Galaxy Securities China: Optimistic about innovative drugs in the second half of the year, focus on the rebound of equipment and service growth.

China Galaxy Securities pointed out that in the second half of 2025, they continue to be optimistic about innovative drugs and are paying attention to the recovery of the medical devices and services sector. 1) Continued optimism for medical innovation: Innovative drugs in the second half of the year are expected to continue, and domestic Category B catalogs and commercial insurance policies are expected to drive further valuation growth. 2) Medical investment and financing expected to recover: The prosperity of the secondary market is expected to bring about a rebound in primary market investment and financing, with improvements in the business environment for CXOs and upstream industries. 3) Medical devices expected to bottom out and rebound: Tender data has started to improve, and demand for upgrades is gradually being released. 4) Medical service growth expected to reach a turning point: National DRG/DIP payment reform achieves comprehensive coverage of designated areas and eligible medical institutions, with signs of recovery in the ophthalmology field. 5) Medical consumption awaiting recovery: Observing the effects of domestic stimulus consumption policies, it is expected to benefit the recovery of medical consumption, with clearance of channel inventories and a resurgence of end-user demand. In terms of investment recommendations, the valuation recovery of the medical innovation drug sector in 2025 is significant, and it is expected to drive a rebound in other sectors in the second half of the year. They are optimistic about the innovation drug industry chain, leading companies in specific industries, and the recovery of medical consumption.