According to the Financial Associated Press on November 27 (editor Hu Jiarong), as the announcement of the National Medicare Drug List for 2024 approaches, most Hong Kong pharmaceutical stocks have strengthened. As of the time of writing, Keji Pharmaceuticals-B (02171.HK), Innocare (09969.HK), Kelun Biotech-B (06990.HK), and Kangnuoya-B (02162.HK) have respectively increased by 9.41%, 9.18%, 4.66%, and 3.67%.

Note: performance of medical stocks.

In terms of news, the National Healthcare Security Administration plans to hold a press conference on November 28, during which the results of the adjustments to the National Medicare Drug List for 2024 will be announced and questions from the media will be answered.

Why do pharmaceutical companies place such importance on Medicare collection?

First is the increase in sales: after entering the Medicare list, the sales volume of pharmaceuticals rises, especially for products in a mild competitive situation where the sales growth rate after entering Medicare is higher than that of highly competitive products.

Secondly, commercial support: for innovative drug companies, entering the Medicare list is a significant step towards achieving commercialization goals, helping companies recover research and development investments, and further financing the companies' innovative R&D activities. Expenditure on innovative drugs from the Medicare fund has significantly increased over the past few years, rising from less than 6 billion yuan in 2019 to approximately 90 billion yuan in 2023, expanding fifteenfold in four years.

Which product areas are likely to be included?

According to Ping An Securities, this year’s national negotiations focused on product areas have been summarized.

PD-(L) (immune drugs for cancer treatment): This year, Yuheng Bio's sapalizumab and Chia Tai Tianqing/Akesco (09926.HK)'s pembrolizumab participated in the negotiations, while Jiangsu Hengrui Pharmaceuticals (600276.SH), Junshi Bio (01877.HK), and Beigene (BGNE.US) are negotiating new indications for their PD-1.

EGFR TKI: Shenghe Pharmaceuticals' rupegotin tablets and Betta Pharmaceuticals' rociletinib are involved in this year's negotiations, while Betta Pharmaceuticals (300558.SZ)'s befotinib is participating in first-line treatment negotiations for NSCLC; Jiangsu Hengrui Pharmaceuticals' ametanib is up for renewal in the catalog.

Dual antibodies: Akeso (09926.HK)'s two dual antibodies are participating in this year's negotiations. Before the negotiations, Akeso reduced the price of cadonilimab (AK104, PD-1/CTLA4) from 13,220 yuan/125mg/bottle to 6,166 yuan/125mg/bottle, a decrease of 53.4%, with an annual treatment cost below 0.2 million yuan; the annual treatment cost for yivozi monoclonal antibody (AK112, PD-1/VEGF) is above 0.4 million yuan.

PSCK9 (lipid-lowering drugs): Novartis AG (NVS.US)'s inclisiran injection and Innovent Bio (01801.HK)'s tocilizumab are participating in the negotiations.

Hematological tumor TKI (tyrosine kinase inhibitors): Ascentage Pharma-B (06855.HK)'s olverembatinib for new indications (for CML CP adult patients resistant to first- and second-generation TKIs) is participating in the negotiations; DiZhe Pharmaceuticals-U (688192.SH)'s gositinib capsules, an out-of-catalog drug, are also involved in the negotiations.