Group 1 - The establishment of a commercial insurance innovation drug directory indicates that China's pharmaceutical industry has welcomed a second major buyer, alongside basic medical insurance [1][6] - The National Healthcare Security Administration (NHSA) has introduced new measures to support the high-quality development of innovative drugs, including the opening of medical insurance data and the establishment of a commercial insurance innovation drug directory [1][6] - Since 2018, the medical insurance fund has spent 410 billion yuan on negotiated drugs, highlighting the significant financial impact of medical insurance on the pharmaceutical sector [1] Group 2 - The transition from the 1.0 version of medical insurance (1998-2019) to the 2.0 version (2020 onwards) emphasizes the importance of establishing mechanisms that ensure accessible, safe, and affordable basic healthcare [2][3] - The NHSA aims to create a collaborative platform between social insurance and commercial insurance, addressing the challenges of data sharing and payment efficiency [3][4] - The integration of basic medical insurance and commercial insurance is crucial for building a multi-tiered medical security system, which includes addressing legal and theoretical barriers [3] Group 3 - The sharing of medical data between commercial insurance and medical insurance is expected to enhance risk management and improve pricing strategies in the commercial insurance market [4][5] - The introduction of a one-stop payment system could significantly reduce the financial burden on patients, particularly in corporate supplementary medical insurance [4] - Long-term changes in the commercial health insurance model are anticipated, integrating various services such as patient management and community support [5] Group 4 - The NHSA is focusing on utilizing real-world data to evaluate the comprehensive value of drugs and medical devices, which will influence their inclusion in both basic medical insurance and commercial insurance directories [6][9] - Real-world data is essential for understanding the effectiveness and safety of innovative drugs in diverse patient populations, which can lead to more informed purchasing decisions by medical insurance [7][9] - The establishment of a management platform for clinical data quality is necessary to support the transition from volume-based to value-based payment mechanisms [7] Group 5 - The Hainan Boao Lecheng International Medical Tourism Pilot Zone has initiated a project to support the entry of innovative drugs into medical insurance using real-world data, aiming to address key decision-making issues in medical insurance [8][9] - The project categorizes unlisted innovative drugs by disease type and explores multi-channel payment pathways, enhancing the accessibility of innovative treatments [9]

Investment Rating - The report assigns an "Overweight" rating to the pharmaceutical and biotechnology industry, indicating that the industry index is expected to outperform the CSI 300 index by 10% or more over the next six months [2][40]. Core Insights - The pharmaceutical and biotechnology sector saw an overall increase of 1.90% from July 21 to July 25, 2025, ranking 19th among 31 industries in the Shenwan index, outperforming the CSI 300 index by 0.21 percentage points [4][12]. - The current PE valuation of the pharmaceutical and biotechnology sector is 30.67 times, which is at the historical median level, with a valuation premium of 140% compared to the CSI 300 index [4][18]. - The top three performing sub-sectors during the same period were medical services (6.73%), medical devices (4.43%), and pharmaceutical commerce (1.84%) [4][12]. Market Performance - In the year-to-date, the pharmaceutical and biotechnology sector has increased by 18.81%, ranking 3rd among 31 industries, and outperforming the CSI 300 index by 13.92 percentage points [4][13]. - The sub-sectors that achieved significant gains include chemical pharmaceuticals (34.25%), medical services (32.34%), and biological products (13.49%) [4][19]. Industry News - The National Healthcare Security Administration (NHSA) held two meetings to support the high-quality development of innovative drugs and medical devices, emphasizing the need for comprehensive value assessments for innovative products [5][34]. - The NHSA introduced new measures to empower innovation in drug and device pricing, aiming to support genuine innovation and improve the quality of healthcare in China [5][36]. Investment Recommendations - The report suggests focusing on high-quality stocks in the following segments: innovative drugs, CXO (Contract Research Organization), chain pharmacies, medical services, and second-class vaccines [5][37][38]. - Recommended stocks include Betta Pharmaceuticals, Teva Biopharmaceuticals, Kaili Medical, Haier Biomedical, Huaxia Eye Hospital, and Lao Bai Xing [5][38]. Stock Performance - During the last week, 337 stocks in the sector increased in value (71.10%), while 127 stocks decreased (26.79%). The top five gainers were Haitai Biological (46.93%), Zhendong Pharmaceutical (42.89%), Saili Medical (31.73%), Chenxin Pharmaceutical (30.75%), and Rendu Biological (27.82%) [4][27].

Core Viewpoint - The article emphasizes the importance of implementing a comprehensive value assessment for innovative drugs and medical devices as a new policy tool under the "Measures to Support the High-Quality Development of Innovative Drugs" [1] Group 1: Policy Implementation - The National Healthcare Security Administration (NHSA) held a seminar focusing on the comprehensive value assessment of innovative drugs and devices, indicating a shift towards evaluating real-world effectiveness rather than solely relying on laboratory data [1] - Future value-based purchasing in healthcare will prioritize real-world data to enhance the effectiveness of insurance coverage decisions [1][2] Group 2: Research Directions - The research will focus on two main areas: comprehensive value assessment for basic medical insurance drug catalog management and for commercial health insurance innovative drug catalog management [2] - Specific topics include evaluating drugs not yet on the market within certain regions, proposed new inclusions in the catalog, and mechanisms for drug exit from the catalog [2] Group 3: Evaluation Framework - A systematic and comprehensive evaluation framework is needed to assess the value of medical products, addressing questions like "where to allocate funds" and "is the spending worthwhile" [2] - The evaluation process will occur in three stages: pre-market assessment, post-market but pre-insurance assessment, and post-insurance entry re-evaluation [3] Group 4: Expert Insights - Experts believe that the establishment of a comprehensive value assessment system will help avoid competitive internalization among innovative drugs and guide the rational allocation of medical resources [4] - The NHSA's initiative is seen as a significant step away from merely reducing drug prices to a more structured approach in determining insurance payment standards for innovative drugs [4]

Group 1 - The innovative drug sector is experiencing a resurgence, with significant stock price increases for companies such as Chengda Pharmaceutical (+14.05%) and Huisheng Pharmaceutical (+9.45%) [1][2] - The National Healthcare Security Administration (NHSA) is actively promoting high-quality development of innovative drugs through a series of meetings and discussions with industry representatives [3] - The NHSA's commitment to supporting genuine innovation and establishing a comprehensive value evaluation system for innovative drugs is expected to enhance the efficient use of healthcare resources [3] Group 2 - CITIC Securities reports that the NHSA's ongoing efforts in centralized procurement and negotiation will shift the market focus from low-price competition to quality and cost control, benefiting companies with strong quality systems and cost advantages [4] - The innovative drug sector is anticipated to receive continued policy support, with commercial insurance policies providing additional growth opportunities [4] - By 2025, the domestic innovative drug industry is expected to reach a turning point, transitioning from capital-driven to profit-driven growth, presenting dual opportunities for performance and valuation recovery [4]