Group 1 - The Hong Kong stock market for innovative drugs has seen significant gains, with companies like Bohan Bio rising over 17%, and other firms such as Sihuan Pharmaceutical and Sanofi Biotech also experiencing substantial increases [1] - Various ETFs related to innovative drugs have also performed well, with multiple funds rising over 2% and others over 1.5% [1][3] Group 2 - Recent updates from the National Healthcare Security Administration indicate that several new innovative drugs have been rapidly entering hospitals, with a focus on those included in the medical insurance directory by May 2025 [5][6] - Notable drugs showing fast hospital admission growth include those from Kangfang Biotech and Shanghai Yizhong, among others [6] Group 3 - Citigroup's research report highlights a significant increase in market interest in the healthcare sector, particularly in innovative drugs, with expectations for the CXO sector to gain attention due to improved fundamentals and attractive valuations [7] - The report also mentions that WuXi AppTec's revenue for fiscal year 2024 is projected to reach 39.24 billion RMB (approximately 5.4 billion USD), with a growth forecast of 10%-15% for 2025 [7] Group 4 - According to CICC's research, China's innovative drug sector is transitioning into a phase of gradual innovation, gaining international competitiveness [8] - The report emphasizes that the domestic innovative drug industry is expected to reach a turning point by 2025, shifting from capital-driven growth to profit-driven growth [8]

Investment Rating - The report maintains an investment rating of "Leading the Market - A" [9] Core Insights - The report highlights that several newly included innovative drugs in the medical insurance directory are rapidly entering hospitals, with significant growth in the number of drugs entering hospitals by the end of May 2025 compared to April 2025 [2][22] - The report notes that the new drug sector has shown a strong performance, with notable increases in stock prices for companies such as Beihai Kangcheng (114.5%), Frontier Biotech (41.4%), and Junsheng Tai (29.4%) during the week of July 7 to July 13, 2025 [1][18] Summary by Sections Weekly New Drug Market Review - From July 7 to July 13, 2025, the top five companies in the new drug sector by stock price increase were Beihai Kangcheng (114.5%), Frontier Biotech (41.4%), Junsheng Tai (29.4%), Kaituo Pharmaceutical (20.7%), and Yongtai Biotech (20.1%) [1][18] - The top five companies by stock price decrease were Yiming Anke (-19.4%), Shenzhou Cell (-13.4%), Ascentage Pharma (-10.0%), Lepu Biotech (-8.9%), and Rongchang Biotech (-8.8%) [1][18] Key Analysis of the New Drug Industry - The National Medical Insurance Administration updated the hospital admission data for innovative drugs included in the medical insurance directory as of the end of May 2025, indicating rapid hospital admissions for several newly included domestic innovative drugs [2][22] - Notable drugs with fast admission growth included Kangfang Biotech's Cardunilumab and Ivorisumab, Shanghai Yizhong's Paclitaxel Micelle, and Zecjin Pharmaceutical's Recombinant Human Thrombin [2][22] New Drug Approval and Acceptance Status - Four new drug or new indication applications were approved this week, including Ascentage Pharma's Lisatoclax tablets and Zhejiang Tianyuan's quadrivalent influenza virus split vaccine [26][27] - Ten new drug applications were accepted, including Dali Yingjie’s Docetaxel Injection and Zhaoke Pharmaceutical's Atropine Sulfate Eye Drops [26][28] Clinical Application Approval and Acceptance Status - This week, 43 new drug clinical applications were approved, and 20 new drug clinical applications were accepted [4][28]

Investment Rating - The report initiates coverage with an OUTPERFORM rating for BeiGene [2]. Core Views - BeiGene is positioned as a leading innovator in China's biopharmaceutical sector, with a strong focus on oncology treatments and a robust pipeline of over 60 clinical projects globally [3][11]. - The company is expected to achieve profitability by 2025, driven by significant revenue growth from its core products, particularly the BTK inhibitor, Zanubrutinib, which is projected to double its revenue in 2024 [4][20]. - BeiGene's global commercialization capabilities and a well-established management team are key competitive advantages that will support its growth trajectory [12][29]. Summary by Sections 1. Innovative Product Globalization - BeiGene has a diverse product pipeline and aims to become the first biopharma company to achieve consistent profitability [11]. - The company has 17 commercialized products, including Zanubrutinib and Tislelizumab, with strong sales performance in the US and Europe [20]. - Revenue for 2024 is projected at $3.81 billion, a 55% increase year-over-year, with significant contributions from the US market [20]. 2. Leadership in Hematology - The combination of BTK inhibitors and BCL-2 inhibitors is expected to solidify BeiGene's leadership in hematological malignancies [5]. - Zanubrutinib has shown superior efficacy compared to Ibrutinib, establishing its best-in-class status [5][24]. - The company is also developing Sonratoclax, a BCL-2 inhibitor, which is anticipated to enhance its market position [5]. 3. Expansion in Solid Tumors - BeiGene is actively expanding its presence in solid tumors, with Tislelizumab gaining traction in various indications [11]. - The company is developing next-generation CDK inhibitors targeting a market exceeding $10 billion [11]. - Focus areas include lung cancer and breast cancer, with ongoing clinical trials for multiple candidates [11]. 4. Financial Projections and Valuation - Revenue forecasts for FY25-27 are $5 billion, $6 billion, and $6.7 billion, respectively, with a CAGR of 21% [7]. - The net profit is expected to turn positive by FY25, reaching $390 million by FY26 [7]. - The target price is set at HK$182.35, based on a DCF model with a WACC of 9% and a perpetual growth rate of 4% [7].