CICC released a research report stating that with the support of domestic engineering talent dividends, abundant clinical resources, and supportive policies, domestic innovative drugs have gradually transitioned from a following era to FIC/BIC innovation. The innovative pharmaceutical industry entering the 2.0 era has gradually completed qualitative improvements. In the second half of the year, around mid-October surrounding the ESMO conference, related clinical data readouts and business development activities are expected to bring new investment opportunities to the sector. Regarding commercial insurance, since 2025, commercial medical insurance-related policies have continued to advance, which is expected to accelerate healthcare system payment reforms, ease supply-demand conflicts while accelerating support for domestic innovation. Entering the second half of the year, with the strengthening of fiscal policies, domestic medical equipment-related targets are also highly anticipated by the market.
CICC's main viewpoints are as follows:
Optimistic About Long-term Development Trends in Innovative Pharmaceuticals
With the support of domestic engineering talent dividends, abundant clinical resources, and supportive policies, domestic innovative drugs have gradually transitioned from a following era to FIC/BIC innovation. After several years of cultivation, domestic products have achieved commercial scale-up and are expected to benefit from payment-side policy reforms, improving profitability of innovative pharmaceutical companies. Pipeline data in research and development shows excellence, with substantial business development deals continuing to be reached. CICC believes that the innovative pharmaceutical industry entering the 2.0 era has gradually completed qualitative improvements. In the second half of the year, around mid-October surrounding the ESMO conference, related clinical data readouts and business development activities are expected to bring new investment opportunities to the sector.
Investment and Financing Expectations Improve, Expected to Bring Prosperity to Innovation Industry Chain Orders
Benefiting from the prosperity of the innovative pharmaceutical industry represented by Hong Kong Stock Exchange 18A companies since the beginning of the year, current primary and secondary market investment and financing has reversed the decline of the past 3-4 years, showing a relatively obvious turnaround starting from the second quarter. In the second half of the year, with the recovery of A/H market IPO projects and financing activities such as additional issuances and rights offerings in primary and secondary markets, investment and financing data is expected to improve in Q3. Domestic demand-oriented CROs may benefit from changes on the demand side, while upstream research will also benefit from this change.
Focus on Commercial Insurance and Equipment Subsidy Policies
Since 2025, commercial medical insurance-related policies have continued to advance, which is expected to accelerate healthcare system payment reforms, ease supply-demand conflicts while accelerating support for domestic innovation. The implementation of childcare subsidy-related policies is expected to improve long-term population pressure and stimulate infant and toddler-related consumption to some extent. Entering the second half of the year, with the strengthening of fiscal policies, domestic medical equipment-related targets are also highly anticipated by the market.
Target Stocks
A-shares: BeiGene (688235.SH), Hengrui Medicine (600276.SH), Kelun Pharmaceutical (002422.SZ), WuXi AppTec (603259.SH), Tigermed (300347.SZ), New Industries Biomedical Engineering (300832.SZ), MGI (688114.SH), Huitai Medical (688617.SH), Dian Diagnostics (300244.SZ).
H-shares: SKB BIO-B (06990), CSPC PHARMA (01093), SINO BIOPHARM (01177), Kangfang Biopharm (09926), WuXi Biologics (02269), Junshi Biosciences (01877), Zai Lab (09688).
Risk Factors
R&D failures, commercialization falling short of expectations, centralized procurement price reductions exceeding expectations.