According to the Securities Times APP, gtja released a research report stating that with full support along the entire chain, innovative drugs are benefiting from favorable policies in various regions successively, and subsequent policy advantages are expected to continue to advance. In 2024, the national medical insurance drug catalog adjustment work officially started in July, with negotiations expected to be completed and results announced in November. Regarding centralized procurement, the tenth batch of chemical drug national procurement is expected to start in Q4 2024, with the relevant detailed rules released, and entering the substantial bidding stage in Q1 2025. The third and first batch expansion of the national Chinese patent medicine alliance procurement will begin reporting in October, and there may be related centralized procurement documents issued in Q4, combined with centralized procurement in Anhui and other provinces, it is expected that the categories for procurement will expand rapidly.

GTJA's main opinions include:

The direction of policy support for innovative drugs remains unchanged, and negotiations are expected to promote a new round of volume expansion.

With full support along the entire chain, innovative drugs are benefiting from favorable policies in various regions successively, and subsequent policy advantages are expected to continue to advance. In 2024, the national medical insurance drug catalog adjustment work officially started in July, with negotiations expected to be completed and results announced in November. In recent years, the negotiation rules for medical insurance are more scientifically reasonable, domestically produced new drugs with sufficient clinical evidence and clear patient benefits are likely to succeed in negotiations and see increased sales volume.

Stable expectations for chemical drug centralized procurement, while Chinese patent medicines may face accelerated expansion under centralized procurement.

The tenth batch of chemical drug national procurement is expected to start in Q4 2024, with the relevant detailed rules released, and entering the substantial bidding stage in Q1 2025. Currently, there are 136 varieties that have not yet been included in centralized procurement and have more than 5 competitors, preliminarily meeting the conditions to be included in the tenth batch of national centralized procurement. The average price reduction for the 9 batches of 11 centralized procurement rounds reached 55%, with no significant fluctuations in price reductions in the past two years, and is expected to have limited impact on performance.

The third batch and the first batch of the nationwide Chinese patent medicine alliance will start reporting in October for the extended procurement. It is expected that there will be related procurement documents issued in Q4, combined with the procurement in Anhui and other provinces, accelerating the expansion of the procurement categories. Shandong Province is taking the lead in the procurement of Chinese herbal pieces, and it is expected that relevant documents will be issued in Q4 of 2024, but the procurement is difficult and the amount is not high, with limited expected impact on performance.

The normalization of medical device procurement is advancing, with an increase in market share of domestic leading companies.

IVD procurement: The comprehensive implementation of biochemical liver function procurement has landed, and the procurement of biochemical renal function, immunoinfectious diseases, hormone luminescence will be implemented in H2 of 2024. The procurement of biochemical glucose metabolism and immune tumor markers is expected to start in Q4 of 2024. With the progress of the implementation of related categories of procurement, domestic leading companies are expected to expand market share with cost-effective advantages and accelerate import substitution.

High-value consumables procurement: the nationwide procurement of artificial crystals and sports medicine is fully implemented; the inter-provincial alliance continues to procure high-value consumables and is expected to start in Q4 of 2024 or Q1 of 2025. Overall procurement rules can be anticipated, with decreasing marginal impact, but attention is still needed on the impact on specific categories.

Medical equipment updates are expected to be implemented in some projects in Q4 of 2024.

Some provinces and cities are gradually introducing medical equipment update plans. As of September 20, more than 20 billion yuan worth of equipment updates have been reported, with most at the stage of approved feasibility reports. Over 4 billion worth of medical equipment update projects have announced procurement intentions. It is expected that some projects will gradually announce procurement intentions by the end of 2024 to 2025 and start advancing procurement.

The expected policy tightening has taken shape in Q3, with relatively stable expectations for Q4, recommending a focus on innovation and improvement.

Emphasizing both innovation and commercialization, focusing on leading companies with significant differentiation advantages and high innovation attributes. Biotech: Beigene (06160), Innovent Bio (01810), Akeso (09926), Clover Biopharmaceuticals (06990), Hutchmed (China) (00013), Innocare (09969), CanSino Biologics (02162); Pharmaceutical companies: Jiangsu Hengrui Pharmaceuticals (600276.SH), Jiangsu Nhwa Pharmaceutical (002262.SZ), Huadong Medicine (000963.SZ), Beijing Aosaikang Pharmaceutical (002755.SZ), and more.

2024Q4-2025H1 orders and growth are expected to recover: Shenzhen Mindray Bio-Medical Electronics (stock code 300760.SZ), Shenzhen New Industries Biomedical Engineering (stock code 300832.SZ); stable performance expected: Apt Medical Inc. (stock code 688617.SH), Amoy Diagnostics (stock code 300685.SZ).

Risk warning: The extent of centralized procurement price reduction exceeds expectations, and the uncertain policy implementation time.