Market Performance - The Hang Seng Index (HSI) closed at 25,859, up 2.4% for the day and 28.9% year-to-date[2] - The KOSPI index showed significant growth, closing at 3,815, with a 1.8% increase for the day and a remarkable 59.0% year-to-date[2] - The MSCI China index increased by 2.3% for the day and 33.2% year-to-date, indicating strong market performance[2] Commodity Prices - Gold prices rose to $4,356 per ounce, reflecting a 2.5% increase for the day and a substantial 66.0% increase year-to-date[3] - Brent Crude oil prices decreased to $61 per barrel, down 0.6% for the day and down 15.1% year-to-date[3] - The Baltic Dry Index (BDI) surged to 2,046, showing a remarkable 105.2% increase year-to-date[3] Economic Indicators - China's GDP growth moderated to 4.8% year-on-year in Q3 2025, down from 5.2% in Q2 2025, with a required growth of 4.2-4.5% in Q4 to meet the annual target of 4.9-5%[6][7] - Retail sales growth in China slowed to 3.0% year-on-year in September, the lowest since November 2024, down from 3.4% in August[14] - The US Initial Jobless Claims for the week ending October 23 are expected to be 226,000, slightly higher than the consensus of 218,000[4] Corporate Updates - China Mobile reported a 1.4% year-on-year increase in Q3 earnings to RMB 31.1 billion, with service revenue rising by 0.8% to RMB 216.2 billion[10][11] - Akeso Inc. presented positive Phase III study results for its drug AK112, showing a progression-free survival hazard ratio of 0.60 in the treatment of sqNSCLC[26][29]

Investment Rating - The report maintains an "Accumulate" rating for the pharmaceutical and biotechnology industry [1] Core Insights - The 2025 World Conference on Lung Cancer (WCLC) highlighted the promising clinical data of domestic lung cancer drugs, particularly the innovative drug iza-bren developed by BaiLi Tianheng, which demonstrated a 100% objective response rate (ORR) in first-line patients with EGFR mutation non-small cell lung cancer (NSCLC) [2][17] - The report suggests a favorable outlook for the pharmaceutical sector, particularly in innovative drugs, research services, and CXO [3][12] Summary by Sections Industry Performance - The A-share pharmaceutical index has seen a year-to-date increase of 26.8%, while the Hang Seng Biotechnology Index has surged by 103.3% [11] - Notable stock performances include Zhend Medical (+41.3%) and Haooubo (+28.0%), while Yuekang Pharmaceutical (-18.4%) and Maiwei Biological (-14.4%) faced significant declines [11] New Drug Developments - Novartis' lung cancer drug, Capmatinib, received approval for a new indication in China, and Johnson & Johnson initiated a Phase III clinical trial for its KLK2/CD3 dual antibody [2] - BaiLi Tianheng's iza-bren showed a 100% ORR in a Phase II study for EGFR mutation NSCLC, with a median progression-free survival (mPFS) of 12.5 months [17][21] Investment Recommendations - The report ranks preferred sub-sectors as follows: innovative drugs > research services > CXO > traditional Chinese medicine > medical devices > pharmacies [3][12] - Specific companies to watch include: - From GLP-1 perspective: BoRui Pharmaceutical, GeLi Pharmaceutical, and XinDa Biologics - From PD-1/VEGF dual antibody perspective: Kangfang Biologics and Shenzhou Cell - From AI drug development perspective: JingTai Holdings and Chengdu XianDao [3][12] Clinical Research Updates - The HARMONi study by Kangfang Biologics showed improved overall survival (OS) with a hazard ratio (HR) of 0.78, indicating a significant benefit for patients, especially in North America [25] - The report emphasizes the ongoing clinical trials for innovative drugs, including the registration Phase III study for iza-bren [20][24]

Core Insights - The PD-1/VEGF dual antibody is currently a hot topic in innovative drug development, with significant collaborations and financial transactions highlighting its potential [1][2][3] Group 1: Industry Dynamics - Chinese biotech companies are emerging as key players in the global PD-(L)1/VEGF dual antibody development race, demonstrating advanced research progress and achieving international recognition through high-value business development (BD) deals [2][3] - Major collaborations include 12.5 billion USD upfront payment and 60.5 billion USD total deal value between 3SBio and Pfizer for SSGJ-707, and BioNTech's 15 billion USD upfront payment for BNT327 licensed to BMS, totaling over 90 billion USD [1][2] Group 2: Clinical Developments - The PD-(L)1/VEGF target gained traction after Kangfang Biotech's AK112 outperformed the benchmark drug, Pembrolizumab (K drug), in head-to-head trials, leading to increased interest from multinational corporations (MNCs) [3][4] - AK112 demonstrated a higher objective response rate (ORR) of 50% compared to K drug's 38.5% and a disease control rate (DCR) of 89.9% versus 70.5% in late-stage non-small cell lung cancer (NSCLC) trials [4][6] Group 3: Competitive Landscape - The success of AK112 has intensified competition among MNCs, with companies eager to capitalize on the potential of PD-(L)1/VEGF dual antibodies, as evidenced by Pfizer's strategic investments [9][10] - As of May 2025, there are 14 PD-(L)1/VEGF dual antibodies in clinical stages globally, with half originating from Chinese biotech firms, indicating a robust pipeline and potential for further BD opportunities [15][24] Group 4: Future Prospects - Companies like Junshi Biosciences, I-Mab, and Hualan Biological Engineering are actively pursuing PD-(L)1/VEGF dual antibodies, with significant investments and clinical trials underway [15][20][22] - The shift from merely imitating existing drugs to innovating new targets and technologies marks a significant evolution in the Chinese pharmaceutical industry, enhancing its international competitiveness [24][25]

Core Viewpoint - The "pure pharmaceutical" funds have achieved the best performance among public QDII funds, highlighting a significant shift in investment focus away from popular AI and technology sectors towards undervalued pharmaceutical stocks [1][2][3] Group 1: Performance of Pharmaceutical Funds - As of March 5, the Huatai-PineBridge Hong Kong Advantage Select Fund achieved a year-to-date return of 23%, ranking first among Hong Kong and QDII funds, with a significant portion of its assets (89%) allocated to pharmaceutical stocks [2][3] - Other funds, such as the Jiashi Mutual Fund and Ping An Core Advantage Fund, also reported strong performances with returns of 22% and 20% respectively, focusing entirely on pharmaceutical stocks without exposure to AI or internet healthcare [4][5] Group 2: Market Dynamics and Trends - The shift towards pharmaceutical stocks by fund managers indicates a strong confidence in the recovery of this sector, despite the popularity of AI and technology stocks [4][6] - Non-pharmaceutical funds have begun to reallocate their portfolios towards pharmaceutical stocks, reflecting a trend of recognizing the potential for growth in this sector [6][12] Group 3: Technological Breakthroughs and Global Market Impact - Chinese pharmaceutical companies are experiencing significant breakthroughs, as evidenced by the collaboration between Kangfang Bio and Summit Therapeutics, which has led to a dramatic increase in stock prices [8][9][10] - The share of Chinese pharmaceutical companies in global drug transactions has increased from less than 5% in 2020 to over 20% in 2024, indicating a growing influence in the global pharmaceutical market [9][10] Group 4: Future Outlook for the Pharmaceutical Sector - The introduction of new drugs into the medical insurance system, with a majority being newly listed products, suggests a positive trend for domestic pharmaceutical innovation [12][13] - The anticipated role of commercial insurance in supporting innovative drugs is expected to enhance market dynamics and pricing strategies, further benefiting the pharmaceutical sector [13][14]