Citigroup has released a research report stating that the past fiscal year and the first-quarter earnings season confirm a sustained improvement in the fundamentals of China's healthcare industry. This improvement is driven by innovative drugs and CDMOs (Contract Development and Manufacturing Organizations), while domestic medtech, services, and pharmacy sectors have bottomed out. Innovation is yielding returns, with upfront and milestone payments from licensing deals boosting profits, sales of innovative drugs accelerating, and CXO (pharmaceutical R&D and manufacturing outsourcing) order volumes reaching record highs. Looking ahead, the bank anticipates a series of near-term catalysts, including data releases at ASCO 2026, continued momentum in licensing deals, follow-ups to drug pricing reforms effective April 14th, potential upward revisions to CXO guidance, and accelerated market consolidation benefiting leaders in medtech, services, and pharmacy. Industry-specific headwinds, such as in vitro diagnostic pricing, biosimilar centralized procurement, and DRG 3.0, have largely been digested and reflected by the market. Citigroup has updated its Hong Kong stock buy list, which now includes: Hengrui Pharma (01276), CSPC Pharma (01093), Ascletis Pharma (01672), Innovent Bio (01801), WuXi AppTec (02359), WuXi Biologics (02269), Alibaba Health (00241), MicroPort MedBot (02252), Mindray Medical (300760.SZ), Aier Eye Hospital Group (300015.SZ), and Yifeng Pharmacy (603939.SH). Stocks it views less favorably include China Resources Medical (01515) and Bloomage BioTechnology (688363.SH).