Core Viewpoint - The national centralized drug procurement process has entered the reporting phase for the first eight batches, with significant changes in selection rules and a shift towards an inquiry-based pricing mechanism, which is expected to reshape the competitive landscape of the pharmaceutical market [1][2][3]. Group 1: Procurement Process - The reporting phase for medical institutions to submit drug demand data will start on December 19 and end on December 29, involving 317 drug varieties [1][5]. - The procurement process will include 4943 items from 1185 companies, with institutions required to report based on a specified drug list [1][3]. - The new inquiry-based pricing mechanism allows all companies to potentially be selected as long as their prices do not exceed the benchmark price, contrasting with the previous competitive bidding approach [1][8]. Group 2: Changes in Selection Rules - The inquiry mechanism is designed to stabilize clinical medication and industry expectations, with the aim of reducing provincial bidding costs for companies [3][7]. - The inquiry pricing will be based on historical procurement prices and will consider international prices, with specific guidelines for determining the maximum effective bid price [7][9]. - The new rules allow for slight price increases for previously selected low-priced products, but with a corresponding reduction in procurement volume [9][10]. Group 3: Market Impact - The shift to an inquiry-based system is expected to increase the number of selected products and enhance market replacement rates for previously unselected products [8]. - The inquiry model is seen as more scientific and fair, providing opportunities for smaller companies while placing limits on high prices from larger firms [8][9]. - New drugs and previously unselected products can apply for inclusion in the procurement process, provided they meet the inquiry benchmark [9].

Investment Rating - The industry investment rating is maintained at "Overweight" [2] Core Viewpoints - The combination of "logistics package" and "volume-price linkage" is driving the increase in industry concentration, forcing intermediaries out of the market and enhancing the sensitivity of coal prices [5] - The "logistics package" mechanism significantly reduces comprehensive logistics costs, creating sustainable advantages in delivery certainty and cost, while raising entry barriers for small coal operators [5] - The "volume-price linkage" mechanism strengthens scale premiums, allowing large mining and trading enterprises to gain larger discounts, while smaller entities face profit margin compression [5] - The weakening of intermediary roles is expected to enhance coal price sensitivity, with a clear trend of price reversal under the backdrop of supply contraction expectations [5] - The report emphasizes the importance of evaluating the effectiveness of "anti-involution" policies and their impact on liquidity and risk preferences to seize coal investment opportunities [5] Summary by Sections Policy Focus on Cost Reduction and Efficiency - National policies are continuously promoting the development of logistics package models [14] - The logistics package model is seen as a core strategy to reduce overall logistics costs through integrated services [7] Strengthening Long-term Contract Barriers - Long-term contract policies are reinforcing scale barriers, putting pressure on intermediaries [16] - The proportion of railway coal in total coal shipments has increased significantly in 2023 compared to 2022 [21][20] Volume-Price Linkage Trading Pilot - The introduction of volume-price linkage trading mechanisms is expected to benefit large market players significantly [25] - The rapid decrease in port coal inventories contrasts with weak net inflows, indicating a structural tightening in supply [24][23] - The Taiyuan Coal Trading Center has initiated a volume-price linkage trading mechanism to enhance market liquidity and efficiency [27] Investment Recommendations - The report recommends focusing on elastic stocks in the coal sector, highlighting specific companies likely to benefit from the current market dynamics [10]