Citigroup's latest research report highlights that China's AI-driven drug discovery (AIDD) sector is accelerating rapidly, with the speed and cost advantages of AI drawing significant attention from the investment community. According to market research data, global pharmaceutical R&D investment is estimated at approximately $313 billion in 2026, yet AIDD penetration remains at only about 6%. The bank believes there is substantial room for industry expansion, projecting the global AI drug discovery ecosystem could reach around $50 billion by 2030, with growth concentrated across three key areas: data generation, wet-laboratory validation, and AI-native discovery.

Citigroup views INSILICO (03696) as a hybrid enterprise combining both platform capabilities and a robust pipeline. Its proprietary AIDD platform is expected to consistently produce "higher quality and more differentiated" clinical assets, potentially creating exponential value. The bank maintains a "Buy" rating on INSILICO (03696) with a target price of HK$85, designating it as the top pick in the sector. Regarding XtalPi Holdings (02228), Citigroup has initiated coverage with a target price of HK$8, noting that while the company integrates physical AI, robotic experimentation, and intelligent orchestration, the depth of its product pipeline remains limited, and commercial output is still pending further validation.