Bank of China International: In '26, it was recommended to focus on opportunities in the medical service sector and be optimistic about the three directions of innovation, overseas travel, and consumption in the pharmaceutical sector

The Zhitong Finance App learned that Bank of China International released a research report saying that in '25, the gains in the medical service sector were clearly divided. Among them, the CXO and innovative drug-related sectors rose significantly. In '26, the bank is still optimistic about “product-driven” related companies. The core is that the industry trend of “product-driven” related companies is still improving, and related targets are expected to gradually enter the profit cycle; in addition, the '26 recommendation is to focus on opportunities in the medical service sector. Although the medical service sector's performance in '25 was not impressive, the bank believes that the long-term logic of medical services is still there, and the industry is resilient. After 26 years of low base effect in the medical service sector, the industry is expected to gradually recover.

Bank of China International's main views are as follows:

The rise and fall rates of the 25-year sector were clearly divided, and the chemical and pharmaceutical sector ushered in valuation expansion

Overall, the overall performance of A-shares was relatively good in '25. As of October 31, 2025, all 31 A-share Shenwan Tier 1 sectors recorded positive returns. Among them, the pharmaceutical biotechnology sector ranked 10th in terms of rise and fall, with an increase of 34.95%. Looking at the molecular sector, as of October 31, 2025, according to Shenwan's three-level industry classification, there was some differentiation in the rise and fall rate of each sub-sector. Among them, pharmaceutical R&D outsourcing, or CXO, had the highest increase of 58.71%, followed by biological products, with an increase of 57.59%, and the third was chemical preparations, with an increase of 52.17%; while offline pharmacies and blood products followed, with 7.56% and 0.87%, respectively. In terms of valuation, as of October 31, '25, the overall price-earnings ratio of the pharmaceutical biotechnology sector was 30.82 times. Compared with 2020, the industry's valuation is still at the bottom. Combined with performance-side analysis, the increase in valuation in the bioproducts and pharmaceutical R&D outsourcing sector is positively correlated with performance, and the increase in valuation is driven by performance. However, net profit from the vaccine and in vitro diagnostics sector declined markedly in the first three quarters. The increase in both valuations was mainly due to a decline in the profit side. The increase in valuation in the chemical formulation sector has little correlation with performance. The rise in the chemical formulation sector is more due to valuation expansion, while the offline pharmacy and pharmaceutical distribution sector have improved, but valuations are still declining.

Still optimistic about “product-driven” related companies for 26 years

In recent years, “product-driven” related companies have gradually emerged from the influence of collection, and enterprises have continued to launch new products by increasing investment in R&D; on the other hand, the policy side is also gradually improving. Policies such as “collecting against internal volume” and “encouraging innovation” are frequent, further guiding the pharmaceutical industry to innovation-driven transformation. More importantly, enterprises are gradually entering a new profit cycle along with the continuous implementation of innovative products. Based on this, the bank believes that the industrial logic of future “product-driven” related companies will continue. Regarding innovative drugs, the bank believes that there is still a trend in the innovative drug industry. In '25, the innovative drug BD was the focus of attention in the capital market. The innovative drug BD not only proved the competitiveness of China's innovative drugs on a global scale, but has also gradually become an important way for China's innovative drugs to go overseas and go international. It is still an important direction for the innovative drug industry in the future. In addition to this, the performance of innovative drug-related companies and the clinical progress of some key products are also important points worth paying attention to in the future. In the medical device sector, the bank believes that medical device industry trends are similar to innovative drugs, and are still at the bottom, and the valuation of medical devices is expected to expand further in the future due to factors such as medical device channel barriers.

Healthcare services are resilient and are expected to gradually recover in '26

Judging from the performance of the medical service sector this year, although the medical service sector did not perform well, judging from data on the number of treatments and surgeries from some ophthalmology companies, the bank believes that the industry has begun to gradually recover, and in the long run, the medical service sector is still resilient: 1. In the context of aging, the incidence rate of residents is expected to gradually increase, the immediate demand for medical services is strong, and the industry is resilient; 2. In the context of collection and medical insurance fee control, the leading medical service companies are expected to continue to benefit; 3. There are still many unresolved Problems, such as pathological myopia and glaucoma in the field of ophthalmology. With the introduction of new technologies and products in the industry, the medical service industry still has a lot of room for development. In 26 years, the medical service sector is expected to gradually recover under the 25-year low base effect.