[core view]
Accelerating transformation: high quality & cost performance, innovative technology and internationalization are the path and theme. Focusing on the impact of policies on the pharmaceutical industry, this paper systematically combs five topics: medical insurance catalogue, volume procurement, payment method, commercial health insurance and review and approval, outlines the policy environment during the 14th Five Year Plan period, and looks forward to the transformation and upgrading direction of the pharmaceutical industry. The guidance of the above policies to the pharmaceutical industry can be summarized into five key words – clinical value, cost performance, high quality, innovation and internationalization. It is not only the path of industrial upgrading, but also the main melody of industrial development. Based on the slow growth of medical insurance funds and the current situation of large but not strong industry: 1) insufficient original innovation ability in frontier fields; 2) The concentration is not high and the industrial ecology has not been formed; 3) The manufacturing level and quality still need to be improved; 4) The international competitive advantage of high value-added products is not strong. We believe that at present, the industry is at the key node of transformation and upgrading, innovative drugs, high-end generic drugs and high-end preparations are the starting point of transformation, innovative technology is the strategic growth point of the industry, and internationalization will lead the second growth curve of the industry.
Medical insurance Catalogue: the catalogue of drugs shall be adjusted normally to improve the driving force of innovation and transformation. The drug catalogue is an important tool for the fine management of medical insurance funds. Based on the functional orientation of “ensuring basic and wide coverage”, the catalogue adopts the methods and methods of pharmacoeconomics, internal reference price and price negotiation to determine the payment standard. In terms of opportunities, the dynamic adjustment mechanism was initially established, the drug catalogue was adjusted once a year, supporting policies such as online connection and “double channel”, the access and use path of innovative drugs was gradually unblocked, and the speed of commercial transformation was accelerated. From 2016 to 2021, negotiations have been carried out for six consecutive years, with a total of 366 drugs included, and the sales of many drugs have doubled or doubled after admission. In terms of challenges, the negotiation price is affected by factors such as reference drugs and medical insurance payment ability. Due to the fierce competition of innovation, the previous decline was at the level of 50%, so the pricing is subject to great challenges. In the future, catalog selection will be normalized, scientific and professional, catalog structure will be accelerated and optimized, the number of innovative drugs and the proportion of medical insurance payment will increase, and drug prices will further return to clinical and market value.
Purchase with quantity: remove the duplication of low quality and accelerate the creation of high quality. The procurement with quantity is carried out in a normal and institutionalized manner. The procurement level is composed of national, provincial and municipal alliances. The core rule is “procurement with quantity, integration of bidding and procurement, and price competition”. It is operated through the bidding procurement platform to realize “all procurement should be taken, price discovery and drug price reduction”. In terms of challenges, since 2018, volume procurement has been carried out six times, with an average decrease of more than 50%. A total of 234 varieties have been included, and it is expected to reach 500 by 2025. The scope of procurement has gradually expanded from oral preparations and injections to insulin, Chinese patent medicine and biological analogues. There is great pressure on the price reduction of fully competitive varieties. In terms of opportunities, the acceleration of industrial supply side reform, transformation and upgrading, the strong development momentum of innovative drugs, first imitation, difficult imitation and high-end preparations, and the weakening of channel competition will usher in a better development environment. In the future, the informatization of drug prices will be improved, the control will be tightened, the withdrawal of backward production capacity will be accelerated, the industrial concentration will be further improved, and the saved medical insurance fund will pay more for drugs with clinical value and innovation.
Payment method: guide the rational allocation of resources and pay the clinical value strategically. DRG / Dip payment reform will change the settlement mode of hospitals and medical insurance funds, similar to the lump sum system, so as to stimulate the endogenous driving force of cost and efficiency management of medical institutions, give play to the restraint and incentive role of the fund and maximize clinical value. The operation of DRG / Dip generally involves budget formulation, case enrollment, determination of disease group weight / score, determination of disease group rate / point value, annual settlement, negotiation and other links. In 2021, there will be 101 DRG / Dip pilot cities. By 2025, it is expected that the cost of grouping by disease diagnosis and paying / hospitalization by disease type will reach 70%. In terms of opportunities, DRG / Dip will consolidate the use status of drugs with high clinical value and help hospitals improve efficiency and control costs, accelerate the substitution of generic drugs with appropriate price and definite curative effect, and focus more on clinical value in drug research and development. In terms of challenges, the treatment budget of the disease group will be formulated in advance, and the use of adjuvant drugs and drugs with uncertain curative effect will be greatly impacted.
Commercial insurance: commercial insurance ushered in explosive growth and helped the accessibility of innovative drugs. Commercial health insurance is a supplementary level of the medical security system, which is positioned to support innovative products and technologies other than medical insurance. In 2021, the commercial insurance raised 840 billion yuan, and the scale is expected to reach 2 trillion yuan in 2025, with 1.5 times the growth space. In the future, PICC will reshape the payment structure, deeply integrate the medical insurance system, and become a strategic highland of payment innovation.
Review and approval: improving standards, increasing efficiency and connecting with international standards is the direction. After five years of drug review reform, the backlog of registration has been significantly improved. In 2021, 25 innovative drugs were listed, increasing for four consecutive years. In the future, the review and approval standards will be improved to promote the supply side reform of R & D, mainly to solve the problem of excessive concentration of R & D resources. In addition, drug supervision will continue to improve the degree of internationalization and encourage simultaneous registration and declaration at home and abroad. [investment strategy]
Based on the current policy orientation and the development status of China’s pharmaceutical industry, three strategic directions of “high quality & cost performance, innovative technology and internationalization” can be adopted in 2022 to find short, medium and long-term directions and companies with development prospects corresponding to the next 1-3, 3-5 and 5 + years.
High quality & cost performance strategy direction. Innovative drugs drive growth. Innovative drugs can quickly seize the market and realize cash through medical insurance access. We are optimistic about the head pharmaceutical enterprises with strong commercialization ability, fast R & D speed and sufficient number of pipelines. We recommend Jiangsu Hengrui Medicine Co.Ltd(600276) . We suggest paying attention to stone Pharmaceutical Group and China biopharmaceutical. The growth is driven by the first imitation, difficult imitation and high-end preparations. The pattern of related products is good, the pricing space is large, and the “resistance” of centralized procurement is strong. We are optimistic about pharmaceutical enterprises and platform companies with system advantages and technology accumulation. We recommend Baicheng pharmaceutical and Lizhu pharmaceutical.
Strategic direction of innovative technology. Innovative technologies lead the transformation, including ADC, mRNA, double antibody, protac, cell therapy and other technologies. New technologies will lead the subversive innovation of drugs, redefine the treatment scheme of diseases, and have high clinical value. For enterprises that are optimistic about forward-looking and differentiated layout of new technologies, Rongchang biology and Corning Jerry are recommended. It is recommended to pay attention to Aibo biology, develop pharmaceutical industry, Keji pharmaceutical industry, etc.
Internationalization strategy direction. The internationalization of innovative drugs drives growth. We are optimistic about innovative drugs and R & D enterprises with rapid progress in international clinical trials and overseas licensing potential. We recommend Xinda biology and pay attention to Baiji Shenzhou, Shanghai Junshi Biosciences Co.Ltd(688180) , Hehuang medicine, etc. The increase of export added value drives growth, and is optimistic about the pioneers in the export of high-end preparations and biological analogues. It is suggested to pay attention to Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) , Fuhong Hanlin, etc.
[risk tips]
Risk of drug price reduction; Risk of drug R & D failure; Internationalization progress is less than expected; Risk of drugs being included in the negative list
