Zhongtai: Continue grasping the structural pharmaceutical market and continue to focus on medical AI+ solutions.

Zhongtai released a research report stating that the pharmaceutical sector, which combines technology and consumer attributes, will continue to present a structural market trend in the market rotation. Regarding the technological aspect, the innovative drug sector has experienced a sharp rise followed by a correction over the past year. Compared to the beginning of 2025, the valuations of most assets are reasonable. Therefore, it is recommended to focus on sub-industries (preferably small nucleic acids, in vivo CAR, ADC, second-generation IO, protac, etc.) and assets with marginal changes in their underlying fundamentals and sustainable potential for realization. Pharmaceutical/medical AI+ is a new direction with a recent surge in popularity, apart from focusing on leading companies in the field, it is also recommended to pay attention to companies whose main business is not related to pharmaceutical/medical AI+ but are actively embracing related technologies and expected to realize valuation elasticity in the short to medium term. Zhongtai's main points are as follows: Seize the structural trend in pharmaceuticals, continue to focus on pharmaceutical/medical AI+, and pick stocks with positive changes in fundamentals. This week, the Shanghai and Shenzhen 300 rose by 0.36%, while the pharmaceutical and biological sector fell by 0.81%, ranking 21st out of 31 primary sub-industries. This week, medical services increased by 0.22%, while chemical pharmaceuticals, biological products, medical devices, traditional Chinese medicine, and pharmaceutical business fell by 0.54%, 0.89%, 1.07%, 1.75%, and 2.68% respectively. The pharmaceutical market this week showed distinct trends, with AI healthcare, nucleic acid-related stocks that experienced previous corrections, and stocks with marginal changes in fundamentals and light institutional holdings performing well. The company believes that pharmaceuticals, as a sector that combines technology and consumer attributes, will continue to show a structural market trend in the market rotation. Regarding the technological aspect, the innovative drug sector has already experienced a sharp rise followed by a correction over the past year. The valuations of most assets are reasonable compared to the beginning of 2025. Therefore, it is recommended to focus on sub-industries (preferably small nucleic acids, in vivo CAR, ADC, second-generation IO, protac, etc.) and assets with marginal changes in their underlying fundamentals and sustainable potential for realization. Pharmaceutical/medical AI+ is a new direction with a recent surge in popularity. Apart from focusing on leading companies in the field, it is also recommended to pay attention to companies whose main business is not related to pharmaceutical/medical AI+ but are actively embracing related technologies and expected to realize valuation elasticity in the short to medium term. In terms of consumer sector, performance targets based on 2025 earnings forecasts have been largely achieved and reflected in current stock prices. It is recommended to focus on targets actively expanding their product offerings in the traditional Chinese medicine, and medical beauty consumer healthcare sectors and on the medical services sector that has undergone long-term adjustments. Several clinical studies of in vivo CAR therapy are expected to reach major endpoints this year, especially focusing on developments related to self-immune indications: According to MedCUBE, the bank has compiled a clinical pipeline of IST type in vivo CAR, all of which are in the early stages. However, from the layout of targets, design of mechanisms, and planning of indications, this cutting-edge technology has the potential to replicate various targets of ex vivo CAR varieties. At the same time, some emerging companies are already considering the technicities of modifying multiple immune cells at the current stage, with a vast potential range in the application of in vivo technology at the molecular design level. In terms of indications, besides CAR-T treatments for blood and lymphatic system tumors, the significance of positive trial data for self-immune diseases is profound due to the relatively weaker fatality rate, indicating positive clinical trial results. Several clinical studies of in vivo CAR therapy are expected to reach major endpoints this year. Abbvie's core pipeline acquired from Capstan for $2.1 billion is estimated to reach major endpoints soon. This study involves healthy individuals as subjects, with a series of safety indicators as primary endpoints and immune response-related indicators as secondary endpoints, indicating the potential effectiveness in subsequent stages. This pipeline will mainly focus on self-immune indications, considering the high acquisition price of Capstan and the absence of clinical data reading. If this pipeline successfully advances to subsequent stages of clinical research in the near future, it will bring hope for the industry's development. Additionally, several domestic in vivo CAR therapies are also expected to complete early-stage clinical research major endpoints this year, showcasing the domestic innovative drug development in this field. Weekly Market Dynamics: Analysis of the pharmaceutical sector from early 2026 to present, with a yield of 2.44% for the pharmaceutical sector compared to 0.66% for the Shanghai and Shenzhen 300, outperforming by 1.79 percentage points. This week, the Shanghai and Shenzhen 300 rose by 0.36%, while the pharmaceutical and biological sector fell by 0.81%, ranking 21st out of 31 primary sub-industries. This week, medical services increased by 0.22%, while chemical pharmaceuticals, biological products, medical devices, traditional Chinese medicine, and pharmaceutical business fell by 0.54%, 0.89%, 1.07%, 1.75%, and 2.68% respectively. Risk Warning: Risks of policy disturbances, drug quality issues, and risks of lagging or untimely updates in publicly available information used in research reports.