Core Viewpoint - The eleventh batch of national organized drug procurement has been initiated, focusing on 55 types of drugs, with an emphasis on ensuring quality, reasonable pricing, and meeting diverse patient needs while promoting healthy development in the pharmaceutical industry [1][2]. Group 1: Procurement Process - The procurement process will enter the reporting phase for medical institutions, adhering to principles of "stabilizing clinical use, ensuring quality, preventing collusion, and avoiding excessive competition" [1]. - The selection of drugs for this batch will exclude newly negotiated drugs that are still under agreement, aiming to protect industry innovation [1][2]. - A total of 122 drugs met the initial selection criteria as of March 31, 2023, with 55 drugs ultimately selected for procurement after further screening [2]. Group 2: Quality Assurance - Stricter quality requirements have been established, mandating that participating companies must have at least two years of production experience for similar formulations, and their production lines must not have violated quality management standards in the past two years [2][3]. - The procurement office will support real-world studies on the clinical efficacy of selected drugs to enhance patient confidence in medication [2]. Group 3: Pricing and Competition - The procurement rules have been optimized to limit excessively low bids, requiring the lowest bidders to justify their pricing and ensure it does not fall below cost [3]. - The procurement will allow medical institutions to report specific brand quantities, aligning their needs with the selected results, thus enhancing the diversity of medication options available [3][4]. Group 4: Procurement Volume - The total reported quantity must not be less than 80% of actual usage, with allowances for adjustments based on clinical demand fluctuations [4]. - The procurement volume will be set between 60% to 80% based on market competition and the number of selected companies, allowing for greater flexibility in brand selection [4]. Group 5: Industry Impact - The ongoing optimization of procurement rules is expected to shift the industry focus from "low-price competition" to "quality competition, cost control, and reasonable profits," thereby enhancing the overall quality and accessibility of medications for the public [4].

Overview - Zhejiang Chengyi Pharmaceutical Co., Ltd. has received the drug registration certificate for Palivizumab injection from the National Medical Products Administration (NMPA) [1] - The approval indicates that the product meets the requirements for drug registration and is subject to pre-marketing quality management compliance inspection [1] Drug Development and Related Information - Palivizumab injection is indicated for the treatment of influenza A or B [1] - The registration application was formally accepted on March 4, 2024, with a total R&D investment of 6.6968 million yuan as of the announcement date [1] Market Situation - As of the announcement date, there are 35 manufacturers of Palivizumab injection, including Chengyi Pharmaceutical and other companies such as Zhongrun Pharmaceutical and Yangtze River Pharmaceutical Group [1] - Palivizumab injection was selected in the national centralized procurement for the tenth batch in December 2024, with a total agreed procurement volume of 249,600 units for the 15ml:0.15g specification and 5,350 units for the 60ml:0.3g specification [2] - The estimated market sales for Palivizumab injection in public medical institutions for 2024 is approximately 9.5 million yuan [2]

Core Viewpoint - The National Federation of Industry and Commerce Pharmaceutical Industry Chamber has released a notice regarding the solicitation of opinions on the "Draft of the Eleventh Batch of National Organization Drug Centralized Procurement Main Rules," indicating a refinement of drug procurement rules in line with government directives [1] Group 1: Key Aspects of the Draft - The draft includes five main areas: coverage scope, medical institution reporting and agreed procurement volume, bidding and selection rules, volume-based and quantity-based rules, and supporting policies [1] - New rules proposed in the draft include the implementation of an "N-3" bidding entry mechanism, the introduction of two types of revival mechanisms, and a requirement for a single enterprise to have a volume cap [1]

Group 1 - The National Medical Insurance Administration announced that the basic medical insurance coverage rate will remain stable at around 95% during the 14th Five-Year Plan, with the number of insured individuals reaching 1.327 billion by 2024 [2] - The 11th batch of centralized procurement for drugs has been initiated, with new principles established to protect innovative drugs from price pressure, thereby encouraging R&D in the pharmaceutical industry [2] - Recent statistics show a significant increase in the number of new drug approvals globally, with 106 new drugs approved in June 2025, indicating a vibrant pharmaceutical research and development environment [3] Group 2 - The Biopharmaceutical ETF (159839) has seen a strong performance, with a 3.82% increase in the National Biopharmaceutical Index and notable gains in constituent stocks such as Zhifei Biological Products and Watson Bio [1] - The Biopharmaceutical ETF has experienced a substantial growth in scale, increasing by 13.76 million in the past six months, ranking in the top third among comparable funds [1] - Leveraged funds have been actively investing in the Biopharmaceutical ETF, with net purchases reaching 1.2935 million in recent days, indicating strong market interest [1]

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].

Investment Rating - The report indicates a positive outlook for the pharmaceutical and biotechnology sector, with a focus on the recent improvements in the 11th batch of centralized procurement policies [2]. Core Insights - The pharmaceutical and biotechnology sector experienced a 4% increase from July 14 to July 18, outperforming the Wind All A index (1.4%) and the CSI 300 index (1.09%). The optimism in the sector continues, with raw materials, chemical preparations, and other biological products leading the gains [2][7]. - The 11th batch of centralized procurement has seen improvements, allowing medical institutions to report quantities based on specific brands rather than just generic names. This change is expected to benefit mainstream pharmaceutical companies with established reputations [2][12]. - The new procurement rules aim to prevent extreme low pricing and enhance the voice of medical institutions, which is anticipated to provide better competitive positioning for mainstream brand pharmaceutical companies [2][12]. Summary by Sections Market Weekly Review - The pharmaceutical and biotechnology sector rose by 4%, with raw materials (7.01%), chemical preparations (6.83%), and other biological products (5.85%) showing the highest increases. The only sector to decline was offline pharmacies, which fell by 2.65% [7][8]. - Notable stock performances included BoRui Pharmaceutical (42.3%), LiSheng Pharmaceutical (41.7%), and NanXin Pharmaceutical (35%), while stocks in restructuring faced declines, such as *ST SuWu (-22.3%) and ST WeiMing (-16.8%) [10]. Industry News and Key Company Announcements - The National Medical Products Administration (NMPA) announced the approval of a recombinant human serum albumin product for treating liver cirrhosis [13]. - On July 15, the National Medical Insurance Administration released guidelines for the 11th batch of centralized procurement, which includes new selection criteria and aims to respect clinical medication choices [12]. - China National Pharmaceutical Group announced a significant acquisition of 95.09% of LiXin Pharmaceutical for approximately 3.5 billion yuan, enhancing its control over the company [15]. - JD Health and Innovent Biologics signed a strategic cooperation agreement to enhance supply chain and digital marketing efforts [15].

Core Viewpoint - The National Healthcare Security Administration (NHSA) has initiated the 11th round of national drug procurement, focusing on 55 generic drugs, emphasizing quality over price, which indicates government support for industry innovation and rational competition [1][2] Group 1: Procurement Details - The procurement period is set from July 16 to July 31, during which hospitals must report their purchasing volumes [1] - The current round of procurement excludes innovative drugs and aims to optimize bidding rules to better match clinical needs and avoid excessive competition [1] - Key changes in bidding rules include allowing hospitals to report purchasing volumes by brand rather than generic names and adjusting the commitment purchasing volume based on clinical needs [1] Group 2: Impact on Major Pharmaceutical Companies - The expected sales impact on major pharmaceutical companies is limited, with estimated effects being less than 3% [1] - Specific companies and their affected products include: - Hengrui Medicine's product under JDB, contributing less than 0.5% to 2024 expected sales [2] - Hansoh Pharmaceutical's products, including Agomelatine and others, accounting for approximately 3% of 2024 expected sales [2] - CSPC Pharmaceutical's products, including Dagagliflozin and others, making up about 1% of 2024 expected sales [2] - China Biologic Products' drugs, including Olaparib and others, also representing around 1% of 2024 expected sales [2] - Shijiazhuang Yiling Pharmaceutical's products, contributing approximately 1.5% to 2024 expected sales [2] - Fosun Pharma's products, including Apalutamide, accounting for about 2% of 2024 expected sales [2]

Financial Performance Summary - In the first half of 2025, the company achieved operating revenue of 487,767.35 million RMB, a decrease of 18.16% compared to the same period last year [4] - The net profit attributable to shareholders of the listed company was 67,206.69 million RMB, down 6.46% year-on-year [4] - The net profit attributable to shareholders after deducting non-recurring gains and losses was 63,746.03 million RMB, a decline of 6.72% compared to the previous year [4] Business Operations Analysis - The decline in revenue was influenced by market supply and demand, with lower sales and prices for certain penicillin raw materials and intermediates [4] - The formulation business faced challenges, with sales revenue for some cephalosporins, hormone products, and neurological products decreasing due to centralized drug procurement and reduced terminal demand [4] - The company is focusing on strategic layout, actively promoting research and development, and enhancing market penetration while effectively reducing costs and expenses, which has stabilized profit margins [4]

Financial Performance Summary - The total operating revenue for the first half of 2025 was approximately 4.88 billion RMB, a decrease of 18.16% compared to the same period last year [2] - Operating profit decreased by 16.10% to approximately 920.16 million RMB [2] - Total profit decreased by 14.86% to approximately 924.93 million RMB [2] - Net profit attributable to shareholders was approximately 672.07 million RMB, down 6.46% year-on-year [2] - Basic earnings per share decreased by 6.46% to 0.5011 RMB per share [2] - The weighted average return on equity decreased by 0.68 percentage points to 4.96% [2] Asset and Equity Overview - Total assets at the end of the reporting period were approximately 19.66 billion RMB, a decrease of 1.49% from the beginning of the period [2] - The company's equity attributable to shareholders remained stable with a share capital of approximately 1.34 billion RMB [2] Operational Challenges and Strategic Response - The decline in net profit was attributed to lower sales and prices of certain penicillin raw materials and intermediates due to market supply and demand factors [3] - The formulation business faced revenue declines due to centralized drug procurement and reduced terminal demand for certain products [3] - In response to competitive pressures, the company is focusing on strategic layout, enhancing research and development, and reducing costs while stabilizing profit margins [3]

Group 1 - The core announcement is about the initiation of the 11th batch of national organized drug procurement, allowing companies to submit information for drug selection from July 16 to July 31, 2023 [1] - A total of 55 drug varieties have been included in this procurement, covering commonly used clinical medications such as anti-tumor, diabetes, cardiovascular, and respiratory drugs [2][3] - The procurement process will exclude innovative drugs and focus on mature products that have been on the market for years and have multiple manufacturers [1][2] Group 2 - 68 drugs that met the evaluation criteria were not included in this procurement, with reasons including insufficient competitive landscape and low projected procurement amounts [3] - Notably, five drugs were excluded due to high patent infringement risks, including Novartis' sacubitril/valsartan, which has seen significant sales growth in recent years [3][4] - The procurement rules are expected to be optimized, focusing on maintaining clinical stability, ensuring quality, and preventing irrational competition among companies [5][6] Group 3 - The selection criteria for this batch of procurement have been made transparent, combining previous rules with new policy requirements [6] - Quality requirements have been strengthened, with a new mandate for bidders to have at least two years of production experience for similar formulations [6][7] - The pricing mechanism has been adjusted to discourage irrational low-price competition, with a focus on rational pricing based on cost and quality [7]