The pharmaceutical sector staged a strong rebound on July 1st after a brief pause.
Numerous stocks in the pharmaceutical manufacturing space surged over 10%, with Yifang Biotech-U and Sansheng Guojian leading the gains, both up over 13%. The only ETF in the market tracking a pharmaceutical index, the Pharma ETF Huabao (562050), recovered from early losses and continued to climb, briefly surging over 4% in the afternoon session with an intraday amplitude nearing 7%.
The medical sector also gained strength, with Meihao Medical, Furui Medical, and Dian Diagnostics all rising over 10%, while Weigao Blood Purification hit the daily limit-up. The largest medical ETF by assets under management in the market, the Medical ETF Huabao (512170), saw its afternoon gains briefly exceed 3%, with an intraday amplitude over 5.5% and real-time turnover reaching 7.68 billion yuan, significantly surpassing the previous full day's volume.
Zhang Fang, the fund manager of the Medical ETF Huabao (512170), noted that the sudden surge in pharmaceuticals may be influenced by capital rotation from high-valuation to low-valuation sectors. After experiencing an extended period of significant decline, the CSI Medical Index's current price-to-earnings ratio is around 28, placing it near the 10th percentile of its valuation range over the past decade, indicating historically low overall valuation and high investment attractiveness. Consequently, it is more likely to attract capital attention during market style rebalancing.
Positive news also served as a catalyst. Recently, the National Healthcare Security Administration officially announced the preliminary review list for the 2026 National Reimbursement Drug List. The dual-track system of "basic medical insurance + commercial insurance" and the newly introduced 8-year price protection mechanism for innovative drugs have significantly boosted sentiment across the entire pharmaceutical sector.
Regarding the current investment value of the pharmaceutical sector, Zhang Fang believes that from a fundamental perspective, since 2026, global and domestic healthcare investment and financing have continued to recover, showing substantial year-on-year growth. This trend is expected to directly translate into CRO/CDMO orders, supporting their sustained high earnings growth.
For the medical device sector, on one hand, policies promoting equipment renewal continue to provide impetus. On the other hand, with continuous technological advancements, domestic medical device companies have made breakthroughs in both emerging and high-end markets, supported by the dual growth drivers of import substitution and overseas expansion.
In the long term, demographic aging, rigid demand for healthcare, and innovation on the supply side are the solid fundamental drivers for the sector's sustained high growth. Currently, the pharmaceutical sector is in a historically low valuation zone, with some medical sub-sectors showing signs of improving fundamentals, warranting increased attention.
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For one-click investment in leading pharmaceutical companies, the primary allocation tool is the market's only Pharma ETF (562050) and its corresponding feeder fund (024986), featuring a unique "75% innovative drugs + 25% traditional Chinese medicine" allocation, making it a scarce offering in the market that combines the high growth potential of innovative drugs with the high dividend appeal of traditional Chinese medicine.
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