medical insurance catalog and the expected growth in traditional Chinese medicine, suggesting that the market will see repeated competition around essential drugs [11][12] Group 3 - The article outlines the trends in the CXO industry, indicating that the global supply chain for pharmaceuticals is unlikely to decouple from China, as the U.S. heavily relies on Chinese raw materials [16][17] - It notes that the global innovative drug cycle is entering a new phase, with a revival in drug research and development activity, particularly in the U.S. [18][25] - The report emphasizes the importance of BD transactions and financing in revitalizing the domestic innovative drug sector, with significant increases in transaction amounts and the number of deals [38][43] Group 4 - The article discusses the future trends in the CDMO industry, highlighting a shift from cost competition to technology premium, with domestic companies leading in high-end production capacity [50][55] - It mentions that the CRO industry is undergoing further consolidation, driven by the challenges faced by smaller companies and the need for efficiency [56] - The report also points out the recovery in the medical device sector, particularly in imaging equipment and home medical devices, supported by government subsidies and market demand [64][65]

Investment Rating - The report maintains an optimistic outlook on the pharmaceutical industry, particularly for 2025, suggesting a potential for diverse investment opportunities as valuations are currently low and public fund allocations to the sector are also low [10][11]. Core Insights - The report emphasizes a transition in the innovative drug sector from quantity to quality, highlighting the importance of differentiated products and internationalization in pipelines [10][11]. - The medical device sector is experiencing a recovery in bidding volumes, particularly in imaging equipment, and there is a notable push for home medical devices due to supportive policies [10][11]. - The CXO and life sciences services sectors are expected to see a rebound in investment and performance, with a shift towards high-profit elasticity as companies enter a return phase [10][11]. - The report identifies a significant growth opportunity in the specialty API sector, which is expected to enter a new growth cycle due to cost improvements and low valuations [10][11]. Summary by Sections Market Review - The report notes that the CITIC Medical Index rose by 2.73%, outperforming the CSI 300 Index by 4.48 percentage points, ranking second among 30 primary industries [7]. - The top-performing stocks included Nanxin Pharmaceutical and Lide Man, while the worst performers included *ST Suwu and Sanofi [7]. Overall Viewpoint and Investment Themes - The pharmaceutical sector is positioned for growth, driven by macroeconomic factors and the recovery of large-scale products [10][11]. - The report suggests focusing on innovative drugs, medical devices, and the CXO sector as key investment areas, with specific companies highlighted for their potential [10][11]. Innovative Drug Sector - The report indicates that the domestic innovative drug industry is entering a new wave, with a significant increase in clinical trial applications and approvals for domestic drugs [41][47]. - The revenue from innovative drugs for leading companies like BeiGene and Hengrui is projected to grow significantly, with BeiGene's innovative drug revenue reaching 269.9 billion yuan in 2024, a 74.11% increase [47]. Medical Device Sector - The report highlights the recovery of the orthopedic market post-collection, with a focus on domestic companies benefiting from increased market concentration and product diversification [76]. - The neuro-surgical high-value consumables market is also expected to see significant growth, driven by product line expansion and international sales [76]. CXO and Life Sciences Services - The report anticipates a recovery in the CXO sector, with a positive outlook for order volumes and performance as the industry transitions to a high-growth phase [10][11]. - The life sciences services sector is expected to benefit from increased demand and a shift towards high-profit models as companies stabilize their operations [10][11].

Core Viewpoint - The A-share medical ETF (512170) experienced a correction after a historic 10-day rally, with a notable decline on July 31, 2025, where the ETF fell by 1.6% and lost its 5-day moving average [1][3]. Group 1: Market Performance - The medical ETF (512170) recorded a cumulative increase of 11.48% in July, outperforming the Shanghai Composite Index (+3.74%) and the ChiNext Index (+8.14%) [4]. - On July 31, 2025, the medical ETF showed increased volatility with a daily trading range of 2.67% and a trading volume of 1.02 billion yuan, indicating active market participation [1][3]. Group 2: Sector Adjustments - Major CXO stocks, including WuXi AppTec, saw significant declines, with WuXi AppTec dropping 2.61% and a trading volume reaching 9.499 billion yuan, marking a four-month high [3]. - Other medical giants like Mindray Medical and Aier Eye Hospital also experienced declines of over 2% [3]. Group 3: Policy and Future Outlook - Recent policy shifts indicate a growing support for innovative medical devices, with the National Healthcare Security Administration holding discussions on new pricing policies for innovative drugs and devices [6]. - The trend of "anti-involution" in the medical sector is expected to alleviate low-price competition, potentially accelerating the development of high-end domestic medical devices [6]. - Public funds are increasing their allocation to the medical sector, with the top ten A-share funds holding 11.51% in the medical sector, reflecting a 1.51% increase [6][7].

Group 1 - The core viewpoint of the report highlights the impressive year-on-year growth in revenue and profit for WuXi AppTec in Q2 [2] - The revenue growth of small molecule drug development (DM) exceeded expectations, while TIDES continued to show strong growth [2] - The laboratory business remained stable, although competition in the clinical CRO market continues to be a factor that needs to be addressed [2]