Key investment points
On May 20, 2022, the general office of the State Council issued the national health plan for the 14th five year plan, proposing that by 2025, China’s public health service capacity will be significantly enhanced, a number of major disease hazards will be controlled and eliminated, the quality of medical and health services will be continuously improved, the supporting capacity related to medical and health and the development level of health industry will be continuously improved, and the national health policy system will be further improved. For the pharmaceutical and biological industry segments:
Traditional Chinese medicine: carry out the living inheritance of traditional Chinese medicine and the protection and utilization of ancient literature resources. Improve the evidence-based ability of traditional Chinese medicine, promote scientific and technological innovation of traditional Chinese medicine, and speed up the research and development of ancient classic and famous prescriptions. Strengthen the quality assurance of traditional Chinese medicine and build a quality standard system, monitoring system and traceability system of traditional Chinese medicine.
Innovative drugs: encourage the R & D, innovation and use of new drugs, accelerate the R & D and industrialization of clinically urgently needed drugs for the treatment of major diseases, and support the R & D of high-quality generic drugs. We will accelerate the construction of a rapid emergency research, development and production system for drugs, and strengthen the unified command and coordination of emergency research and development, inspection and testing, system verification, review and approval, monitoring and evaluation of drugs and medical devices required for prevention and control in response to emerging infectious diseases and other emergency needs related to national public health and safety. We will deepen the reform of the review and approval system for drugs and medical devices, and speed up the review and approval of innovative drugs that meet the requirements, drugs and medical devices in urgent need, and drugs for the treatment of rare diseases. Strengthen the research and development of affordable psychotropic drugs and long-term injections.
Medical devices: optimize the review process of Innovation Medical Management Co.Ltd(002173) equipment registration. We will tackle key problems in original technologies and launch a number of high-quality medical equipment integrating new technologies such as artificial intelligence. Build a medical equipment industry cluster with perfect chain and distinctive characteristics. Promote the development of intelligent services Siasun Robot&Automation Co.Ltd(300024) and implement the popularization and application project of rehabilitation aids and intelligent aging technology.
Medical service sector: encourage social forces to set up non-profit medical institutions in areas with weak medical resources and in areas with shortages such as rehabilitation, nursing and mental health. We will guide and promote the standardized development of independent institutions such as medical testing centers and medical imaging centers, and encourage experienced medical practitioners to set up clinics.
In terms of payment: we are encouraged to increase the supply of new health insurance products around special needs medical treatment, cutting-edge medical technology, innovative drugs, application of high-end medical devices, disease risk assessment, disease prevention, TCM Prevention and treatment, sports and fitness and other services.
Medical and health system reform: improve the modern hospital management system and promote the high-quality development of public hospitals; Clarify the division of responsibilities, referral standards and referral procedures of medical and health institutions at all levels in the diagnosis and treatment of related diseases, and speed up the construction of hierarchical diagnosis and treatment system; We will improve the universal medical insurance system, and carry out grouping by disease diagnosis and payment by disease score. Improve the drug supply guarantee system and expand the centralized procurement scope of drugs and high-value medical consumables. We will deepen the reform of medical service prices, standardize the management of medical service price items, establish a sensitive and dynamic price adjustment mechanism, and optimize the price policy of traditional Chinese medicine.
Investment advice
Through the interpretation of the national health plan for the 14th five year plan, we believe that “innovation” runs through the whole process. Whether in the traditional Chinese medicine sector, innovative drugs sector or medical devices sector, the State encourages scientific and technological innovation, develops high clinical value pharmaceutical and mechanical products to meet clinical urgent needs, provides policy support in review and approval, and explores new payment methods in payment, all of which are to accelerate the development of innovative pharmaceutical and mechanical products. In terms of medical and health system reform, we will further promote graded diagnosis and treatment and DRG dip medical insurance payment, and encourage the development of private hospitals. In terms of investment direction, we believe that “grasping scientific and technological innovation” is the main logic of pharmaceutical sector investment in the future. It is suggested to pay attention to innovative pharmaceutical machinery and its upstream manufacturing, medical services and other subdivision directions.
Risk tips
Policy changes exceed expectations; Risk of R & D failure; Industry “black swan” incident, etc.
