Core Viewpoint - The strong performance of the Sci-Tech Innovation Board (科创板) indices reflects the market's positive sentiment towards "hard technology," indicating sustained confidence from investors in this emerging sector [1][4][9]. Group 1: Index Performance - On October 13, the Sci-Tech 50, 100, and 200 indices rose by 1.40%, 1.04%, and 0.58% respectively, ranking among the top performers in the market [2][3]. - Since the beginning of the year, the Sci-Tech 50, 100, and 200 indices have increased by 48.95%, 54.64%, and 55.37%, respectively, leading all indices in terms of growth [1][4]. Group 2: Market Dynamics - Despite a general decline in major indices, the Sci-Tech indices showed resilience, primarily driven by strong performances in the semiconductor and software sectors, which align with national strategies for self-sufficiency [3][4]. - The semiconductor sector is experiencing upward momentum due to the storage chip cycle and accelerated domestic substitution processes, leading to significant gains for leading companies [4][5]. Group 3: Investment Trends - The ongoing strength of the Sci-Tech indices is attributed to a confluence of factors including the explosion of AI demand, recovery in semiconductor market conditions, and continuous policy support [5][9]. - The market narrative has shifted from traditional consumer blue-chip stocks to a focus on technological innovation, indicating a transformation in investment philosophy [5][9]. Group 4: R&D and Innovation - The Sci-Tech Board has demonstrated a robust commitment to R&D, with total R&D expenditures exceeding 84.1 billion yuan in the first half of 2025, which is 2.8 times the net profit, showcasing a high density of innovation [7][8]. - Recent breakthroughs in various sectors, including semiconductors and biomedicine, highlight the board's focus on hard technology, with several companies achieving significant advancements [6][7]. Group 5: Future Outlook - Experts predict that technology innovation will remain a central theme in the A-share market, supported by ongoing economic transformation and strategic planning for the next five years [9][10]. - The upcoming "15th Five-Year Plan" is expected to further emphasize the strategic importance of new productive forces, particularly in technology sectors [10].

Group 1 - The global oncology conference in 2025 showcased a Chinese dual-antibody ADC drug, highlighting China's innovative drugs gaining global recognition [1] - In the first half of 2025, Chinese pharmaceutical companies signed over 70 external licensing agreements for research pipelines, totaling over $60 billion, setting historical records [1] - The record-breaking licensing deal of $6 billion for a PD-1/VEGF dual-antibody by 3SBio to Pfizer signifies a shift in China's innovative drug licensing landscape [1] Group 2 - The dual-antibody and dual-antibody ADC technologies are expected to be the next major focus in the pharmaceutical industry, potentially overcoming resistance issues and enhancing efficacy [3] - The global pharmaceutical market is facing a "patent cliff," with over $100 billion worth of blockbuster drugs losing patent protection in the next five years, creating a strategic need for new pipelines [2] - Morgan Stanley predicts that by 2040, annual sales of innovative drugs from China could reach $220 billion, with 35% of new drugs approved by the FDA originating from Chinese pipelines [2] Group 3 - Baiaosuatu's unique positioning as a "molecular source" through a comprehensive technology platform allows for a significant reduction in drug development timelines and costs [4] - The "Thousand Mice, Ten Thousand Antibodies" initiative enables pharmaceutical companies to select from a vast library of antibody candidates, streamlining the drug discovery process [4] - Baiaosuatu's business model focuses on molecular discovery with a clear emphasis on business development (BD), differentiating it from other innovative drug companies [5] Group 4 - In the first half of 2025, Baiaosuatu signed 80 new agreements, a nearly 60% year-on-year increase, establishing partnerships with around 280 collaborators, including major global players [6] - The high "repurchase rate" of Baiaosuatu's collaborations indicates strong demand and efficiency in project advancement, exemplified by multiple partnerships with Merck [6] - Baiaosuatu is transforming drug discovery from a high-risk process into a shared, high-probability system, enhancing the overall success rate of drug development [7] Group 5 - The dual-antibody and dual-antibody ADC wave is reshaping the landscape of Chinese innovative drugs, with Baiaosuatu positioned as a critical player in this transformation [8] - Baiaosuatu's systematic technology platform and forward-looking business model allow it to occupy a pivotal role in the value chain of the pharmaceutical industry [8] - The company is redefining the BD landscape in China's innovative drug sector, potentially becoming an indispensable infrastructure entity in global drug development [9]

Core Insights - The Shanghai Stock Exchange emphasizes its mission to support technological innovation and enhance its role as a capital market hub, particularly through the STAR Market [1] - The STAR Market has established five sets of listing standards, with the second to fifth sets not requiring profitability, thus providing diverse listing pathways for unprofitable companies [1][2] - As of now, 54 unprofitable companies have collectively raised over 200 billion yuan through IPOs, demonstrating effective transformation of R&D capabilities into operational performance [1][3] Listing Standards - The STAR Market's second to fourth listing standards focus on revenue scale combined with R&D intensity, cash flow, or market capitalization, catering to hard-tech companies with specific characteristics [1][2] - The fifth standard does not set performance requirements but emphasizes market capitalization and developmental achievements, suitable for innovative companies with clear market prospects [1][2] Company Performance - Among the 54 unprofitable companies, 40% have achieved profitability, with a total revenue of 1,745 billion yuan in 2024, marking a 24% year-on-year increase [3] - Notable companies like BeiGene and Cambricon have shown significant R&D investments, with BeiGene's R&D expenditure reaching 7.278 billion yuan, accounting for 42% of its revenue [2][3] - The semiconductor sector, led by companies like SMIC, has seen substantial advancements, enhancing the industry's self-sufficiency and innovation capabilities [3][4] Market Developments - The STAR Market's fifth standard companies are entering a new phase of commercial development, with 46 drugs/vaccines approved for market entry, showcasing rapid commercialization [4] - The introduction of the "1+6" policy framework aims to further support unprofitable companies in high-tech sectors, balancing innovation support with market risk management [4][5] - Since the implementation of the "1+6" policy, 15 new IPO applications have been accepted, including four from unprofitable companies, indicating ongoing market dynamism [5]

Core Insights - The innovative drug sector is experiencing a significant resurgence, with the Oriental Red Medical Upgrade Fund achieving a year-to-date return of 82.35% as of August 22, 2025, significantly outperforming its benchmark [1] - The fund manager emphasizes the importance of understanding the fundamental changes in the market rather than relying on market fluctuations [1][2] - The launch of the Oriental Red Medical Innovation Mixed Fund (QDII) on September 10, 2023, indicates a continued focus on innovative drugs as a key investment area [2] Investment Strategy - The fund manager believes that the innovative drug market may see differentiation, with funds favoring truly innovative companies [2] - A long-term perspective is taken, with a focus on various sub-sectors such as ADC, dual antibodies, multi-antibodies, gene therapy, and innovative small molecules [2][3] - The manager employs a unique industry classification system, dividing the pharmaceutical sector into 18 sub-industries to better capture growth opportunities [3] Market Dynamics - The investment approach is influenced by policy cycles and growth rates, with a focus on sectors benefiting from government support [3][4] - The manager prefers to identify opportunities in sectors at the bottom of their cycles, emphasizing the importance of solid company operations even in challenging times [4] - A rigorous valuation methodology is applied, with different metrics used for various types of companies, including PE, PEG, and specific criteria for innovative drugs [5][6] Future Outlook - The year 2024 is seen as a critical turning point for innovative drug companies, with expectations for significant market developments in 2026-2027 [7] - Recent policy measures aimed at supporting high-quality development in innovative drugs are expected to enhance the industry's growth potential [8] - The manager anticipates a shift in market sentiment towards companies with genuine innovation and deep value as the market stabilizes [9]