CICC: Clear Trend in Innovative Drug Industry Chain, Positive Order Outlook for Pharma Supply Chain
Taylor Wilson
CICC said at its morning briefing that while innovative-drug stocks have pulled back short-term, BD deals and clinical readouts remain solid and pharma supply-chain orders carry strong earnings visibility; separately, China Securities estimated the "15th Five-Year" infrastructure framework at roughly ¥26.4 trillion baseline.
Innovative drugs sold off — has the thesis broken?
CICC says no. Macro noise and capital rotation drove a short-term de-rating, but China's out-licensing (BD) deals and clinical data readouts continue on track.
This means → share prices are falling, yet drugmakers keep signing deals and publishing data — the hardest indicator of an intact industry trend.
Both license-out and new-co models — where a Chinese biotech grants overseas rights or spins out a dedicated offshore entity for a drug — are advancing China's drug internationalization despite the share-price pullback.
Where is the money coming from, and who gets the orders?
CICC highlights a healthy biopharma funding environment at home and abroad, with a fresh round of R&D spending under way.
In plain terms = once drugmakers raise capital, they spend it on R&D — and the outsourced lab and manufacturing work flows to upstream CXOs (contract research and manufacturing organizations that run experiments and produce drugs on behalf of pharma companies).
This means → CXO firms enjoy relatively firm order visibility; their earnings growth is backed by real capital flows, not just expectations.
What is the "Six Networks" plan, and how big is it?
China Securities (中信建投) spotlighted "Six Networks" — the top-level framework for infrastructure investment during the 15th Five-Year Plan period, marking a shift from legacy "roads, rails, and bridges" toward networked, security-resilient systems.
Key numbers: cumulative investment of roughly ¥24.1 trillion to ¥29.2 trillion, with a baseline scenario of ~¥26.4 trillion and an annual average of ¥5.3 trillion.
Structurally, underground utility-network spending jumps sharply, digital and power infrastructure rises steadily, and traditional livelihood segments still grow in absolute terms but shrink as a share. Funding follows a three-tier model: fiscal leadership + state-enterprise backbone + private-capital supplement.
How should investors position for July?
Huaxin Securities recommends sticking with a barbell strategy — betting on both ends: high-beta on one side, stable defensives on the other. July brings A-share interim-earnings season; a large IPO may cause short-term liquidity noise, but it does not alter the medium-to-long-term trajectory.
Core positioning: AI computing names that have corrected enough and can deliver real earnings — optical modules, semiconductor materials — while rotating into non-ferrous metals and chemicals on the side.
In plain terms = buy the beaten-down tech stocks that can show actual profit, then use large-cap financials to balance style exposure — cover both ends.
What to watch next?
Whether pharma supply-chain orders actually convert into CXO earnings is the key checkpoint for the market to validate the innovative-drug thesis.
This means → in the upcoming interim-earnings season, CXO companies' order backlogs and revenue growth rates will be the most direct test.
If orders convert smoothly, the current pullback is a buying window; if conversion disappoints, the valuation reset may have a second leg.
Content is for reference only, not financial advice.