Investment Rating - The report maintains a "Strong Buy" rating for the pharmaceutical industry, indicating a positive outlook for investment opportunities [3]. Core Insights - The new centralized procurement regulations emphasize "stability in clinical use, quality assurance, prevention of collusion, and countering excessive competition," which are expected to promote the long-term healthy development of the industry [2][32]. - The report suggests focusing on recently launched innovative products, high-quality raw material suppliers, and key products that have passed the consistency evaluation for generic drugs [2][32]. Summary by Sections Market Review - The pharmaceutical and biotechnology index increased by 4% this week, outperforming the CSI 300 index by 2.91 percentage points, ranking second in industry performance [11]. - Year-to-date, the pharmaceutical and biotechnology index has risen by 16.59%, also surpassing the CSI 300 index by 13.45 percentage points [11]. - The chemical pharmaceutical sector showed the highest growth this week at 6.86%, while traditional Chinese medicine had the lowest decline at 0.88% [16][18]. Individual Stock Performance - In the A-share market, 397 out of 474 pharmaceutical stocks rose, with the top five performers being: - Borui Pharmaceutical (+42.35%) - Lisheng Pharmaceutical (+41.68%) - Nanxin Pharmaceutical (+34.95%) - Aosai Kang (+32.77%) - Yipin Hong (+32.13%) [22]. - In the Hong Kong market, 96 out of 106 pharmaceutical stocks increased, with the top performers including: - Clover Biopharma-B (+63.79%) - Lepu Biopharma-B (+62.04%) - Deqi Pharmaceutical-B (+47.04%) [25]. Industry News and Policies - The 11th batch of national centralized drug procurement was officially launched, including 55 varieties across various therapeutic areas, focusing on clinical needs and market realities [28]. - The new procurement rules are more refined, requiring production experience and quality control capabilities from manufacturers, which will help ensure drug quality and promote industry standardization [28]. - The establishment of the "Commercial Insurance Innovative Drug Directory" marks a significant step in building a multi-tiered medical security system, providing new economic support for innovative drug development [28]. Key Company Announcements - Heng Rui Pharmaceutical reported positive results from its GLP-1/GIP dual receptor agonist HRS9531 in a Phase III weight loss study, with an average weight reduction of 19.2% in the treatment group [29][31]. - The report highlights various corporate actions, including stock incentive plans and capital increases by several companies, indicating active corporate governance and strategic investments in the sector [36].

Group 1 - In 2024, China approved 48 innovative drugs, more than five times the number in 2018, with nearly 40 approved in the first half of the year, indicating a significant "explosion effect" in the sector [1] - The number of innovative drugs approved by the U.S. FDA in 2024 is 50, only two more than China's total, suggesting that China may surpass developed countries in high-tech innovation in the pharmaceutical field [1] - The approval of innovative drugs in China is particularly focused on oncology, with lung cancer being a major health threat, leading to advancements in drug development that enhance treatment options and patient survival rates [1] Group 2 - Bispecific antibodies and antibody-drug conjugates are at the forefront of innovative oncology drugs, with only four bispecific drugs approved globally, one of which is China's innovative drug, Ivosidenib [2] - A head-to-head clinical trial published in The Lancet showed that Ivosidenib significantly outperformed the well-known cancer drug Pembrolizumab in terms of progression-free survival [2] - The first international phase III clinical study of Ivosidenib has concluded enrollment and is awaiting FDA review for lung cancer indications [2] Group 3 - The innovative drug Lurbinectedin was approved in March 2024, becoming the first antibody-drug conjugate for lung cancer indications globally, marking a shift from "catching up" to "leading" in drug development [3] - The rapid development of innovative drugs in China is attributed to supportive policies, including the recently approved "Implementation Plan for Supporting Innovative Drug Development" by the State Council [3] - Ivosidenib was approved in May 2024 and included in the medical insurance list the same year, allowing patients to benefit from insurance reimbursement starting January 1, 2025 [3] Group 4 - Among the 91 drugs newly included in the medical insurance directory in 2024, 33 were approved and included in the same year, reducing the time from approval to insurance coverage from about five years to one year [4] - The price of Ivosidenib dropped by 68% after being included in the insurance directory, significantly alleviating the financial burden on patients [4] - The five-year survival rate for cancer patients in China has improved from 33.3% a decade ago to 43.7% by the end of 2023, translating to an additional 500,000 lives saved each year [5] Group 5 - Despite rapid development, the Chinese innovative drug market faces challenges such as homogenization and lack of clear clinical advantages, leading to "involution" in competition [6] - The National Medical Insurance Administration emphasizes the need to support true innovation and differentiated innovation to guide the development of the biopharmaceutical industry [6] - New measures have been introduced to utilize medical insurance data for innovative drug research and development, enhancing the efficiency of innovation [7] Group 6 - A new commercial health insurance directory for innovative drugs has been established, allowing for the inclusion of high-value drugs that exceed basic insurance coverage [8] - The commercial health insurance sector in China is growing, with a premium income of 977.3 billion yuan in 2024, indicating a potential for increased support for innovative drugs [9] - The establishment of the commercial health insurance directory aims to alleviate the financial burden on patients while ensuring sustainable development for innovative drug companies [10] Group 7 - Companies can apply for inclusion in both the medical insurance directory and the commercial health insurance directory, with the latter allowing for greater involvement of insurance companies in the decision-making process [11]

Group 1 - The industry is evolving with new transaction models such as NewCo, and there is high interest in the ADC sector, along with opportunities in dual antibodies, multi-antibodies, small nucleic acids, and mRNA technologies [1] - The upcoming commercial insurance innovative drug catalog is expected to be launched within 2025, aiming to include products beyond basic medical insurance, potentially creating a more flexible pricing environment compared to medical insurance negotiations [1] - The innovative drug ETF Guotai (517110) tracks the CSI Hong Kong-Shenzhen Innovation Drug Industry Index, covering quality innovative drug companies across A-shares and Hong Kong Stock Connect, mitigating risks associated with single technology failures [1]

Investment Rating - The report maintains a "Recommended" investment rating for the pharmaceutical industry [1] Core Insights - The domestic new drug market is expected to continue its growth momentum, driven by the synchronization of commercial insurance and medical insurance directories, which is likely to establish a differentiated pricing mechanism for innovative drugs [3] - The focus on tri-specific antibodies (tri-Abs) is increasing, with significant developments expected in 2025, particularly in the field of solid tumors [4] - The trend towards more effective and scientifically-backed weight loss solutions is gaining traction, with GLP-1 drugs projected to generate over $50 billion in global sales in 2024 [5] - The self-immune direction in biopharmaceuticals is seeing increased business development (BD) activity, with notable collaborations and advancements in clinical trials [6] - The approval of Vuxinib (伏欣奇拜单抗) marks a new era in biological treatments for gout, with significant market potential anticipated due to the rising prevalence of hyperuricemia and gout in China [7] Summary by Sections 1. Pharmaceutical Market Tracking - The pharmaceutical industry outperformed the CSI 300 index by 1.00 percentage points in the last week, with a weekly increase of 1.82% [18] - Over the past month, the pharmaceutical sector lagged behind the CSI 300 index by 1.36 percentage points, with a monthly increase of 1.73% [21] 2. Pharmaceutical Sector Trends and Valuation - The pharmaceutical sector's recent performance shows a 1.73% increase over the last month, underperforming the CSI 300 index [34] - The current price-to-earnings ratio (PE) for the pharmaceutical index is 35.79, above the five-year historical average of 32.22 [37] 3. Recent Research Achievements - The research team has published several in-depth reports highlighting trends in the pharmaceutical industry, including the growth of blood products and the impact of policies on inhalation formulations [41] 4. Recent Industry Policies and News - The National Healthcare Security Administration released measures to support the high-quality development of innovative drugs, enhancing their market access and payment capabilities [43] - Recent collaborations and licensing agreements among major pharmaceutical companies indicate a robust trend in the industry, with significant advancements in clinical trials and product approvals [44][46]

Core Viewpoint - The introduction of the commercial health insurance innovative drug directory is a significant step forward for the pharmaceutical and insurance industries, providing new opportunities for high-priced innovative drugs to gain market access and support from commercial insurance [1][2][14]. Summary by Sections Introduction of the Commercial Health Insurance Innovative Drug Directory - The National Healthcare Security Administration (NHSA) has announced the timeline for the adjustment of the basic medical insurance directory and the first version of the commercial health insurance innovative drug directory, with the official release expected between October and November 2023 [1]. - The new directory aims to clarify the boundaries of basic medical insurance and create more development space for commercial health insurance [1]. Market Opportunities and Growth Projections - The commercial health insurance innovative drug directory is expected to significantly impact the market, with projections indicating that the self-funded market for innovative drugs in China will grow from 320 billion yuan in 2024 to 1 trillion yuan by 2030 [2]. - Following the announcement, innovative drug concept stocks saw a 7.76% increase, with over half of the related stocks rising in value [2]. Eligible Drugs and Selection Criteria - The first version of the commercial health insurance innovative drug directory will include innovative drugs that exceed the basic medical insurance scope but have high clinical value and significant patient benefits [6]. - Eligible drugs include unique drugs approved between January 1, 2020, and June 30, 2025, and rare disease treatments approved before June 30, 2025 [6]. Potential Beneficiaries - High-priced "life-saving drugs" are expected to gain more payment opportunities through the new directory, particularly in the field of cell therapy, which has faced challenges in market penetration due to high costs [4][7]. - Recent approvals in the rare disease sector, with 36 new drugs in the last two years, are also likely candidates for inclusion in the directory [8]. Challenges and Industry Dynamics - Despite the positive outlook, not all players in the market will benefit equally, and the introduction of the directory may lead to a significant reshaping of the industry, akin to the impact of centralized procurement [3][14]. - The NHSA's new policies emphasize the importance of data sharing and collaboration between commercial insurance and pharmaceutical companies to enhance the efficiency of innovative drug development [15]. Financial Implications and Market Trends - The overall market for innovative drugs in China is projected to exceed 160 billion yuan by 2024, with a year-on-year growth rate of 16% [10]. - The NHSA's spending on negotiated drugs is expected to surpass 100 billion yuan annually, indicating a substantial financial commitment to supporting innovative therapies [10]. Conclusion and Future Outlook - The successful implementation of the commercial health insurance innovative drug directory will depend on the ability of commercial insurance to effectively support innovative drugs and address patient needs [12]. - The ongoing evolution of the pharmaceutical landscape, driven by innovation and regulatory changes, will require careful navigation by industry stakeholders to balance drug affordability and sustainable development [20].

Core Points - The adjustment of the national basic medical insurance drug catalog for 2025 has officially started, with a notable addition of a commercial health insurance innovative drug catalog [1][4] - The focus of the 2025 adjustment will be on areas where basic catalog coverage is insufficient, such as encouraging the development of pediatric and rare disease medications [3][4] - Over the past seven years, the national basic medical insurance catalog has undergone regular and dynamic adjustments, successfully negotiating and including a large number of life-saving drugs at reasonable prices [3][4] Group 1 - The 2025 adjustment aims to fill clinical medication gaps and provide better support for patients [3][4] - A total of 835 new drugs have been added to the national basic medical insurance catalog, covering various fields including cancer, chronic diseases, and rare diseases [3][4] - 438 drugs that are ineffective, prone to abuse, or have been eliminated from clinical use have been removed from the catalog, resulting in a more rational structure [3][4] Group 2 - The newly introduced commercial health insurance innovative drug catalog serves as a supplement to the basic catalog, allowing for the inclusion of innovative drugs that cannot yet be reimbursed by the basic insurance [4][5] - Drugs approved for marketing within the last five years or exclusive drugs for rare diseases can be submitted for the commercial health insurance innovative drug catalog [5][6] - The process for a drug to enter the commercial health insurance innovative drug catalog involves expert review and price negotiations among the national medical insurance bureau, commercial insurance companies, and pharmaceutical enterprises [6]

Group 1 - The National Medical Insurance Administration has officially launched the adjustment of the national basic medical insurance, maternity insurance, and work-related injury insurance drug catalog, as well as the commercial health insurance innovative drug catalog, starting from July 11, 2023 [1] - The newly added commercial health insurance innovative drug catalog focuses on high innovation, significant clinical value, and substantial patient benefits, which cannot be included in the basic catalog due to exceeding the "basic insurance" scope [1][4] - The adjustment aims to enhance the multi-tiered medication security system, better meet the diverse medication needs of the public, and provide stronger economic support for the development of innovative drugs [1][4] Group 2 - The adjustment criteria for traditional Chinese medicine (TCM) have been clarified, allowing eligible TCM decoction pieces to be included in the adjustment scope [2] - Specific conditions for TCM drugs to be included in the basic catalog include those approved by the National Medical Products Administration between January 1, 2020, and June 30, 2025, and those with significant changes in indications or functions [2][3] - The adjustment will also consider removing TCM drugs from the basic catalog if they have not supplied the market as agreed or have no transaction volume on the national medical insurance information platform [3] Group 3 - The commercial health insurance innovative drug catalog will be submitted and adjusted simultaneously with the medical insurance catalog, reducing the administrative burden on pharmaceutical companies [4][5] - The establishment of the commercial health insurance innovative drug catalog is intended to clarify the boundaries of basic medical insurance coverage and provide more development space for commercial health insurance [4] - The National Medical Insurance Administration will ensure the connection between the medical insurance drug catalog and the commercial health insurance innovative drug catalog, providing stable outlets for innovative drugs [5]

Core Viewpoint - The adjustment of the National Basic Medical Insurance, Maternity Insurance, and Work Injury Insurance drug catalog, as well as the new commercial health insurance innovative drug catalog, has officially commenced for 2025, aiming to enhance the multi-tiered medication security system and support the development of innovative drugs [1] Group 1: Policy Changes - The adjustment period for the drug catalogs is set from July 11 to July 20, during which eligible applicants can submit their applications through the National Medical Insurance Service Platform [1] - The newly added commercial health insurance innovative drug catalog focuses on drugs with high innovation, significant clinical value, and substantial patient benefits, which are currently unable to be included in the basic catalog due to exceeding the "basic protection" scope [1] Group 2: Industry Impact - The initiative aims to better meet the diverse medication needs of the public and provide stronger economic support for the development of innovative drugs [1]

Core Viewpoint - The National Healthcare Security Administration (NHSA) has released a work plan for the adjustment of the National Basic Medical Insurance, Maternity Insurance, and Work Injury Insurance drug catalog and the Commercial Health Insurance Innovative Drug Catalog, allowing eligible companies to apply for inclusion starting July 11, 2023 [1][3]. Group 1: Work Plan Details - The work plan allows for the application of new generic names or exclusive drugs for rare diseases approved for marketing within the last five years to be included in the Commercial Health Insurance Innovative Drug Catalog [1]. - The application process includes preparation, submission, initial review, public announcement, re-examination, and final announcement of the drug list [2]. - The timeline for the application process spans from July to November 2023, with specific phases for expert review and negotiation for pricing [2]. Group 2: Benefits for Innovative Drugs - Inclusion in the Commercial Health Insurance Innovative Drug Catalog can enhance sales for innovative drugs by leveraging the scale of basic medical insurance or commercial insurance [4]. - Drugs in the commercial insurance catalog are exempt from being counted in the basic medical insurance self-pay rate indicators and the monitoring of selected alternative products [4]. - The arrangement allows for innovative drugs to be excluded from the Diagnosis-Related Group (DRG) payment system, addressing the issue of high costs associated with innovative treatments [5]. Group 3: Application Choices for Companies - Companies can choose to apply for either the basic medical insurance catalog, the commercial health insurance innovative drug catalog, or both [6]. - The selection criteria for the commercial health insurance catalog focus on high innovation, significant clinical value, and substantial patient benefits, making it unlikely for the same drug to be included in both catalogs simultaneously [6][7]. - For products priced above the set standard, inclusion in the commercial insurance catalog is seen as more favorable compared to the basic medical insurance catalog [8].

Core Points - The National Healthcare Security Administration (NHSA) has announced a series of adjustments to the basic medical insurance directory and the first version of the commercial health insurance innovative drug directory, with the new directories expected to be officially published between October and November 2023 [1][2][6] Group 1: Policy Changes and Implications - The introduction of the commercial health insurance innovative drug directory is seen as a long-awaited opportunity for the industry, allowing for more market opportunities for high-priced drugs [2][4] - The NHSA emphasizes the importance of respecting the market position of commercial health insurance during the directory adjustment process, allowing insurance companies and industry experts to participate in price negotiations [5][10] - The new directory will include innovative drugs that exceed the basic medical insurance scope but have significant clinical value, with a focus on unique drugs approved between January 1, 2020, and June 30, 2025 [10][11] Group 2: Market Response and Growth Potential - The investment market has reacted positively, with innovative drug concept stocks rising by 7.76% within a week, indicating strong investor interest [7] - The self-funded market for innovative drugs in China is projected to grow from 320 billion yuan in 2024 to 1 trillion yuan by 2030, highlighting significant growth potential [6] - The introduction of the commercial health insurance directory is expected to provide more payment opportunities for high-priced "life-saving" drugs, particularly in the cell therapy and rare disease sectors [9][12][14] Group 3: Challenges and Industry Dynamics - Despite the positive outlook, not all players in the market will benefit equally, and the industry may face a significant shake-up akin to the centralized procurement process [8][25] - The NHSA's new policies aim to address issues of drug homogeneity and competition, with a focus on data openness to enhance the efficiency of innovative drug development [26][30] - The competitive landscape is expected to intensify, particularly for PD-1 drugs, as clinical performance will be linked to insurance renewals, increasing the pressure on companies to demonstrate efficacy [33]