A research report from China Galaxy Securities indicates that the 15th Five-Year Plan is expected to continue driving the development of the biopharmaceutical industry. The firm is optimistic about investment opportunities in the pharmaceutical sector for 2026. Following recent market fluctuations and adjustments, valuations have retreated to relatively low levels, suggesting a potential restart of an upward trend. The investment strategy involves seeking out hard technology in pharmaceuticals and alpha opportunities in specific sub-sectors. Recommendations include focusing on innovative drugs (leaders with Best-in-Class and First-in-Class pipelines), innovative medical devices (imaging, high-value consumables, consumer medical devices, etc.), and the medical AI direction. Attention is also advised on the recovery of pharmaceutical consumption and independent third-party ICLs. The main viewpoints of China Galaxy Securities are as follows:
The 15th Five-Year Plan has, for the first time, listed biopharmaceuticals as a national emerging pillar industry, continuously promoting pharmaceutical innovation. The 14th Five-Year Plan focused on five key projects: the industrialization of innovative pharmaceutical products, tackling key industrial pharmaceutical technologies, supply guarantee for vaccines and drugs in short supply, product quality upgrades, and green, low-carbon development in the pharmaceutical industry, with remarkable results. The 15th Five-Year Plan proposes to improve the coordinated development and governance mechanism for healthcare, medical insurance, and pharmaceuticals. The biopharmaceutical industry has been designated as a national "emerging pillar industry" for the first time, signifying a further elevation of its strategic positioning. This upgraded positioning for the pharmaceutical sector in the 15th Five-Year Plan is expected to be followed by continuous favorable supporting industrial policies.
In the healthcare field, the shift is from "system construction" to "strengthening foundations and coordinated governance." The 15th Five-Year Plan period is a critical stage for the development of China's healthcare sector, marking a fundamental transition from scale-expanding "system construction" to a connotation and quality-focused model of "strengthening foundations and coordinated governance." This transformation is driven by two core factors: firstly, a strategic upgrade in the "triple linkage" of healthcare, medical insurance, and pharmaceutical reforms from separate departmental reforms to systematic, coordinated governance, typified by the Sanming model; and secondly, a paradigm shift in service models from "treatment-centered" to "health-centered."
In the medical insurance sector, the evolution is from "universal basic coverage" to "multi-dimensional optimization and provincial-level coordination." The acceleration of provincial-level coordination of medical insurance funds, which enhances the efficiency of medical insurance fund usage, is expected to become a new starting point for pharmaceutical investments. Provincial-level coordination is anticipated to resolve structural contradictions within the medical insurance system, revitalize existing funds, and promote a recovery in expenditures. Structural issues currently exist in China's medical insurance funds, with declining expenditures and insufficient coverage intensity in some regions. The provincial-level coordination system breaks down administrative barriers between cities, allowing surplus funds generated by economically developed cities with younger populations to be directed through provincial adjustment mechanisms to support cities within the province that have weaker economic foundations, severe aging populations, or face fund depletion risks, thereby achieving "using abundance to supplement shortage and sharing risks." By advancing provincial-level coordination and cross-provincial mutual aid for individual accounts, it is expected to revitalize accumulated medical insurance funds, effectively resolve structural contradictions in revenue and expenditure, and reverse the trend of slowing expenditure growth.
In the pharmaceutical field, the leap is from "imitation-innovation combination" to "original innovation and high-quality development." The state provides strong support through full-chain policies (R&D, review, payment, internationalization). On one hand, the number of approved domestic Class 1 new drugs has hit record highs, and outbound BD transaction values and upfront payments are rising, marking a significant enhancement in global competitiveness. On the other hand, upstream life sciences and high-end medical devices are accelerating domestic substitution to address "bottleneck" issues, while simultaneously deepening the inheritance and innovation of traditional Chinese medicine and strictly standardizing re-evaluations to reshape the market landscape. Coupled with the comprehensive empowerment of AI technology in R&D, diagnosis, and service scenarios, this ultimately aims to build a modern, autonomous, and controllable pharmaceutical industry system with global influence, accelerating the transition from a "major pharmaceutical country" to a "pharmaceutical power."
Risk提示: Risks include increased macroeconomic pressures leading to insufficient growth in pharmaceutical consumption capacity; potential underperformance of policies such as innovative drug medical insurance payment; risks associated with global order transfers due to geopolitical factors; and risks that centralized procurement or fee reductions may exceed market expectations.
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