With China's innovative drug License-out projects setting new records in total value and preclinical projects maintaining a high proportion, emerging therapies such as ADC, bispecific/multispecific antibodies, and small nucleic acids, as well as obesity indications in the metabolic field, are expected to be key directions for future License-out projects. China's innovative drug companies have transitioned from a high-investment, low-output R&D exploration phase to a pipeline-intensive harvest period. Meanwhile, the development of commercial insurance is expected to shift the payment model for innovative drugs from a "single-payer" system to diversified payment solutions.

Additionally, the medical device sector is witnessing a continued recovery in procurement demand for 2025, driven by equipment renewal policies and funding implementation. Key insights include:

This year, the chemical pharmaceutical sector has led gains in the healthcare industry, supported by innovative drugs and AI healthcare, with valuations approaching the 10-year historical average. Public fund holdings in biopharmaceutical stocks remain at relatively low levels over the past decade, though the proportion has shown a sequential increase in 2025 Q1-Q3.

The rapid development of innovative drugs has become a benchmark for China's growing innovation capabilities. The record-high total value of License-out projects and the sustained high proportion of preclinical projects reflect global recognition of China's innovative drugs, enhancing their "gold content." While international pharmaceutical giants consolidate their positions in traditional strongholds, they are actively expanding into high-potential areas such as metabolism and neurology.

Over the past decade, China's innovative drug companies have evolved from an R&D exploration phase to a pipeline-intensive harvest period. Data shows that China's innovative drug market exceeded RMB 400 billion in 2024, becoming a new highlight of economic growth. Notably, 113 domestically developed innovative drugs were approved during the 14th Five-Year Plan period (up to 2024), 2.8 times the number in the 13th Five-Year Plan. This transformation is attributed to comprehensive regulatory reforms, increased R&D investment, and strategic globalization efforts.

Compared to global pharmaceutical giants, domestic companies still lag in revenue, market capitalization, and blockbuster drug portfolios. However, China's commercial health insurance sector has significant growth potential, which could facilitate a shift from single-payer to diversified payment models for innovative drugs.

In 2025, procurement demand for medical devices continues to recover, with policies and funding driving market expansion. Statistics indicate a 29.8% year-on-year growth in the medical device procurement market in Q3 2025, with revenue turning points emerging for medical equipment companies. Amid normalized domestic centralized procurement and anti-corruption measures, companies are accelerating overseas expansion to access higher-margin or better-paying markets.

Government policies in 2025 further support the development of brain-computer interface (BCI) technologies, with global leaders like Neuralink driving rapid advancements and clinical applications.

**Stock Recommendations:** - **Innovative Drugs:** BEIGENE (06160), HENGRUI PHARMA (01276), SINO BIOPHARM (01177), 3SBio (01530), CSPC Pharma (01093). - **Medical Devices:** 1. **Domestic Demand Recovery:** Mindray (300760), United Imaging (688271), SonoScape (300633), Aohua Endoscopy (688212). 2. **Overseas Expansion:** Haituo Newlight (688677), Snibe (300832). 3. **BCI Sector:** Cyberdyne (300430), Weisi Medical (688580).

**Risk Warnings:** Industry policy changes, slower-than-expected sales growth, and R&D delays.