Investment Rating - The report maintains a "Buy" rating for the company with a target price of 25.35 CNY, based on a 65x PE valuation for 2026 [4][9]. Core Views - The company's performance is under pressure due to the price adjustment of its core product, Ginkgo biloba extract injection, which has significantly impacted revenue and profit margins [12]. - The company is accelerating its small nucleic acid drug pipeline, which shows potential for international expansion, with several products already in clinical trials in both China and the United States [12]. - Increased investment in R&D is evident, with R&D expenses rising to 2.1 billion CNY, accounting for 17.9% of revenue, indicating a commitment to innovation [12]. Financial Performance Summary - Revenue is projected to decline from 4,196 million CNY in 2023 to 3,107 million CNY in 2025, reflecting a year-on-year decrease of 17.8% [6]. - Operating profit is expected to drop significantly to 76 million CNY in 2025, down from 232 million CNY in 2023, with a projected recovery in subsequent years [6]. - The net profit attributable to the parent company is forecasted to decrease to 57 million CNY in 2025, a decline of 53.7% compared to 2023 [6]. - The gross margin is expected to decline to 49.3% in 2025, with a gradual recovery projected thereafter [6].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 25.35 CNY, based on a 65 times PE valuation for 2026 [4][9]. Core Views - The company's performance is under pressure due to the price adjustment of its core product, Ginkgo biloba extract injection, which has significantly impacted revenue and profit margins [12]. - The company is accelerating its small nucleic acid drug pipeline, which shows potential for international market expansion [12]. - Increased investment in R&D is noted, with R&D expenses projected to rise, indicating a commitment to innovation [12]. Financial Performance Summary - Revenue for 2025 is expected to decline to 3,107 million CNY, a decrease of 17.8% year-on-year, with a gradual recovery projected in subsequent years [6]. - Operating profit is forecasted to drop to 76 million CNY in 2025, reflecting a 52.0% decline, but is expected to rebound significantly in 2026 [6]. - Net profit attributable to the parent company is projected to be 57 million CNY in 2025, down 53.7% from the previous year, with a recovery anticipated in 2026 [6]. - The company’s gross margin is expected to decrease to 49.3% in 2025, with a gradual improvement in the following years [6]. R&D and Product Pipeline - The company has 42 ongoing R&D projects, including 21 innovative drugs and 21 generic drugs, with several key products in the NDA review stage [12]. - The small nucleic acid drug YKYY015 and YKYY029 are undergoing clinical trials in both China and the US, indicating strong development activity [12]. - The company has also received FDA approval for its RSV and VZV mRNA vaccines, showcasing its expanding product portfolio [12].

Core Viewpoint - The article highlights the strong performance and growth potential of Yuekang Pharmaceutical, particularly in the innovative drug sector, driven by significant R&D investments and a robust pipeline of products [4][5][17]. Financial Performance - In the first half of the year, Yuekang Pharmaceutical reported a revenue of 1.167 billion, with R&D investment amounting to 209 million, representing 17.91% of revenue, a year-on-year increase of 7.54% [4][6]. Industry Context - The innovative drug sector is recognized as one of the "new five flowers" in the current A-share technology bull market, alongside semiconductors, internet software and hardware, new energy, and robotics [5]. R&D Capabilities - Yuekang Pharmaceutical has established eleven major technology platforms focusing on nucleic acid drugs, peptide drugs, high-end traditional Chinese medicine, high-end chemical drugs, and AI drug development, making it one of the few companies with capabilities in mRNA vaccines and small nucleic acid drugs [6][8]. Product Pipeline - As of June 30, 2025, Yuekang has 42 projects in development, with 21 innovative drugs, including 12 nucleic acid drugs, 3 peptide drugs, 5 traditional Chinese medicines, and 1 chemical drug, indicating a rich and tiered pipeline [6][17]. Upcoming Drug Approvals - Three innovative traditional Chinese medicine drugs are expected to be approved soon, which will fill clinical treatment gaps and enhance Yuekang's competitiveness in the traditional medicine sector [7]. High-Value Nucleic Acid Drugs - Yuekang's subsidiary, Tianlong Pharmaceutical, is a key player in nucleic acid drug development, with significant advancements in AI target discovery and delivery systems, positioning the company with a competitive edge in the market [8][9]. Innovative Peptide Drugs - The company is developing a broad-spectrum peptide drug for coronavirus infections, which is set to enter phase III clinical trials, showcasing its innovative approach to treatment [10]. mRNA Vaccine Development - Yuekang has developed a robust mRNA vaccine technology platform, including self-replicating mRNA vaccines and unique delivery systems, which enhance efficacy and stability [11]. AI Drug Development Platform - The company has created a comprehensive AI drug development platform that streamlines the drug discovery process, significantly reducing development time and costs [12][13]. Global Expansion and Licensing Potential - Yuekang's international strategy includes establishing a global R&D team and pursuing FDA approvals early in the drug development process, indicating strong potential for overseas licensing opportunities [14][16]. siRNA Drug Development - Yuekang has two siRNA drugs in the U.S. clinical approval process, with one expected to be the first of its kind in the market, highlighting the company's innovative capabilities in gene therapy [15][16].

Investment Rating - The report maintains an "Overweight" rating for the pharmaceutical and biotechnology industry, expecting the industry index to outperform the market index by over 10% in the next six months [1][40]. Core Insights - The SW pharmaceutical and biotechnology industry outperformed the CSI 300 index, rising by 7.84% from July 11 to July 24, 2025, exceeding the CSI 300's performance by approximately 4.13 percentage points [4][14]. - Most sub-sectors within the industry recorded positive returns during the same period, with the medical research outsourcing and raw materials sectors leading with increases of 14.23% and 9.30%, respectively [4][15]. - Approximately 91% of stocks in the industry achieved positive returns, with notable performers including Borui Pharmaceutical, which saw a weekly increase of 78.98% [16]. Summary by Sections 1. Market Review - The SW pharmaceutical and biotechnology industry outperformed the CSI 300 index, with a rise of 7.84% from July 11 to July 24, 2025, surpassing the CSI 300 by about 4.13 percentage points [14]. - Most sub-sectors recorded positive returns, particularly medical research outsourcing and raw materials, which increased by 14.23% and 9.30%, respectively [15]. - About 91% of stocks in the industry had positive returns, with Borui Pharmaceutical leading at 78.98% [16]. 2. Industry News - The report highlights the ongoing progress of the 11th batch of national drug procurement, with significant updates provided during a government open day event on July 22, 2025 [4][28]. - The announcement of the 11th batch of national drug procurement included a notification for drug information submission, which was highly anticipated [4][28]. 3. Company Announcements - Yekang Pharmaceutical announced that its subsidiary received FDA approval for clinical trials of YKYY029 injection for hypertension treatment [29]. 4. Industry Outlook - The report maintains an "Overweight" rating for the industry, citing a continuous rise in the pharmaceutical and biotechnology sector driven by positive sentiment towards innovative drugs and improved financing data [30]. - The report suggests focusing on investment opportunities within the innovative drug supply chain and highlights several companies across various segments, including medical devices, pharmaceutical commerce, and innovative drugs [30][32].

Core Viewpoint - YKYY029 injection, developed by YKANG Pharmaceutical and Hangzhou Tianlong, has received approval for clinical trials, marking a significant milestone in the company's drug development efforts [1][2]. Group 1: Drug Development - YKYY029 is a novel siRNA drug targeting the AGT gene, featuring a unique sequence and a proprietary delivery system developed by the company, which has been granted a national patent [2]. - The drug utilizes a GalNAc delivery system for efficient liver-targeted delivery, enhancing its therapeutic potential [2]. - The approval of the IND for YKYY029 is seen as a testament to the company's capabilities in new drug development, reinforcing its competitive edge in the cardiovascular disease sector [3]. Group 2: Preclinical Research - Preclinical studies have demonstrated significant AGT suppression activity in both in vitro and in vivo models [3]. - In pharmacological trials on spontaneously hypertensive crabs, YKYY029 maintained normal blood pressure levels, achieving a reduction of over 20 mmHg in systolic blood pressure at the study endpoint [3]. - Toxicity tests in SD rats and crabs showed no adverse reactions at high doses, indicating good safety and tolerability [3]. Group 3: Publication and Future Potential - Research papers related to YKYY029 have been published in the reputable journal "Molecular Therapy Nucleic Acids," highlighting the drug's enhanced efficacy and safety in various animal models [3]. - The combination of optimized sequence composition, modification patterns, and delivery systems is expected to further improve the drug's clinical trial outcomes for hypertension treatment [3].

Policy Developments - The National Medical Products Administration (NMPA) has released a draft for public consultation regarding the adjustment of medical device classifications, aiming to optimize the registration and filing requirements for medical devices [1] Drug Approval - Yuyuan Pharmaceutical's YKYY029 injection has received clinical trial approval for treating hypertension, marking a significant step in the development of a novel siRNA drug [2] - Hengrui Medicine has received clinical trial approvals for four drugs, including SHR-8068 injection and Abediterib injection, with total R&D investments amounting to approximately 20.33 million yuan [3] Financial Reports - Microchip Biotech expects a net profit of 30.06 million yuan for the first half of 2025, driven by increased sales from new drug listings and optimized sales strategies [4] - China National Pharmaceutical Modern reported a 6.46% decline in net profit for the first half of the year, attributed to decreased sales and prices of certain antibiotics and other products [5] Capital Market - Tigermed announced the sale of its stake in Lixin Pharmaceutical for approximately 34.11 million USD, reflecting a strategic move in the context of the domestic pharmaceutical industry's consolidation [6] Industry Events - A breakthrough in brain-computer interface technology has been achieved in Shanghai, allowing patients with speech impairments to communicate through decoded brain activity [8] - Yuan Da Pharmaceutical's innovative nasal spray for dry eye treatment has received approval and its first prescriptions have been issued, providing a new treatment option for patients [9] Debt Resolution - Kangmei Pharmaceutical has reached a settlement agreement to resolve historical debt issues for 43.5 million yuan, facilitating the closure of related legal matters [10] Market Sentiment - Weier Pharmaceutical announced plans for its employee stock ownership platform to reduce its holdings by up to 1% of the company's shares, driven by shareholder funding needs [11]