The medical device sector, which has faced significant pressure in recent years, is now poised for a turning point. This shift is driven by a systemic optimization of healthcare industry policies, moving away from a phase of crude cost controls and low-price competition towards a new era emphasizing quality, innovation, and value. At this critical juncture of improving industry sentiment and optimizing structure, the Medical Device ETF Huatai-PineBridge (561810), managed by Huatai-PineBridge Fund, is designed to provide investors with a convenient tool to capture the sector's recovery potential.

From a fundamental perspective, the implementation of volume-based procurement (VBP) for consumables and medical insurance cost controls have historically been the primary factors suppressing the valuation and profitability of medical device companies. However, as industry reforms progress into deeper waters, systemic policy optimization has become the core driver of the current recovery. On July 14, 2026, the National Health Commission and two other departments officially issued a notice on VBP, explicitly shifting evaluation criteria from "lowest price priority" to "technically appropriate, quality priority, and reasonable price," reinforcing the concept of total lifecycle cost. Under the "anti-involution" policy direction, the previous procurement practices that solely prioritized low prices are expected to be corrected, leading to substantial improvements in the industry's fundamentals.

Concurrently, the tone set at the top-level design stage has also seen positive changes. The 2026 Government Work Report proposed for the first time to "promote the high-quality development of medical devices." The "15th Five-Year Plan" also specifically emphasized support for the development of innovative drugs and high-end medical device industries, formally elevating the medical device sector to a strategic intersection of building a Healthy China, cultivating new quality productive forces, and upgrading high-end manufacturing. From the optimization of VBP rules to the upgrading of industrial positioning, the policy environment is forming a more sustainable, quality-focused development framework. This is expected to create a more favorable environment for competitive companies with core strengths.

Building on the improving policy landscape, expansion into overseas markets and cross-sector technological integration are becoming key avenues for the medical device industry to break out of the domestic competition and open up new growth space. On the global expansion front, leveraging China's complete industrial chain and significant cost-performance advantages, the competitiveness of domestic medical devices in the global market continues to rise. Data from the first half of 2026 shows a clear trend towards high-end products in China's pharmaceutical and healthcare exports. Medical devices, with an export value of $27.1 billion and a year-on-year increase of 12.47%, have become a core sector driving export growth. Meanwhile, the momentum of industrial innovation continues to be unleashed. Specialized policies are precisely supporting high-end niche segments such as medical robots and AI medical devices, accelerating the transformation of cutting-edge technologies into practical applications. In July 2026, the world's first clinical application of brain-computer interface technology was successfully achieved at Huashan Hospital, marking a critical milestone in the industrialization of domestic frontier medical device technology. Leading companies with independent research and development capabilities are poised to seize the first-mover advantage in this track and realize the value of their innovation growth.

Currently, the positive effects of policy improvements and expanding industrial demand are continuously being transmitted to corporate operations, potentially driving a gradual recovery in revenue levels for the medical device sector. In the first quarter of 2026, the sector's revenue returned to positive year-on-year growth of 3.76%, confirming the industry's warming trend. Furthermore, after a period of sustained adjustment, the underlying index of the Medical Device ETF Huatai-PineBridge (561810), the CSI All Share Medical Devices Index, has seen its latest P/E ratio retreat to 41.82 times. This is at the 43.5% historical percentile since its launch, indicating that the overall valuation is at a reasonably low level. From the multi-dimensional perspectives of policy, industry, and valuation, the growth logic of the medical device industry is expected to be further consolidated, with the sector's medium-to-long-term allocation value potentially becoming increasingly apparent.

As one of the first ETF managers in China, Huatai-PineBridge Fund has over 19 years of experience in index investing. In December 2025, it won the "Passive Investment金牛Fund Company" award from the China Securities Journal for the eighth time. To date, Huatai-PineBridge Fund has built a comprehensive index product matrix covering broad-based, industry, and thematic indices, creating popular products including the CSI 300 ETF Huatai-PineBridge (510300) and the A500 ETF Huatai-PineBridge (563360).