As of the beginning of the year, the MSCI China Healthcare Index has fallen by 26.5%, lagging behind the MSCI China Index by 33.7%. The current dynamic PE ratio of the industry index is 24 times, lower than the 12-year historical average. The bank expects that the policy of updating medical devices will soon be implemented, which will effectively stimulate the release of related demand. The State Council's task of deepening the reform of the medical and health system in 2024 mentioned the development of guiding documents to support the development of innovative drugs throughout the entire chain. The bank believes that with the implementation of support policies and the normalization of industry supervision, the recovery of performance will bring about a revision of industry valuation. China Merchants Securities International continues to be bullish on innovative drugs and equipment giants, as well as high-growth medical consumer stocks. The rebound of the pharmaceutical industry is mainly due to the effective stimulation of procurement demand caused by the implementation of the medical device update policy and the possible implementation of support policies for innovative drugs and equipment. Going overseas provides growth momentum, and the overseas market for innovative medical devices is growing rapidly, while the continued landing of innovative drug licensing transactions is expected; long-term investment opportunities such as GLP-1, ADC, etc. continue. Continue to be bullish on Mindray Medical, United Imaging Medical, Beigene, KPC Pharmaceuticals, Corning Biological Engineering, Juzi Biology, and Innovent Bio.