On March 31, Gu Lan, the fund manager of China-Europe Fund, released the 2025 annual report of the fund. Taking China-Europe Medical and Health, the fund with the largest management scale, as an example, by the end of 2025, the top ten major holdings and hidden major holdings of the fund did not change stocks. During the reporting period, the fund continued to focus on the core areas of innovative pharmaceuticals and their industry chain, OTC, and consumer healthcare. Gu Lan stated that in 2026, they continue to be optimistic about the innovative pharmaceutical industry chain, while also paying attention to the domestic substitution and overseas expansion of medical devices, as well as the reversal of consumer healthcare challenges. In the annual report, Gu Lan stated that the pharmaceutical and biotechnology industry is experiencing an upward trend in a complex internal and external environment, with the Shenwan Pharmaceutical Index rising by 11.9%, lagging behind the 17.7% increase of the Shanghai and Shenzhen 300 Index. There is significant differentiation within the sector, with the innovative industry chain leading the way, and the medical service sector leading with a 28.3% annual increase. During the reporting period, the net asset value growth rate of Class A shares of the China-Europe Medical and Health Fund was 13.07%, compared to a benchmark return of 3.47% for the same period; the net asset value growth rate of Class C shares was 12.16%, compared to a benchmark return of 3.47% for the same period. In terms of holdings, the top ten major holdings of China-Europe Medical and Health are: WuXi AppTec (603259.SH), Hengrui Medicine (600276.SH), Kanglong Chemical (300759.SZ), Taige Medicine (300347.SZ), BayerTianheng (688506.SH), Kelaiying (002821.SZ), Xilantai (002294.SZ), Haisi Ke (002653.SZ), Koller Pharmaceutical (002422.SZ), and BeiJiShenzhou-U (688235.SH). Looking at the latest disclosed annual report data, the hidden major holdings of China-Europe Medical and Health have also not changed stocks, all of which were original holdings. Specifically, the 11th to 20th major holdings are respectively East China Medicine (000963.SZ), Else (688578.SH), Haoyuan Medicine (688131.SH), Zejing Pharmaceutical-U (688266.SH), Zhaoyan New Drug (603127.SH), Huitai Medical (688517.SH), Tebao Biology (688278.SH), Baisai (301080.SZ), Yinko Medical (300677.SZ), and Jiuzhou Pharmaceutical (603456.SH). Looking ahead to 2026, Gu Lan believes that the role of China's pharmaceutical industry is transitioning from following to leading globally, with innovations in pharmaceuticals going overseas, research and development outsourcing recovering, domestic substitutes and overseas expansions of medical devices, and a resurgence in consumer healthcare remaining the core drivers of the industry. The innovative drug sector is expected to remain the core investment theme for the industry. In terms of industry trends, leading domestic innovative pharmaceutical companies have accumulated rich experience in international authorizations, their core assets are highly recognized by international pharmaceutical companies, and BD overseas expansion may still be a theme throughout the year. Several subcategories are expected to see intensive catalysis, such as the ADC sector, where multiple global Phase III clinical trial data are worth looking forward to, involving important indications such as lung cancer, breast cancer, and digestive tract tumors. In addition, the dual antibody field, GLP-1 track, and nucleic acid drugs will see continuous upgrades and new product launches. The consumer healthcare sector is expected to see a reversal of challenges. After a long period of adjustment, sectors such as ophthalmology, dentistry, and medical beauty are gradually recovering as consumer confidence returns, and leading companies are expected to revive due to their brand and service advantages. Against the background of an aging population, the potential for consumption growth in areas such as rehabilitation care and chronic disease management is huge. The medical device sector is expected to see a turning point in performance in 2026, with dual drivers of domestic substitution and overseas expansion reshaping the competitive landscape. In the medical equipment sector, once some companies clear their inventory, their performance is expected to enter a period of recovery. Orthopedic consumables and in vitro diagnostics are gradually becoming the second growth curve in overseas markets, with a trend towards diversification of destinations and a shift towards high value-added categories continuing. The progress in AI healthcare and brain-machine interface fields is rapid, and the brain-machine interface has reached a key point of technological breakthrough to commercialization, benefiting from policy layouts and standard implementation, and the industrialization process is expected to accelerate.