Core Viewpoint - The innovative drug industry continues to strengthen in Q2, significantly outperforming similar risk assets like AI and robotics sectors, attracting high market attention [1][2]. Policy Factors - The National Medical Insurance Administration (NMI) encourages innovation, leading to favorable policies for innovative drugs and a notable acceleration in domestic approvals [2]. - The introduction of a multi-layered insurance payment system is expected to enhance the market for innovative drugs, transitioning from a reliance on basic medical insurance to a dual-driven model of commercial and basic insurance [4]. Performance Factors - Many large innovative drug companies reported profits or are on the verge of profitability in their Q1 reports, boosting market confidence in the sector [2]. - The innovative drug sector has seen a significant increase in the number and value of outbound deals, with Chinese innovative drugs accounting for over half of global transactions [2]. Market Outlook - The period from 2025 to 2028 is anticipated to be crucial for Chinese innovative drug companies as they collectively enter a profitability phase, marking a potential turning point for the sector [3]. - 2025 is projected to be a pivotal year for revenue growth, with around 80% of A-share and Hong Kong-listed innovative drug companies expected to see a surge in product revenues [3]. Investment Strategy - The investment strategy focuses on identifying high-quality companies with favorable valuation through a multi-dimensional comparison of business models, competitiveness, and performance [2]. - The management of the Ping An Medical Health Mixed Securities Investment Fund has achieved a remarkable performance of 57.41% in the first half of the year, with the net value recently surpassing its previous peak in 2021 [1][5].