Investment Rating - The industry investment rating is "Overweight" indicating a positive outlook for the sector in the next six months [1][29]. Core Insights - The pharmaceutical and biotechnology sector has shown strong performance, with an overall increase of 4.00% in the week from July 14 to July 18, outperforming the CSI 300 index by 2.91 percentage points [3][11]. - Year-to-date, the sector has risen by 16.59%, ranking third among 31 industries, and has outperformed the CSI 300 index by 13.45 percentage points [3][13]. - The current PE valuation for the pharmaceutical and biotechnology sector stands at 30.02 times, which is at the historical median level, with a valuation premium of 137% compared to the CSI 300 index [3][17]. Market Performance - The pharmaceutical and biotechnology sector's sub-sectors that performed best last week include chemical pharmaceuticals (6.86%), biological products (3.68%), and medical services (3.14%) [3][11]. - A total of 397 stocks (82.88%) in the sector increased in value, while 70 stocks (14.61%) decreased [3][23]. - The top five performing stocks were: - Borui Pharmaceutical (42.35%) - Lisheng Pharmaceutical (41.68%) - Nanxin Pharmaceutical (34.95%) - Aosaikang (32.77%) - Yipinhong (32.13%) [3][24]. Industry News - The 11th batch of national centralized procurement was officially launched on July 15, with 55 drug varieties included, focusing on mature clinical drugs and excluding new drugs from procurement [4][25]. - He Yuan's plant-derived recombinant human serum albumin (HY1001) was approved for domestic marketing on July 18, aimed at treating liver cirrhosis with low albumin levels [4][26]. Investment Recommendations - The report suggests that the pharmaceutical and biotechnology sector remains a strong investment opportunity, particularly in innovative drugs, CXO, medical devices, traditional Chinese medicine, chain pharmacies, and medical services [5][27]. - Recommended stocks include: - Buy: Betta Pharmaceuticals, Teva Biologicals, Lao Baixing, Huaxia Eye Hospital, Qianhong Pharmaceutical, Baipusais [5][27]. - Focus: Kelun Pharmaceutical, Rongchang Biotechnology, Lizhu Group, Lingrui Pharmaceutical, Kaili Medical, Kangtai Biotechnology [5][27].

Investment Rating - The report rates the pharmaceutical industry as "Overweight," indicating an expectation for the industry to outperform the overall market [1][21][29]. Core Insights - The pharmaceutical sector saw a weekly increase of 4.0%, outperforming the Shanghai Composite Index, which rose by 0.7% [3][5]. - The overall valuation of the pharmaceutical sector stands at 31.7 times PE (2025E), ranking 6th among 31 primary industries [5][8]. - The 11th batch of national drug procurement has been initiated, with 55 products selected, establishing a sales threshold of 100 million yuan for participation [10]. - Recent approvals include the launch of recombinant human albumin injection by He Yuan Biotech and a new flu drug by Jichuan Pharmaceutical and Zhengxiang [10][11]. - Noteworthy IPO approval for Beixin Life, marking a significant milestone in the FFR measurement system in China [11]. - Financial misconduct has led to a penalty for Nuotai Bio, resulting in a stock warning and a halt in trading [11]. Market Performance - The pharmaceutical sector's performance is highlighted with a 4.0% increase, ranking second among 31 sub-industries [3][5]. - Detailed performance across sub-sectors includes raw materials (+7.0%), chemical preparations (+6.8%), and others, with offline pharmacies showing a decline of -2.7% [5][6]. Key Events - The report emphasizes significant events such as the initiation of the 11th national drug procurement and the approval of new drugs, which are expected to impact market dynamics positively [10][11]. - The report also notes the financial penalties faced by Nuotai Bio, which may affect investor sentiment and market stability [11]. Investment Analysis - The report suggests focusing on innovative drug companies and related CXO companies that are expected to benefit from upcoming product launches and business development opportunities [10]. - Companies highlighted for potential growth include Heng Rui Pharmaceutical, Bei Da Pharmaceutical, and WuXi AppTec among others [10].