On August 19th morning session, undervalued sectors showed strong activity! Medical device concepts led the gains, with Inner Mongolia Furui Medical Science Co.,Ltd. posting its second consecutive 20% daily limit up. China's largest Medical ETF (512170) opened higher and once surged 1.84%, with its trading price hitting a new annual high! Trading volume quickly exceeded 500 million yuan.

On the news front, Novo Nordisk announced that the supplemental New Drug Application (sNDA) for semaglutide (Wegovy) has been approved by the FDA for treating patients with metabolic dysfunction-associated steatohepatitis (MASH) accompanied by moderate to advanced liver fibrosis (stage F2 or F3).

Institutions point out that the MASH new drug listing process is accelerating, and they are optimistic about the continued volume growth of diagnostic equipment. Inner Mongolia Furui Medical Science Co.,Ltd., as a MASH "picks-and-shovels" play, is expected to unlock a high-growth trajectory.

In the pharmaceutical sector, innovation drug concepts maintained their momentum, with Gan & Lee Pharmaceuticals once hitting the daily limit, and traditional Chinese medicine leaders like Tongrentang all posting gains. The market's only Pharmaceutical ETF (562050) tracking pharmaceutical indices once explored 2% gains, with its trading price reaching a new high since listing!

Recently, the National Healthcare Security Administration announced 121 drug generic names that passed the preliminary formal review for commercial insurance innovation drug directory adjustments, including million-yuan priced anti-cancer drug CAR-T. Multiple high-priced innovative drugs are pursuing inclusion in the commercial insurance innovation drug directory, seeking new pathways for diversified payment mechanisms for innovative drugs.

The "China Innovation Drug and Medical Device Diversified Payment White Paper (2025)" shows that China's innovation drug and medical device market was estimated at approximately 162 billion yuan in 2024. By 2035, China's innovation drug and medical device market size is expected to exceed 1 trillion yuan.

From a secondary market perspective, multiple institutions have recently highlighted opportunities in the pharmaceutical sector. Based on comprehensive views, the pharmaceutical sector led by innovation drugs is firmly favored long-term, while undervalued healthcare tracks represented by medical devices are equally worth attention.

To capture the upward inflection point opportunities in medical devices and CXO sectors, the allocation tool to focus on is China's largest Medical ETF (512170) and its feeder fund (012323). It concentrates on "medical devices (52%) + medical services (40%)", has high correlation with AI healthcare, and covers 6 leading CXO stocks.

To capture the value revaluation opportunities of leading pharmaceutical companies, the allocation tool to focus on is the market's only Pharmaceutical ETF (562050) and its feeder fund (024986). It focuses on the top 50 leading pharmaceutical companies in A-shares, with heavy positions in innovation drugs (60%), while also considering high-barrier generic drugs and traditional Chinese medicine, and completely excludes healthcare and CXO sectors.

Risk Warning: The Medical ETF and its feeder funds passively track the CSI Healthcare Index, which has a base date of December 31, 2004, and was published on October 31, 2014. The Pharmaceutical ETF and its feeder funds passively track the CSI Pharmaceutical Index, which has a base date of December 30, 2011, and was published on July 15, 2013. The CSI Healthcare Index's annual performance from 2020 to 2024 was 79.67%, -14.71%, -25.1%, -24.25%, and -17.16% respectively. The index constituent stocks are adjusted timely according to the index compilation rules, and their backtested historical performance does not predict future index performance. Individual stocks mentioned in the article are for display purposes only and do not constitute any form of investment advice, nor do they represent holding information and trading activities of any funds under the management company. The fund management company assesses the Medical ETF and Pharmaceutical ETF as R3-medium risk, suitable for balanced (C3) and above investors. The Medical ETF feeder fund is assessed as R4-medium-high risk, suitable for aggressive (C4) and above investors. Please refer to the sales institutions for appropriateness matching opinions. Any information appearing in this article (including but not limited to individual stocks, comments, predictions, charts, indicators, theories, any form of expression, etc.) is for reference only. Investors must be responsible for any autonomous investment decisions. Additionally, any views, analyses, and predictions in this article do not constitute investment advice in any form to readers, nor do they bear any responsibility for direct or indirect losses caused by the use of this article's content. Fund investment involves risks. A fund's past performance does not represent its future performance. The performance of other funds managed by the fund management company does not guarantee the fund's performance. Fund investment should be approached with caution.

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