The policy for updating medical devices is expected to accelerate implementation, promoting the recovery of profits for domestic medical device companies.
According to Zhito Finance APP, CMB International released a research report stating that as policy focus shifts to stimulating the economy, the financial status of the medical insurance fund is expected to improve significantly. The 2024 adjustment results of the medical insurance catalog have been announced, adding 91 types of pharmaceuticals, with insurance supporting innovation. At the same time, stricter regulation of the medical insurance fund will continue to ensure growth for products that meet the characteristics of being used within hospitals, essential needs, and covered by insurance; the policy for updating medical devices is expected to accelerate implementation, promoting the recovery of profits for domestic medical device companies. In addition, the exploration empowered by medical insurance data from the medical insurance bureau for commercial insurance companies may allow high stock price innovative drugs and devices to achieve better reimbursement coverage through the collaboration of medical insurance and commercial insurance in the future.
CMB International's main points are as follows:
The msci chinese medical index has decreased by 17.6% since the beginning of the year, underperforming the msci chinese index by 30.1%.
Benefiting from overseas interest rate cuts and improvements in the domestic macro environment, the pharmaceutical industry, as a high-elasticity industry, is expected to outperform the market. The new version of the medical insurance catalog has been announced, with several major domestic innovative drugs included; we anticipate that the price decrease for renewed products will be relatively moderate, reflecting the continued strong support of the medical insurance fund for innovative drugs. In September and October of this year, the surplus of basic medical insurance (pool fund) has significantly improved.
Insurance supports innovation.
The adjustment results of the medical insurance catalog for 2024 have been announced, adding 91 types of pharmaceuticals. During the negotiation/bidding phase, 117 types of drugs not listed in the catalog participated, 89 were successfully added, with an average price reduction of 63%, which is comparable to the reduction of 62% in 2023 and the average of 59% over the past five years. The new version of the medical insurance catalog will take effect in January 2025.
The Medical Insurance Bureau requires designated medical institutions to hold pharmaceutical meetings by the end of February 2025. They cannot influence the entry of pharmaceuticals into hospitals based on total medical insurance limits, the number of pharmaceuticals in the institution's medication catalog, or the proportion of medication costs. In the first ten months of this year, the medical insurance fund's payments for negotiated pharmaceuticals during the agreement period amounted to approximately 92 billion yuan. In 2023, the average pharmaceutical cost per hospital in sample hospitals accounted for 15.1% of the total pharmaceutical costs, indicating significant room for growth.
Empowering commercial insurance is expected to cover high stock price innovative drugs/devices.
For some expensive cell therapy and gene therapy drugs, basic medical insurance alone is insufficient for full coverage. The Medical Insurance Bureau is exploring ways to enable commercial insurance companies with medical insurance data, to implement supportive policies such as synchronized settlement between the medical insurance fund and commercial insurance. This is expected to significantly reduce underwriting costs for commercial insurance companies and encourage them to improve payment levels, thereby covering more costs associated with innovative drugs and medical devices. In the future, high stock price innovative drugs and devices such as CART therapy and TAVR surgery will achieve better reimbursement coverage through collaboration between medical insurance and commercial insurance.
Implementing prepayments from the medical insurance fund is particularly bullish for the mid and downstream of the industry chain.
On November 27, the Medical Insurance Bureau issued a document mentioning:
(1) Effectively implementing prepayments from the medical insurance fund. The National Medical Insurance Bureau, in conjunction with the Ministry of Finance, issued a document to unify and improve the prepayment system at the national level, using 'prepayment funds' as 'enabling funds' for medical institutions that implement policies well.
(2) Explore instantaneous settlement of the medical insurance fund with medical institutions. Strive to shorten the payment cycle of the medical insurance fund to medical institutions, helping to enhance the quality and efficiency of medical services. It is believed that a shortened payment cycle will be particularly bullish for medical service companies and pharmaceutical distribution companies.
Pay attention to relevant bullish symbols related to the improvement of medical insurance.
The sectors benefiting from the improvement in medical insurance funding include: 1) innovative drugs, which will receive more comprehensive medical insurance coverage; 2) medical service institutions, with improved accounts receivable and reduced bad debts; 3) commercial circulation, with improved accounts receivable and increased revenue growth; 4) medical devices, with improved bidding.
Bullish on beigene-U(688235.SH), innovent bio(01801), kelun biotech-B(06990), united imaging healthcare(688271.SH), wuxi apptec(603259.SH), giant bio(02367), 3sbio(01530).
