Fangsheng Pharmaceutical(SH:603998) KAIYUAN SECURITIES·2025-09-28 09:56Investment Rating - The investment rating for the pharmaceutical and biotechnology industry is "Positive" (maintained) [1] Core Insights - The report highlights the ongoing adjustments to the National Essential Medicines List (NEML), with a focus on the potential inclusion of various traditional Chinese medicine products, which could significantly enhance growth opportunities for related companies [7][15][27] - The report emphasizes the historical context of the NEML, noting that it has undergone several revisions since its inception in 1982, with the latest version released in 2018 [5][16] - The report suggests that the demand for adjustments to the NEML is increasing, particularly for chronic disease medications and innovative domestic drugs, indicating a potential shift in the market landscape [27] Summary by Sections 1. NEML Adjustment Progress - The NEML is set to be adjusted approximately every three years, but the last update was in 2018, leading to calls for a new revision to include more chronic disease medications and innovative products [27] - The report recommends monitoring companies that may benefit from being included in the updated NEML, particularly in the traditional Chinese medicine sector [28] 2. Historical Context of NEML - The NEML was first published in 1982, with significant revisions occurring in 2009, 2012, and 2018, reflecting the government's commitment to improving public health through essential medicines [5][16] - The 2018 version of the NEML included 685 items, with a notable increase in the number of traditional Chinese medicines, indicating a growing recognition of their importance [20][21] 3. Future Outlook - The report anticipates that the upcoming adjustments to the NEML will likely favor traditional Chinese medicine products, which could lead to increased sales and market penetration for companies in this sector [26][27] - Companies like Fangsheng Pharmaceutical are highlighted for their innovative approaches and potential for rapid growth in the traditional Chinese medicine market [30][31] 4. Market Performance - In the fourth week of September 2025, the pharmaceutical and biotechnology sector experienced a decline of 2.20%, underperforming compared to the CSI 300 index [32] - The report notes that while the overall sector faced challenges, certain sub-sectors, such as other biological products, showed resilience with positive growth [38][39]