Institution: The trend of innovation and development in China's pharmaceutical industry remains unchanged

Aijian Securities believes that, at the current point in time, the pharmaceutical sector’s pullback is relatively well absorbed and the shareholding structure has been cleared. The industry trend of innovative overseas expansion remains ongoing, and the pharmaceutical sector is entering a window for long-term allocation. In the short term, it will focus on investment opportunities in price-rising products such as gloves and vitamins. In the long term, China’s pharmaceutical industry’s innovation and development trends will remain unchanged, and after the market has been cleared, there is expected to be an opportunity for long-term positioning. In 2026, it continues to be optimistic about the industry trend of Chinese innovative drugs going global, and will continue to focus on investment opportunities in core advantage tracks such as ADCs, bispecific antibodies, small nucleic acids, and weight-loss drugs.

Huayuan Securities believes that, after a decade of innovation transformation from 2015 to 2025, China’s pharmaceutical industry has basically completed the conversion of new and old growth drivers (innovation replaces generics, and overseas expansion capabilities improve). In particular, innovative drugs have significantly opened a new growth curve for China’s pharmaceutical companies. Specifically: 1) China’s innovative industry has reached a sufficient scale, and traditional Pharma has completed a remarkable transformation; 2) overseas expansion capabilities are accelerating, and Chinese pharmaceutical companies have become an important source of innovative transformation that MNCs highly value. Medical devices, supply chains, and related areas have already occupied a relatively high position on a global scale, and have continued to emerge in developed markets in Europe and the United States as well as emerging markets. The demand side and the payment side are also continuing to drive incremental volume: 3) aging is accelerating continuously, with sustained increases in demand for chronic diseases such as cardiovascular and cerebrovascular diseases, endocrinology, and orthopedics—while the silver economy has a long runway and deep potential; 4) on the payment side, Medicare revenues and expenditures are still growing steadily, and at the same time the National Healthcare Security Administration is actively promoting the development of commercial insurance to build a multi-tier payment system. In addition, new technologies are also accelerating industry change: 5) under the wave of AI in big science and technology, pharmaceuticals are expected to release new growth logic, with rapid development of brain-computer interfaces, early screening of tumors, AI medical care, and so on. Looking ahead to 2026, it continues to be optimistic about the pharmaceutical technology main theme led by innovation, focusing on innovative drugs, brain-computer interfaces, AI medical care, surgical robots, and more. At the same time, it recommends positioning for aging and out-of-hospital consumption, which are expected to see a reversal in 2026. It also calls attention to products with relatively low valuations such as anesthetic drugs and blood products.