Investment Rating - The report maintains a "Positive" investment rating for the pharmaceutical industry [4] Core Viewpoints - The Chinese biopharmaceutical sector is expected to enter a new era of innovative drug exports in 2026, with significant opportunities arising from strategic acquisitions and internal research and development [3][8] - The report emphasizes the importance of selecting strong fundamental innovative drug stocks that have undergone sufficient adjustments, as well as actively monitoring new medical technologies and companies poised for recovery in 2026 [4][41] Summary by Sections Industry Performance - From January 26 to January 30, the pharmaceutical index fell by 3.31%, underperforming the CSI 300 index by 3.39%. Notably, the market has seen a significant adjustment in the innovative drug sector since August 2025, with the lowest holdings in active funds since 2021 [5][21] - The report highlights that 58 stocks rose while 407 stocks fell during the week, with notable gainers including Cap Bio (+26.49%) and Hualan Biological (+12.80%) [5][22] Company Insights - China Biopharmaceutical is enhancing its core competitiveness through strategic acquisitions and self-research, which is expected to lead to more opportunities for international expansion. The acquisition of Hegia in January 2026 and Lixin Pharmaceutical in July 2025 are key moves to strengthen its pipeline in chronic diseases and oncology [8][13] - The report identifies Hegia's siRNA delivery technology as a significant advancement, allowing for long-lasting treatment options in chronic diseases, while Lixin's unique LM-TME platform is expected to enhance the company's capabilities in oncology [9][11][14] Investment Recommendations - The report suggests focusing on innovative drug companies such as Heng Rui Medicine, Xin Li Tai, and China Biopharmaceutical, as well as companies involved in new medical technologies like AI healthcare and brain-computer interfaces [41][43] - It also highlights the potential for recovery in the medical device and pharmaceutical manufacturing sectors in 2026, recommending stocks that are currently undervalued [41][42] Market Trends - The report notes that the Chinese pharmaceutical industry has completed a transition from generic to innovative drugs, with companies like Heng Rui Medicine and China Biopharmaceutical leading the way in innovation [41][42] - The aging population and increasing healthcare demands are expected to drive growth in the sector, supported by a stable increase in medical insurance revenues and the development of a multi-tiered payment system [41][42]

Group 1 - The core viewpoint of the news is that China Biologic Products Holdings (01177.HK) has seen significant insider buying from its executive director, demonstrating confidence in the company's long-term growth potential [1] - Executive Vice President Xie Xin purchased 1 million shares at an average price of HKD 6.4068 per share, totaling approximately HKD 6.4068 million, increasing his total holdings to 361 million shares, representing 1.92% of the company [1] - This marks Xie Xin's third purchase since July 2025, with previous acquisitions in July and August 2025 at average prices of HKD 6.47 and HKD 7.36 per share, respectively, indicating a total investment of over HKD 20 million in the past six months [1] Group 2 - The company announced that its innovative drug pipeline has achieved significant milestones since December last year, including the approval of the breast cancer drug Kemosil Capsules, the first global CDK2/4/6 inhibitor [2] - The oral GLP-1 receptor agonist TQF3250 for weight loss has received clinical application approvals from both the National Medical Products Administration (NMPA) in China and the U.S. Food and Drug Administration (FDA) [2] - The TYK2/JAK1 inhibitor TQH3906 has shown positive progress in Phase II clinical trials for plaque psoriasis, and the ROCK2 inhibitor TDI01 has enrolled its first patient in a Phase III clinical trial for idiopathic pulmonary fibrosis, marking it as the first globally to enter this stage [2]

Group 1 - The core point of the news is that China Biologic Products (01177.HK) has seen significant insider buying from its executive director, demonstrating confidence in the company's long-term development [1] - Executive Vice President Xie Xin purchased 1 million shares at an average price of HKD 6.4068 per share, totaling approximately HKD 6.4068 million, increasing his holdings to 361 million shares, representing 1.92% of the company [1] - This marks Xie Xin's third purchase since July 2025, with previous purchases made at average prices of HKD 6.47 and HKD 7.36, indicating a total investment of over HKD 20 million in the past six months [1] Group 2 - The mid-year report for 2025 indicates that China Biologic Products' innovative transformation is showing significant results, with expectations that revenue from innovative products will exceed 50% of total revenue [2] - The company has achieved several milestones since December last year, including the approval of the breast cancer innovative drug Kemosil capsules, which is the world's first CDK2/4/6 inhibitor [2] - Other notable advancements include the clinical application approvals for the oral GLP-1 receptor agonist TQF3250 for weight loss by both the NMPA and FDA, and positive progress in the phase II clinical trial of the TYK2/JAK1 inhibitor TQH3906 for plaque psoriasis [2]

Core Viewpoint - China Biopharmaceutical's innovative drug TQH3906 has successfully completed Phase II clinical trials for moderate to severe plaque psoriasis, demonstrating good safety and efficacy profiles [1][2]. Group 1: Clinical Trial Results - TQH3906 achieved its primary endpoint in the Phase II study, which included 209 patients across multiple dosage groups and a placebo group, administered orally once daily [1]. - The drug showed a dose-response relationship, with over 90% achieving PASI 75 and over 70% achieving PASI 90 after 12 weeks of treatment at the recommended Phase II dose, significantly outperforming the placebo group [2]. Group 2: Safety Profile - The overall safety of TQH3906 was good, with the incidence of adverse events comparable to the placebo group, and most adverse events were of mild to moderate severity [2]. - No new safety signals were identified, and the safety profile was similar to other TYK2 inhibitors [2]. Group 3: Market Context and Advantages - Oral small molecule targeted therapies like TQH3906 offer advantages over antibody-based biologics, including ease of administration, better tolerability, and improved patient compliance [3]. - Current oral treatments for plaque psoriasis have lower efficacy rates, with PASI 75 and PASI 90 response rates around 60% and 40%, respectively, highlighting the need for more effective and safe oral medications [3]. - TQH3906 targets the pseudokinase domain (JH2) of TYK2/JAK1, enhancing selectivity compared to traditional JAK inhibitors, which may lead to better safety profiles [3].

Core Viewpoint - China Biologic Products (01177.HK) has announced the completion of Phase II clinical trials for its self-developed innovative drug TQH3906, a TYK2/JAK1 JH2 allosteric inhibitor, targeting moderate to severe plaque psoriasis, demonstrating good safety and tolerability across all dosage groups and achieving the primary endpoint of the study [1] Group 1: Clinical Trial Details - The study is a randomized, double-blind, placebo-controlled, multi-center Phase II trial (NCT06542614) aimed at evaluating the efficacy and safety of TQH3906 in patients with moderate to severe plaque psoriasis [1] - A total of 209 patients were enrolled in the study, which included a placebo group and five different dosage groups of TQH3906 [1] - The drug was administered orally once daily throughout the trial [1]

Investment Rating - The industry investment rating is "Outperform" [1] Core Viewpoints - The global market for Inflammatory Bowel Disease (IBD) drugs is expected to reach $37 billion by 2030, with major pharmaceutical companies investing in this area [4][26] - There is a significant unmet clinical need for new therapies due to the complexity of IBD mechanisms and the high percentage of patients who do not respond to initial treatments [4][18] - The report emphasizes the importance of new targets and mechanisms in drug development, particularly focusing on TL1A, which has garnered interest from multiple multinational corporations (MNCs) [4][32] Summary by Sections IBD Treatment Overview - IBD includes Ulcerative Colitis (UC) and Crohn's Disease (CD), affecting over 3 million patients in the US and Europe, with no current cure available [4][10] - The market for IBD drugs is projected to grow at a compound annual growth rate (CAGR) of 5.88% from $23.26 billion in 2022 to $37 billion by 2030 [26][29] Market Dynamics - The sales proportion of TNF inhibitors is declining, while IL-23 inhibitors and JAK inhibitors are increasing in sales [4][29] - Ustekinumab is expected to contribute approximately $7.8 billion to the market by 2024, while Vedolizumab is projected to reach $6.107 billion [4][29] Clinical Needs and Drug Development - There is a pressing need for new therapies as up to 30% of patients do not respond to initial treatments, and 40% lose response over time [4][18] - The report suggests focusing on new targets and mechanisms, including companies like Abivax, Chenxin Pharmaceutical, and others for potential investment opportunities [4][32] Long-term Investment Strategy - The report recommends a strategic focus on leading innovative drug companies and those involved in the development of new therapies for IBD, highlighting companies such as Innovent Biologics, BeiGene, and others [4][32] - The report also notes the potential for significant market transactions in the IBD space, with several deals exceeding $5 billion in value [4][30]