sector week performance: the CSI 300 index rose 1.92 per cent in the past week, the pharmaceutical biology (Shenwan) index rose 0.90 per cent, compared with the CSI 300 relative earnings of -1.02 per cent, the industry ranked 11th. Since the beginning of 2023, the CSI 300 index is up 0.71 per cent and the Pharmaceutical Biology (Shenwan) index is down 6.68 per cent, compared with a relative gain of -7.39 per cent for the CSI 300, ranking 22nd in the industry overall. In terms of molecular sectors, four of the seven Shenwan pharmaceutical sub-sectors rose and three sub-sectors fell in the past week, with SW Pharmaceutical Services II rising the most, at 4.58 percent, and SW Medical Business II falling the most, at -1.38 percent. Since the beginning of the year, the overall pharmaceutical sector trend in general, only two sub-sectors rose positive, of which SW Chinese medicine II rose the highest, 4.04 percent, followed by SW chemical agents sector rose 2.22 percent, the rest of the sector, SW medical services II fell the most, -18.88 percent.

individual stock weekly tracking: 1) individual stock ups and downs: from the point of view of individual stock ups and downs, the pharmaceutical industry A- shares (including the board) in the past week, 187 stocks rose positive, 222 stocks fell. The top five stocks in the past week were ST Baihua (-15.32%), Haixin B shares (-10.15%), Zhifei Bio (-9.78%), Ganli Pharmaceuticals (-9.71%), and Yuyuan Pharmaceuticals (-9.14%). The top five decliners in the past week were Secco Sid (-17.89 per cent), Kindick (-15.91 per cent), Kangyuan Pharmaceuticals (-14.69 per cent), Tuoxin Pharmaceuticals (-10.67 per cent) and Northland (-9.20 per cent). 2) Land shares: nearly a week north to the total net purchase of 2.609 billion yuan, of which 4.762 billion yuan, outflow of 2.153 billion yuan. From the land-share position, the top five holdings are Xiangyu Medical, Dizhe Pharmaceuticals-U, Cube Pharmaceuticals, National Pharmaceutical shares, Hendi Pharmaceuticals. The top five of the reduction are Dongfulong, Gongdong Medical, Haier Bio, Huluwa, I Wu Bio. 3) Bulk transactions: A total of 32 companies in the pharmaceutical and biological industry have had bulk transactions in the past week, with a total transaction amount of 1.336 billion yuan. The top five transactions were Wantai Bio, Ganli Pharmaceuticals, Zoli Pharmaceuticals, Chutian Technology, and Dasinulin.

sector valuation level: the PE(TTM) valuation of the pharmaceutical and biological sector reached 26.63X in the past week, still below the five-year average PE34.22X. Sector valuations have been slightly adjusted in the past week and remain at historically low levels. Compared to the same industry, the pharmaceutical and biological sector PE-TTM has a premium of -7.27 per cent relative to all A- shares excluding finance and 125.08 per cent relative to the CSI 300.

industry highlights: 1) the eighth batch of 21 provinces to determine the implementation time! 93 varieties meet the next batch of national conditions, 2) 15 provinces alliance procurement will no longer use the lowest price winning bid, 3) Pai Long Bio announced that CDK7 inhibitors have completed the first patient recruitment, 4) Junshi biological anti-PD-1 monoclonal antibody in China submitted the 9th listing application.

recommended attention: in the long run, health insurance control fees and normal collection will continue, enterprises need to choose new varieties, fully grasp the clinical needs, so we are optimistic about enterprises with real innovation capabilities, it is recommended to focus on product-side demand opportunities. Medical devices, conventional diagnosis and treatment continue to resume overlay policy marginal relaxation, the plate is expected to usher in Davis double-click, recommended to pay attention to Murray Medical (300760, buy), Sanyou Medical (688085, buy), Yiren Medical (688198, buy) and so on. In terms of innovative drugs, research and development continue to advance under strict review, pay attention to cutting-edge clinical progress, it is recommended to pay attention to Hengrui Pharmaceuticals (600276, buy), Jingxin Pharmaceuticals (002020, buy), Xingqi Eye Drugs (300573, increased holdings), Kangchen Pharmaceuticals (603590, buy) and so on. CXO, the industry business climate is expected to improve marginally, with the bottom of the investment value, it is recommended to focus on sunshine and (688621, buy), pharmaceutical Mingkang (603259, buy), Kanglong into (300759, increase holdings) and so on.

Risk Tips

The risk of the implementation of the centralized procurement policy exceeding expectations, the risk of repeated epidemics, the risk of less than expected corporate R & D, the risk of asset mergers and acquisitions and pipeline mergers and acquisitions and other investment-related risks