Core Viewpoint - The essence of innovative drug investment is a "high risk, high return" probability game, focusing on the value realization cycle of potential blockbuster drugs [2] - The success of a single drug is merely a "probability event," while the "system capability" of a company is crucial for navigating cycles and enhancing success rates [2][3] Pipeline Worship Rejection - The value of a pipeline is ultimately defined by the company's capabilities, rather than the pipeline itself [4] - For small innovative drug companies, the core value is concentrated in 1-2 key pipelines, while for larger companies and MNCs, the match between "pipeline thickness" and "capability boundaries" is key to determining value [5] - The "false precision" of pipeline valuation is meaningless; the success rate of a drug from clinical trials to approval is only about 10% [6] Company and Platform Capabilities - Company capabilities serve as a "risk hedging tool" for pipelines, enhancing the success probability and value ceiling of drugs [7] - The core of a pipeline is "sustainability" rather than "quantity," as evidenced by the growth history of overseas MNCs [8] Chinese Characteristics of Capability - The "low cost + strong sales" model of companies like Heng Rui is a unique product of China's innovative drug industry stage, based on industry advantages [10] - The model's boundaries do not apply to overseas markets, where MNCs focus on breakthrough innovations and global sales platforms [11] Evolution of Capabilities - The direction of capability evolution is shifting from "cost advantages" to "innovation + integration," as the market landscape changes [12][13] Global Perspective on Big Pharma Logic - Comparing domestic and foreign MNCs clarifies the boundaries between "single drug competition" and "system victory," with both relying on system capabilities rather than single drug dependence [15][16] Investment Framework Upgrade - The complete framework for innovative drug investment should adapt to "stage matching + capability focus," recognizing the value of single drug competition while not idolizing pipelines [18] - For small innovative drug companies, the focus remains on "single drug value inflection points," while for large companies and MNCs, the emphasis is on "capability inflection points" [18] Incremental Options to Enhance Long-term Value - Three incremental options can significantly enhance investment elasticity: improvements in payment terms, overseas value realization, and merger integration [19] - Caution is advised against companies that focus solely on pipeline stories or lack clear capability boundaries for overseas expansion [19] Conclusion - The essence of innovative drug investment is balancing "probability and value," with small companies focusing on "single drug success" and large companies on "capability-driven success" [21] - The development of China's innovative drugs is transitioning from "single drug breakthroughs" to "system competition," with future winners being those that can upgrade local advantages to global innovation and integration capabilities [21]