我们认为市场可能对地缘政治紧张局势反应过度

Pharmaceuticals /Biotechnology Marketlikelyoverreactedongeopolitical tensions, we think Research Analyst+852-2203-6208 disclosure of promising clinical data during the Asco meeting, investors havetendedto sell-on-newsfollowing announcements.Apartfrom the uncertaintywiththe interestrate environment, weattributetheweakness inhealthcare sentimenttopotential regulations on out-licensing deals given ongoing geopoliticaltensions. Inourview,thesepotential regulationswould likelydomoreharmthangoodtotheUS biotech industry.Furthermore,the legislation would likely be a long and lengthyprocess,facing significantopposition from industryleaders.As such,we believethemarketseemstohaveoverreactedtothenews. Pharmaceuticals/BiotechnologyChina Healthcare USlawmakers haveproposed tightening scrutiny of Chinese biotechinvestmentsIn February,some US officials sent a letter to the Us Treasury Department, proposing to expand the coverage of the COiNs Act to biotechnology,therebyprohibiting US investments in the Chinese biotechnology industry. OnMay21,ChairmanJohnMoolenaaroftheSelectCommitteeonChinawrotetoTreasurySecretaryScottBessent,requestingthe inclusionof biotechnologyasaprohibited technology under the COINS Act of 2025.This request stems fromconcerns over increased Us investment and intellectual property transfer toChina's biotech sector, highlighted bythe deal between BMS and Hengrui. OnJune2,JohnMoolenaarandCongresswomanDebbieDingell introducedtheBiotech Investment National Security Act (BINSA).This legislation proposes toinclude biotechnology in the COINS Act of 2025. Under this bill, licensing deals,joint ventures,and equity investments in China could be subjectto reviewbytheTreasuryDepartmentandSecretaryofDefense. Ourtake:MaydomoreharmthangoodtoUsbiotechindustries China has already become a global innovation hub in drug R&D,with itscompaniesconsistentlyinvestinginthisarea.Totalpharmaceutical R&DspendinginChina grewfrom USD26bn in2020 to an estimated USD39bn in2025,representing an8.5%CAGR during this period.Throughout 2020-2025,China'spharmaceutical R&D spending.This sustained investmenthasfostered anR&Decosystem characterized by efficiency,accumulated experience,successfulcandidates,and technicalknow-how.Despite China's relatively smaller share ofglobal R&D spending, it has led the world in the number of innovative drugsentering clinical trials since 2020. Consequently,we believe China will likelycontinue to be a global R&D hub forthe pharmaceutical industry. Pharmaceuticals/BiotechnologyChina Healthcare Avoiding cooperation with Chinese companies would mean missing out onasubstantial numberofpotentialdrugcandidates,especiallyin emergingareas likeADCs and multi-specific antibodies. Dealswill likelyflowtocompaniesfrom otherregions.US-related out-licensingactivitiesaccountedforapproximately42%ofthenumberofdealsfrom2020toMay2026,and57%oftotalupfrontpaymentsinthesameperiod.IftheUSdecidestowalloffin-licensedassetsfromChinesepharmaceuticalandbiotechcompanies,weexpectsomeofthesedealswouldshifttocompanies inotherregions Strong opposition fromlocal industryplayers is expected.While someviewChinesebiotechsasathreattotheUSindustry,othersbelievethepotentiallegislation would actuallyharm Americans by restricting access to life-savingdrugs.Moreover,whilethepublic and government aredemanding cheaperdrugsin theUS,thislegislation would seemingly incur higher R&D expenses forpharmaceuticalcompanies. Continuedout-licensinggmomentumin5M26.UpfrontpaymentssreachedUSD4,833mn(+93%YoY)in 5M26, already representingapproximately68%of Pharmaceuticals/BiotechnologyChina Healthcare Maywassignificant,totalingUSD1,250mn,mainlycontributedbydealsbetweenHengrui and BMS,and InnoventandPfizer. Appendix 1 *Other information available upon request subjectofthisresearch,pleaseseethemostrecentlypublishedcompanyreportorvisitourglobaldisclosurelook-uppageonourwebsiteathttps://research.db.com/Research/Disclosures/EguityResearchDisclosures.Aside from,within this report,important risk andconflict disclosurescanalso be found at https://research.db.com/Research/Disclosures/Disclaimer.Investors are strongly encouragedto reviewthis informationbefore investing Analyst CertificationThe views expressed inthis report accuratelyreflect the personal views of the undersigned lead analyst about the subject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will not receive anycompensationforproviding aspecific recommendation orview inthis report.CyrusNg. Pharmaceuticals/BiotechnologyChina Healthcare The Equity Rating Dispersion Chart depicts the following: Theproportion of recommendationsthatare rated"buy","sell"and"hold"overtheprevious 12months.This is shownfor"Companies Covered"bars inthe chart.Thepercentagevaluedisplayed abovethe baris theproportion as a percentage.E.g.50%abovethe"buy"/"CompaniesCovered"barmeansthat50%ofDB'sequityresearchcoveredcompaniesoverthepast12months havea"buy"rating. Next to eac