Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The demand for high-quality medical resources and innovative drugs in China is continuously increasing due to economic development and rising health awareness among residents [5] - A multi-payment system, including commercial health insurance and charitable assistance funds, is essential to address the accessibility challenges of innovative drugs [5] - The report highlights the structural challenges faced by China's innovative drug payment system, with a significant reliance on personal cash payments and limited contributions from commercial health insurance [8] Summary by Sections Research Background and Methodology - The report defines innovative drugs and multi-payment mechanisms, emphasizing the importance of commercial health insurance in reducing out-of-pocket expenses for patients [18] - It discusses the increasing health demands of the population and the economic pressures due to aging demographics [19][20] International Practices in Innovative Drug Payment - The report compares the multi-payment systems for innovative drugs in the US, Germany, the UK, and Japan, identifying key characteristics such as the dominant role of commercial health insurance outside of social insurance [6][32] - It notes that commercial health insurance is crucial for managing costs and facilitating the participation of pharmaceutical companies in risk-sharing mechanisms [6][33] Current Payment Structure for Innovative Drugs in China - The report estimates that the innovative drug market in China will reach CNY 162 billion in 2024, with a payment structure heavily reliant on personal cash payments (49%) and limited commercial health insurance contributions (7.7%) [8][38] - It highlights the need for commercial health insurance to become the primary payer for innovative drugs to alleviate the financial burden on patients [38] Challenges and Potential of Commercial Health Insurance - The report outlines the current state of commercial health insurance in China, with a premium scale of CNY 977.3 billion in 2024, and discusses the types of insurance products available for innovative drug coverage [53][54] - It projects that by 2035, the market for innovative drugs could reach CNY 1 trillion, with commercial health insurance needing to cover 44% of this market [44][47] Policy Support for Multi-Payment Mechanisms - The report details recent government policies aimed at enhancing the multi-payment mechanisms for innovative drugs, emphasizing the role of commercial health insurance in this framework [48][49][50]