The Zhitong Finance App learned that Minsheng Securities released a research report saying that the 2024 medical insurance catalogue was released. Through this medical insurance catalogue adjustment, Kangfang Biotech's ivoximab and cardonilizumab, Digilidine and other products, Cinda Biotech tolecimab, and Zejing Pharmaceutical's recombinant thrombin were successfully included in the medical insurance catalogue. It is optimistic that products will be released faster with the support of health insurance policies, leading to an increase in corporate performance. By the end of October 2024, the Health Insurance Fund had paid more than 350 billion yuan for drugs negotiated during the agreement period, driving the sales amount of related drugs to exceed 510 billion yuan. With the support of health insurance and other policies, the level of research and development of new drugs in China continues to rise, the scale of the industry continues to expand, and the number of new drugs being developed domestically has risen to second place in the world, accelerating the transformation to high-quality innovation.

The main views of Minsheng Securities are as follows:

The 2024 health insurance catalogue was released, and the negotiation success rate and decline were stable

On November 28, the Ministry of Human Resources and Social Security of the National Health Insurance Administration issued the 2024 edition of the National Medical Insurance Drug Catalogue. A total of 91 types of drugs were added to the current medical insurance catalogue adjustment, including 26 types of drugs for cancer (including 4 rare diseases), 15 types of drugs for chronic diseases such as diabetes (including 2 rare diseases), 13 types of drugs for rare diseases, 7 types of anti-infective drugs, 11 types of proprietary Chinese medicines, 4 types of drugs for psychiatric diseases, and 21 types of drugs used in other fields. At the same time, 43 drugs that have been clinically replaced or have not been produced and supplied for a long time have been transferred.

After this adjustment, the total number of drugs in the catalogue will increase to 3,159, including 1,765 types of Western medicines and 1,394 types of proprietary Chinese medicines. The level of coverage in the fields of tumors, chronic diseases, rare diseases, and pediatric medication will increase markedly. In this year's negotiation/bidding process, a total of 117 drugs outside the catalogue participated. Of these, 89 were successfully negotiated/bid, with a success rate of 76% and an average price reduction of 63%. Overall, it is basically the same as 2023. Combined with negotiated price reductions and medical insurance reimbursement factors, it is estimated that the burden on patients will be reduced by more than 50 billion yuan in 2025.

Strongly support drug innovation and help the development of new quality productivity

The scope of adjustments to the medical insurance catalogue this year was mainly new drugs. Of the 91 new drugs, 90 were newly marketed within 5 years, and 38 were “new global” innovative drugs. Both the ratio and absolute quantity reached record highs. At the negotiation stage, the success rate of negotiations on innovative drugs exceeded 90%, which is 16 percentage points higher than the overall success rate. Of the 91 new drugs, there are 65 from domestic companies, accounting for more than 70%, and the trend is increasing year by year.

Emphasize the implementation of the medical insurance catalogue and strongly promote the implementation and release of drugs in national negotiations

Of the 105 new drugs negotiated in the 2023 catalogue adjustment, the overall sales volume in October 2024 increased nearly 6 times compared to January, and the volume was significant. This year, the Health Insurance Administration further put forward requirements for equipment use, promotion of new drugs, management and supervision to ensure that the catalogue is actually effective and better meets patients' reasonable needs, including guiding designated medical institutions to hold pharmaceutical meetings in a timely manner. In principle, designated medical institutions should hold pharmaceutical meetings before the end of February 2025; further strengthen “dual channel” management; strengthen daily monitoring of drug availability; and promote effective links between commercial health insurance and basic health insurance. Overall, the requirements for the implementation of the drug catalogue this year are more systematic, the path is more clear, and the measures are stronger, which will strongly promote the implementation of drugs in the national negotiations.

New drug negotiations and generic drug collection are two major strategic grippers to promote innovation and transformation in China's pharmaceutical industry

Health insurance funds have freed up space, and the expenditure structure has been optimized and upgraded. According to preliminary calculations by the Health Insurance Administration, a total of 9 rounds of national collection have been carried out in recent years, covering 373 varieties, creating more than 500 billion yuan of health insurance fund space, and “exchanging cages for birds.”

The pharmaceutical industry promotes innovation and achieves high-quality development. The National Health Insurance Administration has launched a total of 7 rounds of new drug negotiations, adding 530 drugs to the catalogue, including 149 innovative drugs. By the end of October 2024, the Health Insurance Fund had paid more than 350 billion yuan for drugs negotiated during the agreement period, driving the sales amount of related drugs to exceed 510 billion yuan. With the support of health insurance and other policies, the level of research and development of new drugs in China continues to rise, the scale of the industry continues to expand, and the number of new drugs being developed domestically has risen to second place in the world, accelerating the transformation to high-quality innovation.

The pharmaceutical industry has a net ecology, and medical service practices are more standardized. Through new drug negotiations and generic drug collection, the unreasonable cost space in the distribution process has been drastically reduced, retail prices of drugs have been made more reasonable, and the necessity, rationality, and standardization of drug use have greatly increased. The structure and quality of clinical drug use in China have improved markedly, and the rationality of drug use has greatly improved.

Key varieties have been successfully included in the medical insurance catalogue, and we are optimistic about accelerated deployment in the future

Through this medical insurance catalogue adjustment, products such as Kangfang Biotech's evosimab and cardonilizumab, Dizhe Pharmaceutical's suvoritinib and golixitinib, Hengrui Pharmaceuticals' tigiridine, and Cinda Biotech Toleximab, Zejing Pharmaceutical's recombinant human thrombin were successfully included in the medical insurance catalogue. They are optimistic that products will be released at an accelerated pace with the support of health insurance policies, leading to an increase in corporate performance.

Investment suggestions: It is recommended to focus on Kang Fang Biotech (09926), Dizhe Pharmaceutical (688192.SH), Hengrui Pharmaceutical (600276.SH), Cinda Biotech (01801), Zejing Pharmaceuticals (688266.SH), Microchip (), Colon Pharmaceuticals (002422.SZ), Colon Pharmaceuticals (06990), Betta Pharmaceuticals (300558.SZ), Xinlitai (002294.SZ), Renfu Pharmaceutical (Dubai), etc. 688321.SH 600079.SH

Risk warning: The price of medical insurance negotiations falls short of the expected risk, the progress of admission to the hospital falls short of the expected risk, market competition increases the risk, the risk of sales volume falling short of expectations, the risk of collection risks, the risk of regulatory policy changes, etc.