Core Viewpoint - The pharmaceutical sector continues to exhibit structural market enthusiasm, particularly in the innovative drug segment, but there are concerns about overvaluation and potential risks associated with future growth expectations [1][4][5]. Investment Strategy - The investment framework employed by the fund manager emphasizes a "balanced offense and defense" approach, combining a low-valuation base with aggressive positions to drive returns [1][2]. - The core logic of the investment strategy is that "valuation is the anchor of investment," with a strict adherence to exiting positions once prices reach intrinsic value boundaries [2][3]. Market Performance - The innovative drug sector has seen significant price increases, with the Hang Seng Hong Kong Stock Connect Innovative Drug Select Index rising over 60% this year, and individual stocks like Kintor Pharmaceutical and Kelun Biotech experiencing gains of over 70% and 105%, respectively [4][5]. - The current market rally is driven by the expiration of patents for PD-1 class products, leading to a demand for new therapies, particularly in the dual antibody and ADC technology routes [4][5]. Sector Focus - The fund manager expresses optimism about the development potential of the traditional Chinese medicine and medical device sectors, particularly in health supplements and cardiovascular fields [1][7]. - Traditional Chinese medicine companies are seen as having unique competitive advantages, including proprietary formulas, stable financial fundamentals, and strong brand longevity, making them resilient to economic fluctuations [7]. Market Dynamics - Since March, there has been a surge in business development collaborations among Chinese innovative drug companies, which has further stimulated market enthusiasm [5]. - However, there are warnings about the need for strategic adjustments as the market's optimistic valuation may not fully account for the risks associated with research and development success rates [5].