Group 1 - The core viewpoint emphasizes the importance of strict supervision and management of narcotic and psychotropic drugs to prevent illegal distribution [1][2][3] - The provincial drug regulatory authority is enhancing the review of production demand plans and increasing inspections of key drug varieties [2][3] - There is a focus on establishing a comprehensive safety management system for special drugs within enterprises [2][3] Group 2 - The "Clear Source and Cut Off - 2025" initiative aims to include designated enterprises dealing with narcotic and psychotropic drugs in the annual inspection list [3] - Joint efforts with the provincial health commission are being made to ensure compliance in the handling of fentanyl-related products [3] - The province has not experienced any incidents of narcotic drug leakage in recent years [3] Group 3 - Extensive training and educational campaigns are being conducted to raise awareness about new regulations regarding narcotic drug management [4] - Enterprises are targeted as key areas for education, with on-site training for employees on drug abuse management and legal regulations [4] - The use of themed promotional activities, such as Drug Safety Awareness Week and International Day Against Drug Abuse, aims to enhance public awareness and community cooperation [4]

Core Viewpoint - The report from Zhonghang Securities indicates that the pharmaceutical and biotechnology industry is expected to benefit in the long term from ongoing bulk procurement of drugs and medical supplies, with a focus on innovative drugs and high-end medical devices [1][6]. Industry Overview - In 2024, the pharmaceutical and biotechnology industry is projected to achieve operating revenue of 24,657.41 billion yuan, a year-on-year decline of 0.97% [1]. - The net profit attributable to the parent company is expected to be 1,405.71 billion yuan, down 12.97% year-on-year, showing improvement compared to the 2023 growth rate of -18.90% [1]. - The largest revenue segments in 2024 are expected to be pharmaceutical commerce (10,179.60 billion yuan), chemical preparations (4,472.88 billion yuan), and traditional Chinese medicine (3,539.45 billion yuan) [1]. Subsector Performance - In 2024, the chemical pharmaceutical, medical device, and pharmaceutical commerce sectors are expected to see positive revenue growth rates of 4.20%, 1.41%, and 0.78% respectively [2]. - The chemical preparation segment is projected to grow by 4.43%, while the medical device segment is expected to see an 8.40% increase in medical consumables [2]. - Conversely, the vaccine sector is anticipated to decline by 37.77% due to high base effects from previous public health events [2]. Profitability Metrics - The gross margin for the pharmaceutical and biotechnology industry in 2024 is expected to be 32.58%, a decrease of 0.53 percentage points from 2023 [4]. - The net profit margin is projected to be 5.99%, down 0.77 percentage points from the previous year [4]. - The sales expense ratio has been steadily declining, from 17.07% in 2018 to 13.33% in 2024, influenced by centralized procurement and medical insurance negotiations [4][5]. Innovation and Policy Support - The government has reinforced the strategic importance of innovative drugs through various policy measures, including the "Implementation of Innovative Drug Industry Promotion Project" and the establishment of an innovative drug catalog system [6][7]. - The domestic innovative drug sector is becoming increasingly competitive, with the highest number of innovative drug research pipelines globally and a rapid increase in clinical trial numbers [6][7]. - The report highlights that high-quality innovative drug companies are entering a profitability cycle, supported by improved research and development capabilities [7].