Guotai Junan Securities Research Report believes that with the empowerment of AI, the shortened R&D cycle, reduced costs, and improved efficiency will all boost the IRR level of innovative pharmaceutical companies from a medium-term perspective, and the sector may be expected to usher in a new growth logic. The recovery of investment and financing activities in the global pharmaceutical industry is conducive to the improvement of financing cash flow of innovative pharmaceutical companies. In the significant upward stage of the industry's investment and financing cycle, the innovative drug sector tends to perform better in the capital market. For example, referring to the previous round from 2019 to 2021. At the same time, the central axis of US Treasury bond interest rates is likely to move downward in 2025, which may further benefit the continuation of the recovery trend in financing activities of innovative pharmaceutical companies and boost the sector's valuation. Waiting for fiscal support, there is room for innovative drug companies to repair their gross profit margins. On the one hand, the imminent release of industry policies represented by the "Class C Catalogue" may be an important catalyst for the recovery of sector valuations and sentiment. On the other hand, "social security injection" may be one of the options for fiscal support, thereby alleviating the pressure on medical insurance payments and driving the continued recovery in the growth rate of basic medical insurance expenditures. The revenue growth rate of the innovative drug sector is expected to usher in an upward inflection point, and the gross profit margin is also expected to be repaired. The "valuation expansion elasticity and space" of innovative drugs listed on the Hong Kong stock market may be stronger than that of A-shares.