Core Viewpoint - The pharmaceutical sector is experiencing a recovery with improved profit growth and increased fund allocation, indicating potential for continued outperformance in the market [1][2]. Market Overview - As of August 29, 2025, the CITIC Pharmaceutical Index rose by 26.28%, outperforming the CSI 300 Index by 12.01 percentage points, ranking 9th among 30 CITIC primary industries [1]. - The proportion of public funds heavily invested in pharmaceuticals increased in Q2 2025, with a total public fund pharmaceutical heavy position of 9.8%, up by 0.7 percentage points from the previous quarter [1]. Macro Situation - Profit growth in the pharmaceutical industry showed significant improvement in June 2025, with Q2 profits rising by 4.5% year-on-year [2]. - The number of bidding activities accelerated in Q1 2025, indicating a positive demand outlook for the year [2]. - License-out transactions surged in H1 2025, with 72 deals completed, exceeding half of the total transactions in 2024, and the total transaction amount was 16% higher than the entire 2024 [2]. Subsector Performance - Chemical Pharmaceuticals: Q2 2025 revenue was 967 billion yuan, a year-on-year decrease of 0.9%, but net profit increased by 8.3% [3]. - A-share Innovative Drugs: Q2 2025 revenue grew by 31.6% year-on-year, with net losses narrowing by 61% [3]. - Hong Kong Innovative Drugs: H1 2025 revenue reached 735.6 billion yuan, up 12.4% year-on-year, with net profit increasing by 239.9% [3]. Specific Sector Insights - Vaccines: Q2 2025 revenue fell by 37.5% year-on-year, with net profit down 94.8%, indicating industry growth challenges [4]. - Blood Products: H1 2025 revenue was 114 billion yuan, a slight increase of 0.6%, but net profit decreased by 13.1% [4]. - Traditional Chinese Medicine: H1 2025 revenue was 1775 billion yuan, down 5.5%, but net profit increased by 0.4% [4]. - Medical Devices: H1 2025 revenue decreased by 5.0%, with a net profit decline of 17.6% [4]. Chain Performance - Specialty Chains: H1 2025 revenue was 315 billion yuan, down 3.9%, with net profit decreasing by 9.7% [5]. - General Hospitals: H1 2025 revenue was 89 billion yuan, down 9%, with a significant net profit drop of 38.2% [6]. - Pharmacies: H1 2025 revenue was 578 billion yuan, slightly up by 0.1%, with net profit increasing by 0.9% [6]. - Pharmaceutical Distribution: H1 2025 revenue was 4681 billion yuan, nearly flat, but net profit increased by 8.1% [6]. - Raw Materials: Q2 2025 revenue was 355 billion yuan, down 5.3%, with net profit decreasing by 13.6% [7]. Life Sciences and CXO - Life Sciences Services: H1 2025 revenue was 79 billion yuan, up 6.6%, with net profit increasing by 18.1% [7]. - CXO: H1 2025 revenue reached 447 billion yuan, up 12.7%, with net profit rising by 61.7% [7].

Investment Rating - The industry investment rating is optimistic (maintained) [1] Core Viewpoints - The pharmaceutical industry is experiencing significant differentiation, with innovative drugs, raw materials, and CXO sectors performing well [2][3] - The overall performance of the pharmaceutical industry in 2024 and the first half of 2025 is under pressure, with notable declines in consumer segments, while innovative drugs, raw materials, and CXO show strong growth [2] Summary by Relevant Sections Overall Industry Performance - In 2024, 453 pharmaceutical companies achieved revenue of 2.46 trillion yuan, a year-on-year decline of 0.55%, and a net profit of 148.65 billion yuan, down 8.8%. In the first half of 2025, revenue was 1.22 trillion yuan, a decrease of 2.5%, with net profit at 102 billion yuan, down 2.1% [2][68] Innovative Drugs - In the first half of 2025, innovative drug companies generated revenue of 26.964 billion yuan, a year-on-year increase of 11.78%. Domestic innovative drug companies are transitioning from R&D to commercialization, marking a turning point towards profitability [2][10] Chemical Drugs - Chemical drug companies reported revenue of 198.06 billion yuan in the first half of 2025, a decline of 3.83%, with net profit at 22.14 billion yuan, down 0.11%. Traditional generic to innovative drug companies are performing better [2][10] Medical Devices - Medical device companies achieved revenue of 106.82 billion yuan in the first half of 2025, down 5.32%, with net profit at 17.58 billion yuan, down 18.07%. The sector is under pressure due to inventory and policy impacts, but high-value consumables are showing better performance [2][10] Biological Products - Blood products revenue in 2024 was 24.18 billion yuan, down 1.4%, with net profit of 6.23 billion yuan, up 14.47%. Vaccine companies faced significant declines, with 2024 revenue at 40.77 billion yuan, down 45.3% [2][10] Traditional Chinese Medicine - In the first half of 2025, traditional Chinese medicine companies reported revenue of 174.38 billion yuan, down 4.57%, with net profit of 22.48 billion yuan, up 0.70%. The sector is under pressure from regulatory policies and weak consumer demand [2][10] Raw Materials - Raw material companies achieved revenue of 47.86 billion yuan in the first half of 2025, down 2.90%, but net profit increased by 20.61% to 8.10 billion yuan. High-demand segments like peptides are performing well [2][10] Pharmaceutical Commerce - Pharmaceutical commerce companies reported revenue of 517.86 billion yuan in the first half of 2025, flat year-on-year, with net profit of 12.09 billion yuan, up 7.6% [5] Medical Services - Medical service companies achieved revenue of 36.36 billion yuan in the first half of 2025, down 4.93%, with net profit of 2.35 billion yuan, down 11.17% [5] CXO & Research Services - The CXO and research services sector reported revenue of 50.64 billion yuan in the first half of 2025, up 13.05%, with net profit of 11.91 billion yuan, up 60.6% [5]

Investment Rating - The report maintains a positive outlook on the Hong Kong pharmaceutical industry, particularly on innovative drugs, indicating that the sector has entered a profitability phase [1]. Core Insights - The report highlights that the total revenue of 149 Hong Kong-listed pharmaceutical companies reached CNY 896.12 billion in the first half of 2025, reflecting a 1% increase, while net profit attributable to shareholders was CNY 61.99 billion, up 29.7% [3][11]. - The innovative drug sector has shown significant growth, with 36 companies reporting a revenue of CNY 28.5 billion, a 15.8% increase, and a net profit of CNY 1.8 billion, marking a turnaround to profitability [4][12]. - The report emphasizes the importance of differentiated products and strong commercialization capabilities for companies in the innovative drug sector, suggesting that these factors will drive future growth [3][4]. Summary by Sections Overall Performance - The total revenue for the Hong Kong pharmaceutical industry in H1 2025 was CNY 896.12 billion, with a net profit of CNY 61.99 billion, indicating a positive trend in profitability [3][11]. - 57% of the companies reported positive net profit growth, while 50% achieved revenue growth [11][6]. Sector Breakdown - **Innovative Drugs**: Revenue of CNY 28.5 billion (+15.8%), net profit of CNY 1.8 billion, indicating a shift to profitability [4][12]. - **Chemical Preparations**: Revenue of CNY 90.8 billion (-7.1%), net profit of CNY 20.8 billion (+52.9%), suggesting a potential industry turning point [4][5]. - **Medical Devices**: Revenue of CNY 22.2 billion (+3.5%), net profit of CNY 1.9 billion, with varied trends across sub-sectors [4][5]. - **CXO**: Revenue of CNY 49.8 billion (+11.2%), net profit of CNY 12.8 billion (+93.7%), showing strong growth [4][5]. - **Traditional Chinese Medicine**: Revenue of CNY 58.5 billion (-1.8%), net profit of CNY 4.3 billion (-11.5%), indicating challenges in the sector [5][6]. R&D and Expenses - R&D expenses totaled CNY 31.4 billion, down 7.8%, with a decreasing trend in R&D expense ratios [16][24]. - Sales expenses reached CNY 77.7 billion, down 1.5%, and management expenses were CNY 58.7 billion, down 7.3% [16][24]. 18A Companies Performance - The report analyzed 50 Hong Kong 18A pharmaceutical companies, which generated CNY 44.9 billion in revenue, a 31.48% increase, and a net profit of CNY 2.727 billion, marking a significant turnaround with a 128.4% growth [29][34]. - Cash and cash equivalents for these companies reached CNY 84.4 billion, up 26.99% year-on-year [34][35]. International Expansion - The report notes that the international recognition of domestic innovative drugs is increasing, with over 20 licensing out projects totaling over USD 2 billion, indicating a growing trend in global market engagement [35][36].

Core Viewpoint - The "Computing Power" sector has seen a significant surge, driven by the emergence of new combinations like "Dagu Wen Chain," which includes stocks related to Nvidia, Google, and Oracle, leading to a collective rise in major companies within the sector [1][6]. Group 1: Market Performance - The Computing Power sector experienced a notable increase, with major stocks such as Shenghong Technology rising by 8.36% and reaching a historical high, while Industrial Fulian hit the daily limit and achieved a market value of 1.17 trillion yuan [1][2]. - The A-share market saw the Computing Power sector dominate the trading volume, with several stocks exceeding 10 billion yuan in transaction value [1][2]. - The Shanghai Composite Index rose by 1.12%, the Shenzhen Component Index increased by 2.63%, and the ChiNext Index surged by 4.31% [3]. Group 2: Catalysts for Growth - Two main catalysts contributed to the rise: the overnight performance of US tech giants like Oracle, which saw a gain of over 35%, and the upcoming 26th China International Optoelectronic Exposition (CIOE) scheduled for September 2025 [6]. - Analysts noted that the ongoing capital expenditure from both overseas tech leaders and domestic cloud service providers from 2023 to 2025 is a crucial support for the Computing Power sector's strength [6]. Group 3: Investment Opportunities - Analysts from GF Securities highlighted the continued investment opportunities in leading optical module stocks, driven by optimistic capital expenditure guidance from tech giants and a sustained demand for ASICs (Application-Specific Integrated Circuits) [7]. - The Computing Power sector's growth is supported by a gradient in the artificial intelligence industry, where infrastructure expansion in GPUs, memory, and networks is followed by accelerated commercialization of models and applications [6].

结构上看，港股众多优质创新药龙头尚有约20%空间，A股预期差标的更为稀缺。投资上应聚焦确定性 龙头。行业主题方面，双抗依然是投资主旋律。自免、小核酸、基因治疗等主题性个股，则需深挖预期 差或转型机会，以期获得自身阿尔法。 医药板块内部展开来看，CXO器械板块自去年底至今，环比趋势明显改善。未来两个季度的关键在于 CXO国内景气度、器械国内招标与景气度能否持续，这将直接决定二者明年能否承接创新药行情。在9- 10月窗口期，会适当提升CXO与器械板块的配置比例，侧重寻找确定性阿尔法标的。至于如中药、药 店等后线板块，无论基本面确定性还是修复速度，均逊于CRO和器械，配置优先级相对更低。 桑翔宇表示，投资节奏来看，第一波为3-6月炒数据阶段，第二波为6-10月炒BD阶段，第三波则BD产品 出海后于海外临床验证，这一阶段风险相对大于收益。第四阶段，就是如美股上市的创新药公司，上市 后利润表极大改善。在第一、二、四阶段应尽量乐观，第三阶段更宜通过主动管理规避风险、深挖阿尔 法。之前讲过ADC，PD-1双抗与TCE三个方向。 9月10日，华安基金经理桑翔宇分享了医药创新和AI医疗的机会。桑翔宇表示，创新药为全年主线，AI ...

Group 1 - The Hang Seng Index rose over 1% during the trading session, reaching a peak of 26,296.6 points, marking a nearly four-year high following the previous day's performance [1] - Other key indices in the Hong Kong stock market also saw collective gains, with the Hang Seng Tech Index increasing nearly 2% and the Hang Seng China Enterprises Index rising over 1% [1] - Southbound capital has seen a continuous net inflow for eight consecutive days, with a cumulative net purchase amount reaching a record high of 10,389.4 million HKD year-to-date [1] Group 2 - Recent trends indicate that Southbound capital is primarily flowing into sectors such as retail, automotive, consumer services, non-ferrous metals, and pharmaceuticals [1] - Changjiang Securities noted that the sustained inflow of Southbound capital is enhancing marginal pricing power, and if domestic low-interest rates persist alongside rising weights in the ERP model, more funds may be allocated to the Hong Kong stock market [1] - The potential for further increases in the Hong Kong stock market is supported by the transmission from broad monetary policy to broad credit, along with possible interest rate cuts in the U.S. that could improve global liquidity, as well as performance realization in the AI industry [1] Group 3 - Relevant ETFs include the Hang Seng Tech Index ETF (513180), which focuses on leading technology AI companies, new energy vehicle manufacturers, and chipmakers [2] - The Hang Seng Internet ETF (513330) targets leading internet companies in Hong Kong, benefiting from reduced competition [2] - The Hong Kong Stock Connect Medical ETF (520510) has a leading CXO content among all market ETFs and is expected to take over the innovation drug main line [2]

Investment Rating - The industry is rated as "Outperform" indicating that the sector is expected to perform better than the market benchmark over the next 12 months [57]. Core Insights - The overall performance of the pharmaceutical industry in China remains weak, with average revenue growth of 1.6% and average net profit declining by 3.2% in the first half of 2025. This is a deterioration compared to the full year of 2024, where revenue growth was 3.2% and net profit declined by 1.4% [5][6]. - The innovative drug sector (Biotech) continues to show strong performance, with an average revenue growth of 35% in 1H25, supported by favorable medical insurance payment policies and successful overseas licensing deals [4][9]. - The pharmaceutical sector (Pharma) shows stable performance with an average revenue growth of 0.8% and net profit growth of 3.4% in 1H25, benefiting from a rich pipeline of innovative drugs [4][9]. - The CXO sector has seen significant recovery, with average revenue growth of 15.5% and net profit growth of 32.7% in 1H25, driven by strong demand for commercial production [37]. - The medical device sector is experiencing mixed performance, particularly the IVD segment, which saw a revenue decline of 14% in 1H25 due to policy impacts and price competition [14][8]. Summary by Sections Pharmaceutical Industry Performance - The average revenue growth for A-share and Hong Kong-listed pharmaceutical companies was 1.6% in 1H25, with net profit declining by 3.2% compared to 2024 [5][6]. - The innovative drug segment remains robust, with a 35% revenue increase, while the traditional generic drug business is under pressure [4][9]. CXO Sector - The CXO sector's revenue grew by 15.5% and net profit by 32.7% in 1H25, largely due to low base effects and strong demand for commercial production services [37]. Medical Devices - The IVD segment faced significant challenges, with a 14% revenue decline in 1H25, attributed to policy changes and competitive pricing pressures [14][8]. - Despite some recovery in medical device tenders, the overall market remains under pressure due to ongoing inventory clearance and competitive dynamics [14]. Future Outlook - The pharmaceutical industry is expected to benefit from the optimization of domestic procurement policies and the continued growth of innovative drug exports, although caution is advised regarding stock price increases [38]. - The report recommends buying shares in companies such as Sangamo Therapeutics (1530 HK), Junshi Biosciences (2367 HK), WuXi AppTec (2268 HK), and others due to their strong growth potential [38].

Investment Rating - The investment rating for the pharmaceutical and biotechnology industry is "Positive" (maintained) [2] Core Insights - The industry is experiencing a clear turning point, entering a new upward cycle due to the continuous support for innovative drugs and the recovery of overseas demand [7][24] - The CXO sector is expected to see a gradual recovery in operating performance, with a recommendation to actively invest in this direction [6][16] - The performance of leading CXO companies is improving, with significant growth in revenue and net profit expected in the first half of 2025 [14][17] Summary by Sections CXO Sector - The CXO industry has shown a recovery trend, with total revenue of 24 core companies reaching approximately 592.2 billion yuan, a year-on-year increase of about 16.6% in the first half of 2025 [14] - Leading CXO companies like WuXi AppTec and WuXi Biologics are experiencing significant improvements in their performance, with net profit growth of 62.7% [14][17] - The demand for ADC and weight-loss industry chains is strong, contributing to the robust growth of companies like WuXi AppTec and WuXi AppTec [17] Life Sciences Upstream - The life sciences upstream sector is witnessing a clear turning point, with most companies showing significant performance improvement [24] - Bioreagent companies are experiencing steady growth in conventional business, while unconventional business impacts are largely cleared [24] - Chemical reagents are maintaining high growth, with companies like Haoyuan Pharmaceutical and Bid Pharma exceeding revenue and net profit expectations [24] Recommended and Benefiting Companies - Recommended companies in the pharmaceutical and biotechnology sector include: Heng Rui Medicine, East China Medicine, Sanofi, and others [8] - In the CXO sector, recommended companies include WuXi AppTec, WuXi Biologics, and others [8] - In the research service sector, recommended companies include Bid Pharma, Baipusai, and others [8]

Investment Rating - The report maintains an "Accumulate" rating for the pharmaceutical and biotechnology industry [7] Core Insights - The report highlights that the pharmaceutical sector is experiencing a rebound, particularly in innovative drugs and their supply chains, with a strong emphasis on the potential for a second wave of innovation over the next 5-10 years [3][4][12] - The report indicates that the recent market adjustments have not altered the fundamental industry logic, and the core theme for innovative drugs is "disruption" [3][4][14] Summary by Sections 1. Industry Performance - The pharmaceutical index increased by 1.40% during the week of September 1-5, underperforming the ChiNext index but outperforming the CSI 300 index [12] - The market has shown a tendency for larger stocks to perform better than smaller ones, with innovative drugs and their supply chains being the main focus [2][3] 2. Recent Review - The report notes a significant rebound in the market after a period of adjustment, with innovative drugs remaining the strongest sector [3][4] - The report emphasizes that the recent adjustments in innovative drug stocks are primarily market-driven and do not reflect changes in industry fundamentals [3][4][14] 3. Future Outlook - The report suggests a continued focus on innovative drugs, particularly overseas large pharmaceuticals and small to mid-cap technology revolutions, with an optimistic outlook for 2025 [4][15] - Key investment themes include innovative drugs, new technologies like brain-computer interfaces and AI in medicine, and internationalization of research instruments and equipment [4][15][16] 4. Strategic Allocation - The report outlines specific companies to focus on within the innovative drug sector, including major players like Innovent Biologics and BeiGene, as well as smaller firms involved in gene therapy and weight loss drugs [16][17] - It also highlights opportunities in new technologies and internationalization, suggesting a diversified approach to investment within the pharmaceutical sector [16][18]

Group 1 - The market is expected to rebound next week, with the potential for the ChiNext index to reach new highs [1] - The current bull market is supported by a new economic cycle, with historical bull markets occurring approximately every 10 years in A-shares [1] - The Federal Reserve is likely to initiate a new round of interest rate cuts in mid-September, influenced by rising unemployment and disappointing non-farm payroll data [1] Group 2 - The rebound target for the Shanghai Composite Index is set at 3920 points, which is a significant resistance level derived from previous market highs [2] - Investors should focus on sector rotation during market fluctuations, with potential for recovery in underperforming sectors such as food and beverage, lithium batteries, consumer electronics, CXO, and liquor [2] Group 3 - Opportunities for industry performance inflection points are identified in CXO and medical devices [3] - Individual stock performance inflection points are anticipated in lithium batteries [3] - Future potential hotspots include solid-state batteries, humanoid robots, low-altitude economy, and satellite networking [3]