The Hang Seng Healthcare Index declined 3.3% this week, underperforming the broader market. Since the fourth quarter of last year, the proportion of mainland capital holding pharmaceutical stocks through the Hong Kong Stock Connect has slightly decreased, while foreign holdings have increased, with some adding positions in innovative drug and device makers and leading CXO companies benefiting from demand recovery. In this year's pharmaceutical business development activities, BOCOM International recommends focusing on differentiated platforms such as small nucleic acids, long-acting formulations, in-vivo CAR-T, and next-generation ADC/XDC, as well as disease areas including autoimmune, metabolic, and central nervous system disorders. The firm believes the sector's trend of stable improvement will continue this year, though short-term fluctuations remain possible. Investors should examine corporate fundamentals and valuations when selecting stocks, seeking undervalued shares such as 3SBIO (01530), HUTCHMED (00013), and GENFLEET-B (02595), which possess abundant catalysts but have valuations not yet reflecting product value. Other opportunities include leading companies in CXO sub-sectors that can benefit from strong downstream demand and improving financing conditions, such as WUXI XDC (02268), as well as sub-sectors where regulatory uncertainties are gradually easing and policy support is anticipated, including hospitals, medical devices, and diagnostics.