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 has been sufficiently digested, the cost-basis structure has cleared, and the industrial trend of innovation going global continues. The pharmaceutical sector is entering a window for long-term allocation. In the short term, focus on investment opportunities in price-increasing products such as gloves and vitamins; in the long term, China’s pharmaceutical industry (600056)’s trend of innovative and industrial development will remain unchanged. After the market clears, there is expected to be an opportunity for long-term positioning. In 2026, we will continue to be optimistic about the industrial trend of China’s innovative drugs going global, and continue to focus on investment opportunities in core advantage tracks such as ADC, bispecific antibodies, small nucleic acids, and weight-loss drugs.

Huayuan Securities believes that, through a decade of innovation transformation from 2015 to 2025, China’s pharmaceutical industry has basically completed the conversion of old and new growth drivers (innovation replacing generic drugs, and overseas expansion capabilities improving). In particular, innovative drugs have significantly opened up a new growth curve for China’s pharmaceutical companies. Specifically: 1）China’s innovative industry has reached a certain scale, and traditional Pharma has completed a remarkable transformation toward innovation; 2）overseas expansion capabilities have accelerated, and China’s pharmaceutical companies have become a key source of innovation transformation that MNCs highly value. Medical devices, supply chains, and others have already occupied a relatively high position on a global scale, and continue to stand out in developed markets in Europe and the U.S. as well as in emerging markets. The demand side and the payment side are also continuously driving incremental volume: 3）aging continues to accelerate, and demand for chronic diseases such as cardiovascular and cerebrovascular diseases, endocrinology, and orthopedics continues to rise, creating a long runway for the silver economy; 4）on the payment side, Medicare income and expenditure are still growing steadily, and at the same time the National Healthcare Security Administration actively promotes the development of commercial insurance to build a multi-layer payment system; also, new technologies are accelerating industry transformation; 5）amid the AI big-technology wave, the pharmaceutical industry is expected to unlock a new growth logic, with rapid development of brain-computer interfaces, early tumor screening, AI medical care, and more. Looking ahead to 2026, we will continue to be optimistic about the pharmaceutical technology main line led by innovation, focusing on investment opportunities in innovative drugs, brain-computer interfaces, AI medical care, and surgical robots. Meanwhile, it is also recommended to position for the aging and off-hospital consumption that are expected to see a turnaround in 2026, and to focus on anesthetics and blood products with relatively low valuations.

(Edited by Zhang Xiaobo)

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