Investment Rating - The industry investment rating is Attractive [6]. Core Insights - The 2025 National Reimbursement Drug List (NRDL) and Commercial Insurance Drug List negotiations are set to begin, with eligibility criteria similar to previous years, including new drugs approved before June 30, 2025, and rare disease drugs [2][3]. - The role of commercial insurance in China's healthcare system is currently limited, accounting for only 7.7% of total spending on innovative drugs and devices in 2024, indicating significant potential for growth [4][8]. - The NHSA is expected to lead the formulation of the first national-level Commercial Insurance Drug List, with negotiations possibly starting in August-September 2025 [3][8]. Summary by Sections NRDL and Commercial Insurance Drug List - The NRDL negotiations may be advanced to August-September 2025 to accommodate the release of the Commercial Insurance List, anticipated in late 2025 [3]. - Eligible drugs for the Commercial Insurance List include new drugs approved from January 1, 2020, to June 30, 2025, and rare disease drugs [2]. Role of Commercial Insurance - Commercial insurance represented only 7.7% of total spending on innovative drugs and devices in China as of 2024, which is less than 5% of total healthcare expenditures [4][10]. - Strengthening the role of commercial insurers through national policy initiatives is expected to alleviate funding constraints and benefit innovative biopharma and medtech players [4]. Spending Insights - In 2024, out-of-pocket expenses accounted for RMB 78.6 billion (48%), commercial insurance for RMB 12.4 billion (8%), and basic government-funded health insurance for RMB 71 billion (44%) of the total spending on innovative drugs and devices [10].