Source: Broker China

The advantage suddenly “smashed” into the pharmaceutical sector!

Today, at the end of the Hong Kong stock market, the innovative drug sector suddenly boomed.$REMEGEN (09995.HK)$,$HUTCHMED (00013.HK)$,$KEYMED BIO-B (02162.HK)$,$GENSCRIPT BIO (01548.HK)$,$INNOVENT BIO (01801.HK)$etc., it skyrocketed one after another. At the same time,$Hutchmed (China) (HCM.US)$At one point, US stocks surged nearly 30% before the market.$BeiGene (BGNE.US)$US stocks soared to 17% before the market. The entire pharmaceutical investment community is also booming. Many market participants believe that when it opens on Thursday, the innovative drug sector with a market value of 1.6 trillion dollars will be the “most beautiful kid.”

So, what are the benefits? The reason is that after the A-share market, the market suddenly issued a “Draft for Comments on the Implementation Plan to Support the Development of Innovative Drugs in the Whole Chain”. Its core is to comprehensively promote key aspects of R&D, approval, use, and payment of innovative drugs through policy guidance and support. However, this document has not been officially confirmed.

In addition, the market also reported that$Novo-Nordisk A/S (NVO.US)$All patent protections for diet pills have been abolished. Recently, there has also been the catalysis of a series of major conferences such as the American Gynecological Oncology Conference, the European Lung Cancer Conference, and the ACCR Conference. Innovative drugs are expected to reach a major inflection point in March.

Innovative drugs are on the rise

It's been a long time since it's been dry, and it's only a matter of time! Today, innovative drugs that have been declining for quite some time have exploded. Near the end of the Hong Kong stock market, the innovative drug sector suddenly boomed, and Rongchang Biotech, Hehuang Pharmaceuticals, Connoa-B, Kingsley, and Cinda Biotech all skyrocketed.

At one point, Hewang Pharmaceutical's US stock surged by nearly 30% before the market, and BeiGe Shenzhou's US stock surged by nearly 17% before the market.$Zai Lab (ZLAB.US)$US stocks surged nearly 12% before the market.

The main reason for the sharp rise in these stocks is probably related to a document circulating on the Internet. The document is called the “Draft for Solicitation of Comments on the Implementation Plan to Support the Development of Innovative Drugs in the Whole Chain”. Its core is to comprehensively promote key aspects of R&D, approval, use, and payment of innovative drugs through policy guidance and support. The publication of the document not only highlights the importance the Chinese government attaches to innovation in the pharmaceutical industry, but also shows its determination to meet people's health needs and enhance the country's pharmaceutical industry's innovation capabilities and international competitiveness.

The specific measures proposed in the document, such as establishing a catalogue of key research and development of innovative drugs, improving basic research capabilities, and optimizing clinical research, are aimed at solving the current challenges facing the pharmaceutical industry, such as insufficient innovation capacity at the source and serious homogenization of R&D. Furthermore, the document also emphasizes the importance of policy coordination and proposes development goals until 2025 and 2027, including breakthroughs in key core technologies and the number of first new drug launches.

Currently, this document has not been officially confirmed, but the market is already “excited.” Many investors in the pharmaceutical industry believe that the most popular sector on Thursday must be innovative drugs. Since the market doesn't have many expectations for innovative drugs, and the A-share sector is still slumping today, there isn't much capital to be ambushed ahead of time. Therefore, there is a logical premise for its popularity.

How big are the benefits?

So, if this document actually comes out, how much impact will it have?

Chen Tielin, chief pharmaceutical director of Debon Securities, believes that the “full chain supports the development of innovative drugs” document released on Wednesday is actually beneficial.

The first is the acceleration of the approval side: 1) The approval and filing information is distributed on one network to strengthen mutual recognition of clinical results in multiple international centers and shorten the review process; 2) the implied clinical trial license was shortened from 60 days to 40 days, and the waiting period for communication meetings was shortened to less than 30 days.

Second, the hospital side encourages: 1) speeding up the Internet. Medical institutions in key regions hold pharmaceutical meetings within 1 month of the publication of the application catalogue, not as late as before; 2) the varieties in the catalogue are not included in the cost assessment index, and the scale of use of innovative drugs is reasonably increased, which is equivalent to the “basic drug catalogue” of innovative drugs.

Third, there are substantial benefits on the payment side: 1) Allowing innovative drugs to be priced according to similar international drugs. This is very important. Really good drugs don't cost cabbage; 2) Multiple payments support commercial insurance, and increase the number of purchasers.

Fourth, encourage financing: Enrich financing channels, support the listing and financing of innovative pharmaceutical companies. Domestic investment and financing meetings will benefit CXO.

The fifth is traditional Chinese medicine: developing innovative medicines with unique diagnostic and treatment advantages of traditional Chinese medicine; traditional Chinese medicine is independent and also catalyzed by base drug expectations. Combined with first-quarter results that are better than expected, we must pay attention simultaneously.

Another brokerage firm pointed out that this document is of great significance to the innovative drug industry, and that a long period of time has gone bad. Specifically, it is reflected in the payment side: giving full play to the guiding and driving role of financial resources in the development of innovative drugs; improving the price of innovative drugs and health insurance access. Reduce price declines and optimize price negotiation mechanisms when adding new indications or renewals. Key regions are encouraged to set up special funds for supplementary payment of innovative drugs. Supply side: Promote the construction of new drug platforms, break through radiopharmaceuticals, novel vaccines and adjuvants, and develop novel therapeutics such as molecular coupling, proteolytic degradation, immunomodulation, and mRNA vaccines; in terms of approval: tilt more approval resources towards high-value innovative drugs; shorten the time for communication meetings.

China Merchants Securities believes that innovative drugs are one of the representatives of new quality productivity. Recently, the National Health Insurance Administration's “Notice on Establishing a Initial Price Formation Mechanism for Newly Launched Chemical Drugs to Encourage High-Quality Innovation (Draft for Comments)” clearly proposed encouraging clinical value-oriented drug research and development innovation. The biomedical industry is an innovation-driven industry. It is the main battleground for implementing innovation-driven development strategies, and biomedical innovation should be supported throughout the chain.

Editor/jayden