Cathay Securities and Haitong Securities: Policy dividends drive the accelerated domestic substitution in the upstream of scientific research and pharmaceuticals, focusing on core targets such as TITAN SCIENTIFIC

According to the Zhitong Finance APP, Guotai Junan has released a research report stating that the upstream of scientific research and pharmaceuticals, as an important component of the strategic emerging industry that is self-controllable, is 迎来双重驱动 from both policy and market. The national level continues to introduce supportive policies, including the "14th Five-Year" Bio-economy Development Plan, which requires the enhancement of the safety level of the industrial chain. The Ministry of Science and Technology has clarified the goal of "independent research and development of high-end products." Coupled with the impact of rising tariff costs on imported brands, domestic companies with independent innovation capabilities are 迎来替代窗口期. Key recommendations include TITAN SCIENTIFIC (688133.SH), Aladdin (688179.SH), and NANOMICRO (688690.SH) as core targets.

Guotai Junan's main viewpoints are as follows:

Policy benefits, the upstream of scientific research and pharmaceuticals is an important component of the strategic emerging industry that is self-controllable

From a policy perspective, the biopharmaceutical industry is listed as a strategic emerging industry. The country has introduced a series of supportive policies for domestic substitution in the life sciences field, such as the "14th Five-Year" Health and Health Technology Innovation Special Plan released by the Ministry of Science and Technology and the National Health Commission in 2022, which proposes requirements for "increasing autonomy in high-end product research and development" and "continuously improving the domestic supply rate of domestically produced products" for major new drugs and key reagent consumables. The National Development and Reform Commission's "14th Five-Year" Bio-economy Development Plan also requires "enhancing the safety and stability of the industrial chain and supply chain." The "Guangdong-Hong Kong-Macao Greater Bay Area Development Plan Outline" and national-level scientific research project support further catalyze the localization process of the industry.

Independent innovation drives domestic substitution, and the domestic substitution rate is expected to rise rapidly

The Chinese market, with its large population base and rapidly growing demand for biopharmaceuticals, is gradually becoming an emerging market for the life sciences industry. In the coming years, the market size of life science products in China will grow rapidly. The high-end market for life science products has long been dominated by European and American companies. This report believes that there is still significant room for domestic substitution. Under the trend of domestic substitution, companies with independent innovation and research and development capabilities that can provide performance similar to or even superior to imported products will stand out in fierce market competition.

If the cost of imported brands rises due to tariffs, the cost-effectiveness of domestic brands is expected to be further highlighted

According to announcements from imported brands such as Merck and PerkinElmer, tariff measures have brought significant financial pressure on their product costs. This report believes that against the backdrop of a tariff war, the cost pressure on imported brands will persist in the long term, and there is expected to be an accelerated window for domestic substitution.

Risk Warning: Tariff geopolitical risks, global pharmaceutical research and development prosperity risks, and risks that supportive policies for innovative drugs do not meet expectations