CITIC Securities: Chinese Pharma Firms Actively Explore Diversified Global Expansion, Focusing on New Growth and Industry M&A

Stock News11-20

Chinese pharmaceutical companies are entering a critical phase of "innovation realization + global expansion," supported by demographic advantages, domestic demand, and full industrial chain manufacturing capabilities. Firms are actively exploring diversified overseas expansion strategies. Amid global competition and policy evolution, the industry must "strengthen domestic foundations, drive innovation, and expand globally," enhancing supply chain security and compliance internally while deepening diversified internationalization externally. Looking ahead to 2026, key opportunities lie in innovative commercialization, global breakthroughs, policy-driven incremental growth, and industry consolidation via mergers and acquisitions.

**Global Perspective: Innovation Value Shines as Chinese Players Accelerate Penetration** China’s pharmaceutical sector leverages "innovation upgrades + supply chain resilience." Overseas licensing of innovative drugs in the first three quarters of 2025 surpassed the total for 2024, while medical device firms are also actively pursuing global pathways. The U.S. dominates early-stage R&D and premium pricing, but multinational pharma’s patent cliffs create robust demand, highlighting the cost-performance advantage of Chinese assets and vast synergy potential.

**Domestic Reshaping: High-Quality Development Anchored in Innovation & Compliance** 1. **Policy**: Focus on high-quality growth, with optimized centralized procurement, diversified payment systems, and medical service pricing reforms. 2. **Pharma**: Innovative drugs enter commercialization scaling; supply chain security remains pivotal. 3. **Devices**: Domestic substitution extends to mid-high-end segments, with opportunities in globalization, emerging tech (AI, brain-computer interfaces), and M&A integration. 4. **Other Sectors**: Monitor recovery and transformation in traditional Chinese medicine, pharmacies, and medical services.

**Global Expansion Reshaping: Multidimensional Breakthroughs** 1. **Innovative Drugs**: BD collaborations normalize, entering "Internationalization 2.0." 2. **Supply Chain**: Recovery in domestic and overseas demand. 3. **APIs**: Overcome short-term volatility by transitioning to specialty APIs/CDMO. 4. **Devices**: Expand overseas markets via direct sales and BD partnerships. 5. **Plasma/Vaccines**: Diversified models for international plasma product registrations and vaccine exports.

**2026 Investment Outlook: Value Reshaping in Progress** 1. **Innovation Themes**: ADC drugs, next-gen immuno-oncology, oligonucleotides, obesity treatments; AI healthcare and neurotech devices. 2. **Globalization Themes**: Innovators with global clinical data and capabilities; device firms aggressively expanding abroad. 3. **Marginal Shifts**: Policy tailwinds (e.g., medical equipment upgrades); demand-supply improvements (CXO order recovery, upstream material substitution). 4. **Consolidation Themes**: Leading niche device players, SOE reforms in traditional medicine, and pharma firms with integration prowess.

**Risks**: Stricter-than-expected procurement policies, intensified competition, delayed drug/device approvals, and unpredictable external factors.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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