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]

Core Viewpoint - The new healthcare policy aims to enhance the accessibility of innovative drugs through the establishment of a commercial insurance innovation drug directory, which is expected to include around 20 to 30 new drugs, thereby improving the overall insurance coverage for patients [6][9]. Group 1: Policy Changes - The National Healthcare Security Administration (NHSA) has released a series of documents outlining the adjustments to the 2025 National Basic Medical Insurance, Maternity Insurance, and Work Injury Insurance drug directories, as well as the commercial health insurance innovation drug directory [2][4]. - The new policy emphasizes a collaborative negotiation mechanism for the commercial insurance innovation drug directory, differing from the basic insurance directory's negotiation process [6][8]. Group 2: Market Impact - The introduction of the commercial insurance innovation drug directory is expected to allow insurance companies to negotiate prices with pharmaceutical companies, leading to lower prices compared to existing market rates [6][8]. - This policy is anticipated to expand the coverage of commercial insurance and reduce operational costs for insurance companies, ultimately benefiting patients by increasing their access to innovative drugs [6][9]. Group 3: Implementation and Future Outlook - The NHSA will begin accepting applications from eligible companies for the new drug directory starting from July 20, 2023, indicating that the preparation for the 2025 adjustments is nearly complete [9]. - The dynamic nature of the directory, which will be updated annually, suggests that more innovative drugs may be included in short-term health insurance plans in the future, providing more options for the public [8][9].

Core Insights - The National Healthcare Security Administration (NHSA) has released a new policy framework for the adjustment of the 2025 National Basic Medical Insurance, Maternity Insurance, and Work Injury Insurance drug catalog, as well as the commercial health insurance innovative drug catalog [1][2] - The new policy signals a shift towards a collaborative pricing mechanism for innovative drugs, allowing commercial insurance companies to negotiate prices with pharmaceutical firms, which is expected to lower costs and expand coverage [2][3] Group 1: Policy Design and Market Impact - The newly introduced commercial insurance innovative drug catalog is expected to include around 20 to 30 drugs, filling gaps in the basic medical insurance catalog and enhancing overall coverage [1] - The commercial insurance innovative drug catalog emphasizes a negotiation mechanism, differing from the basic medical insurance catalog's negotiation process, indicating a more flexible approach to pricing [1][2] - The policy aims to benefit the public by increasing access to new and effective medications, allowing patients to enjoy greater reimbursement for innovative drugs [2] Group 2: Role of Commercial Insurance Companies - Commercial insurance companies will have the opportunity to negotiate prices with pharmaceutical companies, which is a significant shift from previous practices where they had limited bargaining power [2] - Different insurance companies will design various insurance products based on their payment capabilities, leading to a competitive environment and broader coverage options for consumers [2][3] - The NHSA will selectively invite experienced commercial insurance companies to participate in the negotiation process, ensuring that their input is considered in the final decisions [2] Group 3: Future Implications for Innovative Drugs - The dynamic nature of the drug catalog, which will be adjusted annually, suggests that more innovative drugs may be included in short-term health insurance plans, providing consumers with more choices [3] - Pharmaceutical companies can apply for inclusion in the commercial insurance innovative drug catalog independently or alongside the basic catalog, enhancing their market opportunities [3] - The integration of the basic drug catalog with the commercial insurance innovative drug catalog will be strengthened, impacting how drugs are priced, demanded, and reimbursed in the market [3]

Investment Rating - The investment rating for the pharmaceutical and biotechnology industry is "Positive" and the rating has been maintained [2] Core Insights - The pharmaceutical and biotechnology industry index increased by 5.30%, outperforming the CSI 300 index which rose by 3.52% during the reporting period [3][14] - The PE ratio (TTM, excluding negative values) for the pharmaceutical and biotechnology industry as of July 4, 2025, is 28.52x, up from 27.28x in the previous period, indicating an upward trend in valuation [3][19] - Notable sub-industries include "Other Biological Products" and "Medical R&D Outsourcing," which saw increases of 11.20% and 9.37% respectively, while "Medical Equipment" and "Blood Products" lagged with increases of only 0.98% [3][14] Industry Trends - The report highlights significant policy measures from the National Healthcare Security Administration and the National Health Commission aimed at supporting the high-quality development of innovative drugs [5][6] - The introduction of a commercial health insurance innovative drug directory is a key breakthrough, facilitating better pricing and reimbursement mechanisms for high-value drugs [6] - The report emphasizes the importance of the innovative drug industry chain, particularly focusing on platform pharmaceutical companies, clinical CROs, and high-barrier CDMOs [6] Important Industry News - The approval of several innovative drugs, including "ZEGFROVY" by Dize Pharmaceutical and "TQG203" by Zhengda Tianqing, marks significant advancements in the industry [41][42][46] - The report notes that the global number of hemophilia patients is expected to increase by 25% by 2025, highlighting the growing market for innovative treatments [42] - The approval of "Mastrudep" by Innovent Biologics for weight management in adults showcases the expanding therapeutic applications of GLP-1R/GCGR dual agonists [49][50] Investment Recommendations - Continuous attention is recommended for the innovative drug industry chain, particularly for companies that can navigate the new dual directory system and have international expansion capabilities [6] - The report suggests that the recent policy changes and the successful IPO of a biotech company signal a positive outlook for the innovative drug sector [6]

Group 1: US-China Trade Relations - The US has lifted export restrictions on EDA software, ethane, and aircraft engines to China, following recent trade talks [1] - The Chinese Ministry of Commerce confirmed that both sides are working to implement the consensus reached during the June 5 call between the two countries' leaders [1][2] - The lifting of restrictions is seen as a positive signal for further cooperation and outcomes in US-China trade relations [2] Group 2: National Unified Market Construction - The Central Economic Commission of China has emphasized the need to deepen the construction of a national unified market, focusing on "five unifications and one openness" [3] - Specific measures include addressing low-price disorderly competition and promoting the integration of domestic and foreign trade [3][4] - The strategic upgrade reflects a shift from internal integration to external collaboration, aiming for long-term high-quality development [4] Group 3: Health Insurance and Innovative Drugs - The National Healthcare Security Administration has introduced measures to support the development of innovative drugs, including the establishment of a commercial health insurance directory for innovative drugs [5][6] - This directory will include high-value innovative drugs that exceed basic medical insurance coverage, alleviating pressure on the medical insurance fund [6] - The initiative aims to create a sustainable payment pathway for high-value innovative drugs while ensuring basic medical insurance focuses on essential coverage [6] Group 4: Foreign Investment Tax Incentives - The Chinese government has announced a tax credit policy for foreign investors reinvesting profits in domestic projects, effective from January 1, 2025, to December 31, 2028 [7] - This policy aims to encourage foreign investment by allowing a 10% tax credit on reinvested profits, which is a significant incentive compared to previous policies [7] - The move is part of broader efforts to stabilize foreign investment amid declining actual foreign capital usage in China [7] Group 5: Solar Industry Regulation - The Ministry of Industry and Information Technology has convened a meeting with 14 solar companies to address low-price competition in the solar industry [8][9] - The government aims to enhance product quality and facilitate the orderly exit of outdated production capacity to promote sustainable development [8] - The recent actions signal a strong commitment from the highest levels of government to tackle the issue of unhealthy competition in the solar sector [9] Group 6: Major Infrastructure Projects - The National Development and Reform Commission has allocated over 300 billion yuan to support the third batch of "two heavy" construction projects for 2025, totaling 800 billion yuan for the year [10][11] - These projects focus on critical areas such as ecological restoration, transportation infrastructure, and urban underground networks [10] - The coordinated fiscal and monetary policies aim to provide sufficient funding for these major projects, which are crucial for stabilizing investment growth [11] Group 7: Manufacturing Sector Performance - The manufacturing PMI for June rose to 49.7%, indicating a slight improvement in manufacturing activity, with production and new orders both showing positive trends [12][13] - Despite the increase, the PMI remains below the 50% threshold, suggesting that the recovery in the manufacturing sector is still fragile [12][13] - External uncertainties and fluctuating demand continue to pose challenges for the manufacturing industry, necessitating supportive macroeconomic policies [13] Group 8: US Tax and Spending Legislation - The US Congress has passed the "Big and Beautiful" tax and spending bill, which includes significant tax cuts and is expected to increase the federal deficit by approximately $3.3 trillion over the next decade [14][15] - The legislation has raised concerns among investors regarding its long-term fiscal implications, including potential cuts to federal assistance and increased national debt [14][15] - The market's reaction indicates growing apprehension about the sustainability of US fiscal policies and their impact on global investment strategies [15]

Investment Rating - The report maintains an "Outperform" rating for A-Shares including Jiangsu Heng Rui Medicine, Sichuan Kelun Pharmaceutical, Huadong Medicine, WuXi AppTec, Asymchem Laboratories, Hangzhou Tigermed Consulting, and APT Medical [6][32] - The report also maintains an "Outperform" rating for H-Shares including PATEO, Hansoh Pharmaceutical Group, Innovent Biologics, WuXi XDC Cayman, Luye Pharma Group, and BeiGene [6][32] Core Insights - The commercial insurance innovative drug list is expected to be released soon, which is anticipated to improve the domestic market significantly [33] - The National Healthcare Security Administration and National Health Commission have released measures to support the high-quality development of innovative drugs, focusing on high-innovation drugs with significant clinical value [33] - The pharmaceutical sector underperformed the market in June 2025, with the Shanghai Composite Index rising by 2.9% while the SW Pharma Bio index rose by only 0.7% [34] - The Hang Seng Healthcare sector outperformed the market with an increase of 8.4% in June 2025, while the U.S. S&P Healthcare Select Sector underperformed with a rise of only 1.9% [35] Summary by Sections - **Investment Highlights**: Continuous positive outlook for innovative drugs and industry chain, with specific A-Shares and H-Shares recommended for investment [32][6] - **Market Performance**: In June 2025, the pharmaceutical sector's performance was weak compared to the overall market, ranking 19th among Shenwan primary industries [34] - **Sub-sector Analysis**: The best-performing sub-sectors included medical services (+4.8%), chemical preparations (+0.8%), and chemical raw materials (+0.5%) [34][20] - **Stock Performance**: Top gainers in the pharmaceutical sector included Zhejiang Anglikang Pharmaceutical (+146.4%) and Hubei Huaqiang High-Tech Co., Ltd. (+67.4%), while top losers included Kexing Biopharm Co., Ltd. (-28.7%) [34][23]

Core Viewpoint - The pharmaceutical and biotechnology industry is experiencing moderate performance, with the introduction of the commercial insurance innovative drug catalog and the deepening application of artificial intelligence in healthcare presenting structural opportunities for growth [1][3]. Group 1: Commercial Insurance Innovative Drug Catalog - The National Healthcare Security Administration and the National Health Commission have jointly released measures to support the high-quality development of innovative drugs, establishing a commercial insurance innovative drug catalog that focuses on innovative drugs with significant clinical value but outside the scope of medical insurance [1]. - The catalog aims to eliminate barriers for high-value innovative drugs through a "three exclusions" policy, which does not count towards the self-pay rate of medical insurance, monitors alternative products, and limits payment by disease type [1]. - The actual effectiveness of the catalog depends on the payment capabilities of commercial insurance and the collaboration with medical institutions, with the current payment proportion for innovative drugs being less than 8%, while the policy aims to increase this to 44% over the next decade [1][2]. Group 2: AI in Healthcare - Artificial intelligence is rapidly penetrating the entire pharmaceutical industry chain, significantly shortening drug development cycles and reducing costs through target screening, molecular design, and clinical trial optimization [3]. - The National Science and Technology Major Project has allocated 1.75 billion yuan for AI-assisted new drug development projects, focusing on breakthroughs in infectious diseases and rare diseases by 2025 [3]. - The intelligent transformation of medical services is also accelerating, with AI-assisted diagnostic systems becoming more mature in applications such as imaging recognition and pathological analysis [3]. - Despite optimism about the long-term potential of AI technology, challenges such as data fragmentation, privacy protection, and the lack of interpretability of AI models remain significant barriers to large-scale application [3].

Core Points - The National Healthcare Security Administration (NHSA) has released a draft plan for the adjustment of the 2025 National Basic Medical Insurance, Maternity Insurance, and Work Injury Insurance Drug Catalogs, as well as the Commercial Health Insurance Innovative Drug Catalog, marking the upcoming negotiations for 2025 [1][3] - This year, the introduction of the Commercial Health Insurance Innovative Drug Catalog allows companies to choose between two options for innovative drug development, which is expected to significantly promote innovation [1][3] - The adjustment process will be more stringent due to ongoing financial constraints in the healthcare system, focusing support on truly innovative products while being less favorable to Me-too products [2][3] Drug Catalog Adjustment - Since the establishment of the NHSA in 2018, the adjustment cycle for the drug catalog has been shortened from a maximum of 8 years to 1 year, with a focus on new drugs launched within the last 5 years [3] - The 2025 adjustment will continue to focus on new drugs approved between January 1, 2020, and June 30, 2025, with an emphasis on clinical necessity, safety, effectiveness, and reasonable pricing [3][4] - The criteria for inclusion in the regular catalog management have been revised, removing the requirement for exclusive drugs to have not adjusted payment standards for two consecutive agreement periods [4] Commercial Health Insurance Role - The new plan emphasizes the significant decision-making power of commercial health insurance experts in the evaluation and pricing negotiation processes for the innovative drug catalog [7][8] - Experts involved in the evaluation will be recommended from various sectors, including commercial insurance companies and healthcare departments, ensuring a comprehensive assessment of the drugs [7] - The policy shift allows insurance companies to transition from passive payers to active participants in the healthcare ecosystem, enhancing their role in the drug catalog formulation process [8]