Guosen's investment strategy for the pharmaceutical industry in June: the fundamental outlook for innovative drugs and the industry chain is promising.

Guosen released a research report stating that Chinese innovative drugs have not only consistently presented excellent clinical data at international important academic conferences, but also made progress in clinical development overseas, and are about to enter the commercialization stage globally. Chinese CXO companies have comprehensive advantages in terms of talent dividend, chemical capability, compliance capacity, and intellectual property protection. The bank believes that Chinese companies will have strong irreplaceability in the core industry position of chemical CDMO within 5 years. In addition, the bank focuses on the pharmacy sector with reasonable valuation and improving logic. Guosen's main points are as follows: Smooth progress in global development of innovative drugs On June 1st, Professor Lu Shun reported the clinical results of HARMONi-6 at the plenary session of the ASCO annual meeting. The results showed that the combination of Yervoy and chemotherapy achieved significantly positive overall survival (OS) results in first-line treatment of sqNSCLC patients compared to Keytruda monotherapy combined with chemotherapy. This is the world's first phase 3 clinical study in the field of lung cancer to achieve both positive progression-free survival (PFS) and OS results with the combination of PD-1 monoclonal antibody and chemotherapy. The global multicenter phase 3 clinical trial HARMONi-3 SQ of Yervoy is expected to conduct the final analysis of PFS in the second half of the year. The success of the HARMONi-6 clinical trial has strong indicative significance for HARMONi-3. On the other hand, Kollingbor's partner Merck announced that the global phase 3 clinical trial of sac-TMT, TroFuse-005, has reached the main clinical endpoint and is expected to apply for FDA approval in the second half of the year. Chinese innovative drugs have not only consistently presented excellent clinical data at international important academic conferences, but also made progress in clinical development overseas, and are about to enter the commercialization stage globally. Chinese CXO industry has a competitive advantage globally The construction cycle of biopharmaceutical production capacity in Europe is relatively long, and Indian companies still have obvious shortcomings in terms of intellectual property protection, compliance capacity stability, etc. Chinese CXO companies have comprehensive advantages in terms of talent dividend, chemical capability, compliance capacity, and intellectual property protection. The bank believes that Chinese companies will have strong irreplaceability in the core industry position of chemical CDMO within 5 years, and recommends focusing on Asymchem Laboratories (good performance pace in the next three years, impressive growth of chemical large molecules and biological large molecules) and WuXi AppTec (clearing of geopolitical risks, short-term and midterm order certainty). Focus on the pharmacy sector with reasonable valuation and improving logic Offline pharmacies have shown excellent same-store data for two consecutive months, and the logic of improvement in the short term is gradually being verified. Stricter compliance will further catalyze industry clearance and integration, and raise higher requirements for enterprise operational capabilities. In the long term, leading companies with strong compliance advantages are expected to further increase market share. Recommended focus: Yifeng Pharmacy Chain, DaShenLin Pharmaceutical Group, LBX Pharmacy Chain Joint Stock. Portfolio for June 2026 A shares: Shenzhen Mindray Bio-Medical Electronics, Shanghai United Imaging Healthcare, WuXi AppTec, Asymchem Laboratories, ShenZhen New Industries Biomedical Engineering, MeHow Innovative, Amoy Diagnostics, GemPharmatech, Aier Eye Hospital Group, Jiangsu Yuyue Medical Equipment & Supply, Yifeng Pharmacy Chain, DaShenLin Pharmaceutical Group; H shares: AKESO, SKB BIO, HUTCHMED, KEYMED BIO-B, 3SBIO, AK MEDICAL. Risk warning: Risk of research and development failure; Risk of commercialization falling short of expectations; Geopolitical risks; Policy risks exceeding expectations.