Key investment points: Torasemide has clearly benefited from the discontinuation of production of competing products. The company's torasemide is a new generation of high-efficiency diuretics. As the number of patients with high blood pressure, heart failure, kidney failure, and cirrhosis rises, the overall market size is expected to continue to grow. In addition to the discontinuation of competitive products in September 2017, the company's product sales volume increased dramatically, and the market share currently occupies the first place. We expect tolasemide to continue to grow in volume over the next three years. Second-tier products benefit from bidding progress and supplementary catalogues are expected to accelerate. The company's second-line products mainly include lansoprazole, cefotiam, tigecycline and cefoxidione sodium, pidomod, glucosamine sulfate, etc., involving digestive drugs, antibiotics and other types of drugs. With the launch of a new round of bidding and adjustments to local supplementary catalogues, sales of second-tier products are expected to grow rapidly. For example, in 2018, H1 injectable cefoxidione entered category B in Heilongjiang, Jiangsu and Anhui provinces; glucosamine sulfate granules were newly added to category B of the “Medical Insurance Catalogue” of Jiangsu Province; and Pitomod capsules were newly added to category B of the “Medical Insurance Catalogue” in Shandong and Hunan provinces. High-end generic drug+innovative drug dual-wheel drive provides a guarantee for the company's long-term development. In recent years, the company has continuously increased investment in R&D expenses and selected high-quality varieties for reserves. It has varieties under research in various fields such as digestive system drugs, rheumatoid immunity drugs, cardiovascular and cerebrovascular drugs, anti-hepatitis B drugs, etc., which is conducive to further enriching the company's product structure and providing impetus for long-term development. Furthermore, in 2017, the company acquired 90% of the shares of NMS Group, the largest innovative oncology drug company in Italy. Among the externally authorized products, 1 product has already been approved for listing. Additionally, 3 products are expected to enter Phase I clinical trials in 2019, greatly improving the company's ability to innovate. Maintain a “Recommended” rating. We expect the company's EPS in 2018-2020 to be 0.71 yuan, 0.92 yuan, and 1.16 yuan, respectively, and PE 37 times, 28 times, and 23 times, respectively. The current valuation level is quite reasonable, but considering the company's high-simulation+ innovative drug research and development, plus the controlling shareholders' increased shareholding and employee holdings, the “recommended” rating has been maintained. Risk warning: product sales fall short of expectations; product price reduction pressure; mergers and acquisitions fall short of expectations, etc.