BOCOM INTL: Mainland's increment payment space for innovative drugs continues to expand, optimistic about innovation theme.

BOCOM INTL released a research report stating that this week, both the medical insurance and commercial insurance dual catalogues have been implemented. The success rate of new varieties in medical insurance negotiations has reached a new high in recent years, while the price reduction of renewed varieties is relatively moderate. The bank believes that the introduction of commercial insurance funds will bring important incremental funds for innovative drug payments, further optimizing the diversified payment system. The bank is optimistic about the sales volume of newly included medical insurance varieties/adaptations in 2026, as well as the actual implementation and payment situation of the first edition commercial insurance catalogue. The bank continues to recommend focusing on the following directions: 1) Innovative drugs: 3SBIO (01530), ANTENGENE-B (06996), BEONE MEDICINES (06160) and other catalyst-rich stocks, whose valuations have not yet reflected the core value of major products; SIMCERE PHARMA (02096), Legendary Biotech, undervalued and with a clear long-term growth logic; 2) CXO: Leading companies in downstream high prosperity and marginally improving financing sub-sectors, such as WUXI XDC (02268); 3) Gradual release of regulatory uncertainties, opportunities for reversal in hospital, equipment, and diagnostics sub-sectors.