Shanxi: Continuous Improvement of Multi-level Payment System for Innovative Drugs, Continued Enhancement of Competitiveness in Global Market for Domestic Products

Shanxi released a research report stating that currently, the number of innovative drugs in research in China accounts for about 30% globally. The multi-level payment model of "basic medical insurance + commercial health insurance" has created a commercial path for treatment technologies and products with international leading level, effectively promoting the development of innovative drugs and medical devices in China. The PE valuation of the pharmaceutical sector is below historical average. Considering the expected positive growth of the industry by 2026, it is predicted that the sector will achieve positive returns in 2026. Key sectors to focus on include: innovative drugs, CXO, AI healthcare, brain-machine interface, Innovative Medical Management devices, medical equipment tendering recovery, consumer recovery, etc. The main viewpoints of Shanxi are as follows: Policy support: China Meheco Group embraces the era of innovation and development Since the 14th Five-Year Plan, the China National Medical Products Administration has approved 204 innovative drugs and 265 Innovative Medical Management devices. From January to July 2025, 50 innovative drugs and 49 Innovative Medical Management devices were approved. Currently, the number of innovative drugs in research in China accounts for about 30% globally. According to the Medical Cube's "2025 Q1-Q3 Medical Transaction Trend Analysis", in the first three quarters of 2025, the total amount of license-out transactions by China Meheco Group amounted to 92.03 billion US dollars. The rapid growth in the amount of BD authorization for Chinese innovative drugs reflects the rapid development of the Chinese innovative drug industry and the enhancement of international competitiveness. Commercial health insurance welcomes major development, multi-level payment system supports the development of innovative drugs and medical devices In July 2024, the State Council approved the "Implementation Plan to Support the Development of Innovative Drugs throughout the Chain", proposing the development of commercial insurance to jointly promote the development of innovative drugs. The National Medical Insurance Administration has repeatedly stated its exploration of a diversified payment mechanism for innovative drugs, and support guiding inclusive commercial health insurance to timely include innovative drugs in the reimbursement scope. On December 7, 2025, the 2025 edition of the national medical insurance drug catalog was released, adding 114 new drugs, including 50 first-class innovative drugs. At the same time, the National Medical Insurance Administration also published the first edition of the commercial insurance innovative drug catalog in China. Nineteen drugs were included in the commercial insurance innovative drug catalog, including CAR-T, TCE therapy, dual-specific antibodies, and other popular targeted drugs. The multi-level payment model of "basic medical insurance + commercial health insurance" has created a commercial path for treatment technologies and products with international leading level, effectively promoting the development of innovative drugs and medical devices in China. CXO: China Manufacturing sets sail to the sea and business sentiment rebounds Chinese CXO companies and upstream companies in the life sciences industry continue to enhance their global market competitiveness with their strong technical strength, efficient service advantages, and ultimate cost-effectiveness. Domestically, as the investment and financing environment in the innovative drug industry gradually improves, CXO companies have seen a continuous recovery in orders since 2025, and with the completion of orders at lower prices, they are expected to see a situation of increasing order volume and price equality by 2026. Devices & Services: Technology drives industry upgrades, emphasizes opportunities in brain-machine interfaces, AI healthcare, and other industries The high-end customized medical consumables OEM industry has broken through the 0-1 stage, with leading OEM companies gaining global competitiveness in product quality, supply chain security and stability, supply efficiency, and cost advantages, as the trend of supply chain shifting from Europe and America to China accelerates. The brain-machine interface industry continues to progress technologically. In addition, AI healthcare is also developing rapidly, with various sub-models and AI applications growing quickly. Risk warning: macroeconomic environmental risks, market liquidity risks, medical industry policy risks, geopolitical and international trade risks, etc.