Wind data reveals a notable shift in how public fund managers specializing in pharmaceuticals have approached company research since June. The traditional preference for large-capitalization names has given way to a more diversified strategy, particularly as the healthcare sector has regained momentum since late June, stepping in to lead the market while technology stocks consolidated. This time, the rally is driven by both innovative drugs and CDMO services, a departure from the previous focus on innovative drugs alone.
Historically, institutional investors, guided by value-oriented principles in the pharmaceutical space, have concentrated their attention on mainboard listed companies, showing comparatively less interest in pharmaceutical stocks on the STAR Market and ChiNext Board. However, the rise of BeiGene in recent years has challenged this conventional approach. A review of the current, more powerful rally in pharmaceutical stocks highlights the exceptional performance of companies on these two boards, prompting a closer look at second and third-tier targets that may offer better value propositions.
Given that leading names such as BeiGene, Mindray Medical, United Imaging Healthcare, and Pharmaron are already heavily held by institutions, identifying reasonably priced targets among the less prominent listings on the STAR Market and ChiNext Board has become crucial for portfolio allocation. Wind data shows that since June, fund managers have been investigating companies like Sino Biological, Sekisui Diagnostics, and Shenyang Xingqi Pharmaceutical, indicating a move away from simply buying large caps and holding them to mirror index gains.
In a written response, Shen Pinghong, fund manager at Yongying Fund, stated: "We will continue to rebalance between industry trends, mean reversion, and individual stock expectation gaps. On one hand, we seek out niche companies in popular sectors that are not yet fully priced and can demonstrate operational improvements. On the other hand, we look for small and mid-cap companies in traditional undervalued or overlooked industries that possess healthy cash flows, solid balance sheets, and the potential for fundamental changes in the coming quarters. When market expectations slope too steeply, the portfolio will place greater emphasis on valuation protection and risk-reward ratios. Conversely, when quality companies are neglected due to cyclical style shifts, we will actively assess the possibility of value revaluation."
Star Fund Managers Ma Muqing, Meng Yuan, and Fan Jie Investigate Sekisui Diagnostics
Turning first to the STAR Market, Sekisui Diagnostics (688338.SH), which listed on August 6, 2020, has been publicly traded for over six years. On June 29, the company held an institutional research session via webcast, following a similar webcast in May and an on-site meeting in mid-July. According to Wind data, a total of 10 institutions participated across these three sessions, with nine being fund companies and only one being a securities firm.
At the June 29 meeting, three prominent public fund managers specializing in healthcare participated: Ma Muqing from CCB Fund, Meng Yuan from ABC-CA Fund, and Fan Jie from HSBC Jintrust Fund. The research records show they were particularly interested in the company's overseas business plans. When asked about future expectations under the current medical policy environment, including centralized procurement and DRG/DIP payment reforms, the company responded that thromboembolism and hemostasis in vitro diagnostics (IVD) are currently concentrated in the screening field domestically, with significant room for growth in clinical diagnosis and treatment monitoring applications. The company plans to extend its coagulation instrument and reagent product lines, enhance professional service advantages, expand the variety of testing items, and strive to achieve import substitution in the domestic market while intensifying international marketing efforts to increase its market share in coagulation diagnostics. The company also stated it would closely monitor industry trends and actively seek new growth drivers aligned with its strategic development plan.
Addressing questions about the second growth curve amid intensifying market competition, the company emphasized its focus on advantageous businesses, strengthening technological innovation, and increasing market share in specific segments. It also plans to collaborate closely with upstream partners in the industrial chain to enhance product competitiveness. In response to medical payment reforms and evolving market conditions, the company believes that cooperation, complementarity, and integration among enterprises will become industry trends, and it remains open to various forms of collaboration with industry peers under mutually beneficial conditions. Regarding overseas strategy, the company noted that while overseas business currently accounts for a relatively small proportion of overall revenue, it is in a growth phase. The company aims to continue expanding its overseas scale and increase the revenue contribution.
Why would such a relatively young company, with many ambitious plans still in the pipeline, attract the attention of multiple renowned fund managers? Tan Xiongtian, a member of the investment committee at Puzhuo Capital, explained in a written response: "The biggest highlight for Sekisui Diagnostics this year is the gradual emergence of an operational inflection point and substantial progress in its dual-market layout. Overall revenue decline has continued to narrow, with second-quarter single-quarter revenue turning positive year-on-year, demonstrating operational resilience despite domestic medical insurance cost controls and testing policy pressures. The instrument business product structure is continuously optimizing, with an increasing share of mid-to-high-end models driving gross margin improvements, while the company maintains a robust and safe asset-liability structure."
He further added: "On the industrial front, the company is focused on the thromboembolism and hemostasis coagulation diagnostics segment, advancing high-end automated equipment. The SMART series coagulation lines and SF-9200 high-speed coagulation analyzers have been continuously installed in tertiary hospitals, accelerating the import substitution process in high-end domestic medical institutions. The overseas market is becoming a new growth curve, with overseas revenue growing rapidly and product access expanding across more countries. The EU IVDR certification has opened up international scaling potential. Simultaneously, the company is enriching its coagulation testing reagent menu and exploring new testing methodologies, building a competitive barrier through an integrated system of high-end instruments and supporting reagents, which hedges against short-term domestic market pressures and opens up long-term growth space."
Looking at the stock's annual performance since listing, apart from a gain of over 10% in its first year, the share price fell for two consecutive years before rising 33% in 2023. In 2024, the stock weakened again, declining approximately 27%. A potential turning point appeared in 2025, with a gain of 8.40%, and so far this year, the stock is up about 17%. Examining the top ten shareholders, public fund appearances have been rare historically: the 2023 interim report showed GF Wenxin Baoben as the ninth largest shareholder, and the 2024 third-quarter report listed E Fund Healthcare Industry. This raises the question of whether Sekisui Diagnostics, previously under-covered by institutions, has reached a pivotal moment for a significant turnaround.
From a bullish perspective, one industry insider provided a succinct assessment: "The company's core strengths lie in three areas: first, ample room for import substitution in its segment; second, a clear layout for its second growth curve; and third, overseas business in a high-growth phase."
Lou Huiyuan Investigates Sino Biological with Strong Revenue and Profit Growth
Turning to the ChiNext Board, Sino Biological (301047.SZ), listed on August 16, 2021, has been publicly traded for over five years. This biotechnology company based in Daxing, Beijing, is not a traditional institutional heavyweight. However, on August 31, it held an institutional research session via video conference. Wind data shows that 20 institutions participated, including 10 securities firms, five private equity firms, three investment institutions, and two public fund companies. Among them, Lou Huiyuan, the well-known healthcare fund manager at Bank of Communications Schroders Fund, was the most prominent participant.
According to Tian Tian Fund Net, Lou Huiyuan, who is approaching eight years in her role, has achieved positive returns across all her funds this year. Her longest-managed fund, the BOCOM Schroders Healthcare Innovation Fund, has delivered cumulative returns exceeding 1.5 times since inception. From the research records, Lou Huiyuan focused her questions on various fundamental aspects of the business. When asked about the technical barriers in transitioning from standard proteins to customized proteins, the company responded: "The technical barriers are mainly reflected in several aspects: first, the need for a balanced and comprehensive technology platform capable of adapting to the production and labeling needs of various proteins and molecules; second, customized proteins require high delivery efficiency, needing to complete customer-specific requirements within agreed timelines. The company can leverage past experience and advance multiple platforms and technical routes simultaneously to improve delivery efficiency; third, high-throughput production capacity is needed to better meet customers' one-time multi-type protein needs and help control costs."
Regarding the recent hot topic of mRNA vaccines, Lou Huiyuan also inquired about related products. The company emphasized that it is a biotechnology company engaged in the research, development, production, and sales of biological reagents and technical services. Its main business includes recombinant proteins, antibodies, genes, and culture media products, as well as services such as recombinant protein and antibody development and biosafety testing. The company's products are not directly used for clinical treatment but serve as tool reagents to support research by scientific institutions and biopharmaceutical companies.
Why did this mysterious biotechnology company attract 20 institutions to its first research session of the year? Tan Xiongtian analyzed: "On the industrial level, the company continues to consolidate its two core product matrices of recombinant proteins and antibodies, perfecting multiple high-end technology platforms such as membrane proteins and site-specific labeling. Key raw materials in the CGT field have achieved production capacity breakthroughs, and the one-stop CRO R&D services business is steadily expanding. Additionally, the company has launched a full-length p-Tau217 recombinant protein product for Alzheimer's disease testing, entering the upstream raw material segment for neurodegenerative diseases. The product structure is continuously upgrading toward high value-added GMP-grade premium reagents, positioning the company as a core upstream supplier in the domestic cell and gene therapy and innovative drug R&D industrial chain, with strong long-term growth certainty."
Furthermore, Sino Biological has completed its global expansion, acquiring Canada's SignalChem Biotech and establishing a research and development center in Houston, USA. It is also expanding new businesses such as CRO technical services and generative AI protein R&D, making it a target with high growth potential in the biological reagent sector. On the investment front, the company's performance continues to advance steadily. This year, fundamentals show a clear acceleration in recovery, with first-half 2026 revenue growing 21.09% year-on-year and non-GAAP net profit growth reaching 36.25%. Profit elasticity exceeds revenue growth, operating cash flow has improved significantly, and the overall gross margin remains at a high level of around 75%, indicating sustained strength in core profitability.
Guo Xiangbo Investigates Shenyang Xingqi Pharmaceutical as Product Matrix Takes Shape
Turning finally to another ChiNext company, Shenyang Xingqi Pharmaceutical (300573.SZ), listed on December 8, 2016, is the longest-listed company among the three, approaching its tenth anniversary of listing. On September 1, the company held an institutional research session via video conference. Wind data shows that 53 institutions participated, with public fund companies numbering 14, the largest institutional category. Notably, Guo Xiangbo, the former star healthcare fund manager at Tianghong Fund, participated in this research session despite having already stepped down from all his fund products.
From the research records, Guo Xiangbo focused primarily on the company's core product atropine from multiple perspectives. For example, when asked about the usage proportion of different atropine concentrations among newly diagnosed and existing patients, the company responded: "Since 0.02% and 0.04% concentrations were approved in January of this year, they are still in the process of gradually entering hospital and out-of-hospital channels. Hospital channels are the core setting for new patient first visits and existing patient follow-ups and re-prescriptions, while out-of-hospital channels such as retail pharmacies and e-commerce mainly rely on repeat purchases from existing patients. The 0.01% concentration has a solid market foundation and holds an absolute share in the existing market. The newly approved 0.02% and 0.04% concentrations are continuously increasing their share among new patients, with 0.02% offering a good balance of control efficacy and safety, suitable for most newly diagnosed myopia patients. For high-risk children such as those who are young, have high initial myopia, rapid progression, or parents with high myopia, a preference is given to 0.02% atropine combined with optical intervention or 0.04% atropine."
What draws over 50 institutions to this long-established eye drop manufacturer? Tan Xiongtian stated: "The company's most important industrial breakthrough this year is the completion of its myopia prevention and control product matrix. Two new concentrations of atropine sulfate eye drops, 0.02% and 0.04%, have been approved for marketing. Combined with the existing 0.01% formulation, this forms a unique multi-gradient personalized myopia prevention and control medication plan in China. The company is leveraging hospital-based academic promotion combined with out-of-hospital retail channels for continuous volume growth. The original blockbuster product, cyclosporine eye drops, continues to penetrate through medical insurance channels, consolidating its first-mover advantage in the dry eye treatment segment. On the R&D front, the company is simultaneously advancing multiple pipelines, including innovative biologics for fundus diseases and new-generation myopia prevention and control drugs. It is gradually building a complete ophthalmic product portfolio covering myopia, dry eye, and fundus diseases, relying on the strong consumer-oriented ophthalmic prescription drug track to form a development pattern of short-term revenue growth and mid-to-long-term pipeline succession."
Beyond myopia prevention, the company also holds a leading position in dry eye treatment domestically, creating a complementary dynamic between its two core businesses. Bolstered by industrial breakthroughs, the company's performance has maintained a positive trajectory. In the first half of 2026, revenue increased 20.48% year-on-year, and net profit attributable to shareholders grew 28.55%. High-margin products represented by eye drops are the core performance drivers, with product gross margins further improving and earnings quality continuously optimizing, charting a high-growth path for chronic ophthalmic consumer products.
Overall, looking at the market capitalizations of the three companies, two exceed 10 billion yuan while one is below 5 billion yuan, all falling into the small and mid-cap category. Shen Pinghong emphasized: "From a small and mid-cap strategy perspective, industrial diffusion, operational improvements, and insufficient market coverage can all lead to pricing deviations. We are more concerned with whether customer acquisition, order scale, capacity utilization, profit margins, and cash flow can improve simultaneously. For companies still in the early stages of an operational inflection point, the portfolio will gradually validate based on order visibility and valuation space. For targets that have already accumulated significant gains and have relatively fully-priced short-term expectations, we will control positions based on risk-reward ratio changes. Small-cap companies typically face higher volatility in liquidity and fundamentals, so position building pace, holding ratios, and exit space are equally part of investment decisions."