Today, Hong Kong pharmaceutical stocks are rising against the trend, as of the time of publication.$EVEREST MED-B (01952.HK)$Increased by over 12%.$WUXI BIO (02269.HK)$rose nearly 5%,$ZAI LAB (09688.HK)$Increased by more than 4%, $WUXI APPTEC (02359.HK)$ 、 $INNOCARE (09969.HK)$ Up more than 3%.

From the above chart, Genting Hong Kong leads in the gains. The company announced yesterday that the new drug application for Iqmod (VELSIPITY) for the treatment of moderate to severe active ulcerative colitis in adult patients has been officially accepted by the Hong Kong Department of Health. This product was approved for market entry by the Macau Drug Regulatory Authority in April of this year and was launched in the Greater Bay Area in October under the Hong Kong-Macau Medical Device Policy.

Notably, on November 28, Genting Hong Kong announced that Neficon (budesonide enteric-coated capsules, NEFECON) has been successfully included in the 'National Basic Medical Insurance, Work Injury Insurance and Maternity Insurance Drug Catalogue (2024).' The new national medical insurance drug catalog will officially take effect on January 1, 2025.

Meanwhile, $ZAI LAB (09688.HK)$ There was also an increase. In terms of news, the company and$Novocure (NVCR.US)$announced that the key Phase 3 PANOVA-3 study of tumor treating fields achieved its primary endpoint, showing a statistically significant improvement in median overall survival (mOS) compared to the control group.

According to relevant information, PANOVA-3 evaluated tumor electric field therapy combined with gemcitabine and albumin-bound paclitaxel for first-line treatment of unresectable, locally advanced pancreatic cancer.

Zai Lab also announced last Wednesday that its product Orelabrutinib (repcatinib) has been included in the new national medical insurance drug list for the treatment of adult patients with ROS1-positive locally advanced or metastatic non-small cell lung cancer; the intravenous infusion form of Noxipril (omacetaxine) has successfully renewed its contract for the treatment of adult patients with community-acquired bacterial pneumonia (CABP) and acute bacterial skin and skin structure infections (ABSSSI); and Surufatinib (Raymondide) has successfully renewed its contract for the treatment of adult patients with advanced gastrointestinal stromal tumors (GIST) who have previously received three or more kinase inhibitors (including imatinib).

The centralized procurement order for medical insurance benefits pharmaceutical companies.

From the above information, it can be seen that the rise of Gensun and Zai Lab is partly due to the positive impact of the centralized procurement policy of medical insurance.

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.

How do institutions view the future development of pharmaceutical stocks?

Southwest Securities released a research report stating that in the first three quarters of 2024, the CXO industry’s revenue will rise quarter by quarter, but profits will still be under pressure overall. From a short-term perspective, commercial orders continue to be digested, and the apparent performance of CDMO is under pressure; overseas mature CXO clinical pipelines are advancing steadily, while preclinical demand still needs to be restored.

China Securities Co., Ltd. pointed out that since the end of 2023, overseas investment and financing have gradually recovered, downstream demand remains positive, domestic investment and financing have stabilized at the bottom, and downstream demand is still awaiting recovery. Benefiting from the comprehensive and competitive advantages of the domestic CXO industry chain, the industry is currently relatively limited in its exposure to geopolitical influences.

Editor/rice