Zhitong Finance and Economics APP learned that Minsheng Securities released a research report stating that in 2024, the medical insurance catalog was issued. Through this adjustment of the medical insurance catalog, products such as Akeso's Iwosidan monoclonal antibody and Cadunilimab monoclonal antibody, Dize Medicine's Suwothine and Golixetine, Hengrui Medicine's Tegilidin, Innovent Bio's Torayicar monoclonal antibody, Zejing Pharmaceutical's recombinant human coagulation factor, and other products were successfully included in the medical insurance catalog. It is bullish on products accelerating sales under the support of medical insurance policies, bringing incremental performance to the companies. By the end of October 2024, medical insurance funds have paid over 350 billion yuan for negotiated drugs during the agreement period, driving the sales amount of related drugs to over 510 billion yuan. With the support of policies such as medical insurance, China's level of new drug R&D continues to improve, the industrial scale continues to expand, the number of new drugs under research domestically ranks second in the world, and accelerates the transformation towards high-quality innovation.

The main points of the Minsheng Securities report are as follows:

In 2024, the medical insurance catalog was released, and the success rate of negotiations and price reductions stabilized.

On November 28, the National Medical Insurance Bureau and the Ministry of Human Resources and Social Security issued the 2024 version of the national medical insurance drug catalog. This adjustment of the medical insurance catalog added a total of 91 new drugs, including 26 types of oncology drugs (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 Chinese patent medicines, 4 types of psychiatric drugs, and 21 types of drugs in other fields. At the same time, 43 clinical drugs that have been replaced or have not been produced and supplied for a long time were removed.

After this adjustment, the total number of drugs in the catalog will increase to 3159, including 1765 Western drugs and 1394 Chinese patent medicines. The level of protection in areas such as oncology, chronic diseases, rare diseases, and pediatric medication has been significantly improved. In this year's negotiation/auction phase, a total of 117 out-of-catalog drugs participated, with 89 successful negotiations/auctions, a success rate of 76% and an average price reduction of 63%, which is overall comparable to 2023. Taking into account negotiation price reductions and medical insurance reimbursement factors, it is expected that patients will reduce their burden by over 50 billion yuan in 2025.

Strongly supporting drug innovation to promote the development of new high-quality production forces

This year, the scope of adjustments to the medical insurance catalog is mainly focused on new drugs, with 90 out of 91 newly added drugs being new varieties launched within 5 years, and 38 are 'globally new' innovative drugs, setting new highs in both proportion and absolute numbers in historical years. During the negotiation stage, the success rate of negotiations for innovative drugs exceeded 90%, 16 percentage points higher than the overall success rate. Among the 91 newly added drugs, domestic enterprises account for 65 of them, exceeding 70%, showing a year-on-year increase.

Emphasizing the implementation of the medical insurance catalog, effectively promoting the implementation of national negotiations on drug pricing.

In the 2023 catalog adjustment, negotiations for 105 new drugs increased nearly 6 times in overall sales volume from January to October 2024, showing significant growth. This year, the Medical Insurance Bureau further requested requirements for equipment usage, new drug promotion, management supervision, etc., to ensure the practical implementation of the catalog, better meeting the reasonable needs of patients, including guiding designated medical institutions to convene drug administration meetings in a timely manner. Designated medical institutions should hold drug administration meetings by the end of February 2025 at the latest; further strengthen the 'dual-channel' management; enhance daily monitoring of drug allocation conditions; promote effective connection between commercial health insurance and basic medical insurance. Overall, this year's requirements for drug catalog implementation are more systematic, the path is clearer, and the measures are more effective, which will effectively promote the implementation of national drug negotiations.

New drug negotiations and centralized procurement of generic drugs are two major strategic focal points, promoting the innovative transformation of China's pharmaceutical industry.

Medical insurance funds create room for optimization and upgrade of expenditure structure. The Medical Insurance Bureau initially estimated that in the past few years, 9 rounds of national centralized procurement covering 373 varieties have created over 500 billion yuan of space in medical insurance funds, achieving 'emptying the cage to change birds.'

Promoting innovation in the pharmaceutical industry to achieve high-quality development. The National Medical Insurance Bureau has conducted 7 rounds of new drug negotiations, adding 530 drugs to the catalog, including 149 innovative drugs. By the end of October 2024, medical insurance funds have paid over 350 billion yuan for negotiated drugs during the agreement period, driving sales of related drugs to over 510 billion yuan. With the support of medical insurance and other policies, China's research and development capabilities for new drugs continue to improve, the industry scale continues to expand, and the number of new drugs under research in the country ranks second globally, accelerating the transition to high-quality innovation.

The pharmaceutical industry has a cleaner environment, and medical service behaviors are more standardized. Through new drug negotiations and centralized procurement of generic drugs, the unreasonable cost space in the circulation process has been greatly reduced, making drug retail prices more reasonable, and significantly enhancing the necessity, rationality, and standardization of drug use. The clinical drug structure and quality in China have significantly improved, and the rationality of drug use has also greatly increased.

Key varieties successfully included in the medical insurance catalog are bullish on accelerating growth in the future.

Through this medical insurance catalog adjustment, Akeso, with products such as Ivosidenib and Calutideanib, DiZhe Pharmaceuticals with Savolitinib and Golixitinib, Jiangsu Hengrui Pharmaceuticals with Tegilidex, Innovent Bio with Toripalimab, Zelgen Pharmaceuticals with Recombinant Human Coagulation Factor VIIa, successfully included in the medical insurance catalog. Bullish on the accelerated volume of products under the support of medical insurance policies, bringing incremental performance to the companies.

Investment advice: It is recommended to pay attention to Akeso (09926), DiZhe Pharmaceuticals (688192.SH), Jiangsu Hengrui Pharmaceuticals (600276.SH), Innovent Bio (01801), Zelgen Pharmaceuticals (688266.SH), Shenzhen Chipscreen Biosciences (688321.SH), Sichuan Kelun Pharmaceutical (002422.SZ), Kelun Botai (06990), Betta Pharmaceuticals (300558.SZ), Shenzhen Salubris Pharmaceuticals (002294.SZ), Humanwell Healthcare (600079.SH), etc.

Risk warning: Risks include lower-than-expected medical insurance negotiation prices, slower-than-expected hospital admission progress, intensifying market competition, lower-than-expected sales volume, centralized procurement risks, and risks from changes in regulatory policies.