China's national healthcare security fund expenditure exceeded 3 trillion yuan for the first time last year, according to the latest statistics released on July 16. By the end of 2025, the number of participants in the national basic medical insurance scheme had reached 1.33 billion, with the participation rate remaining stable at 95%. The 2025 edition of the National Reimbursement Drug List includes 3,253 Western and Chinese patent medicines, comprising 1,857 Western drugs and 1,396 Chinese patent medicines, with 114 new drugs added during the year. In 2025, the National Healthcare Security Administration also established an Innovative Drug List for commercial health insurance, focusing on innovative drugs with high novelty, significant clinical value, and substantial patient benefits that fall outside the scope of basic medical insurance coverage. The inaugural list included 19 drugs.
Regarding the bulk procurement program and efforts to enhance the accessibility and affordability of innovative drugs and medical devices, what are the key policy focuses of industry attention? With 2026 already halfway through, what are the profit situations for different types of pharmaceutical companies and the smoothness of their product channels?
In empowering pharmaceutical industry innovation, the National Healthcare Security Administration has established a new drug-centered mechanism for medical insurance access and negotiation renewal, significantly shortening the time from market launch to inclusion in the reimbursement list. From 2018 to 2025, the sales of drugs newly added through medical insurance negotiations exceeded 710 billion yuan during their agreement periods, with medical insurance fund expenditures for these drugs surpassing 490 billion yuan.
On the topic of enhancing the accessibility and affordability of innovative drugs and devices, Chen Zhu, Chief Analyst of the Healthcare Industry at CITIC Securities, highlighted several key policy areas of industry focus. These include the initial pricing mechanism for newly launched drugs, adjustments to the National Essential Drug List, and policies promoting commercial health insurance.
First, the initial pricing mechanism for new drugs is expected to grant higher pricing flexibility, more efficient listing processes, and longer price stability periods for high-quality innovative drugs. Second, the adjustment of the National Essential Drug List (2026 edition) marks a significant shift by breaking the previous practice of excluding high-priced innovative therapies. It now includes domestically developed Class 1 innovative drugs, GLP-1 agonists, monoclonal antibodies, and targeted anti-tumor drugs, thereby expanding the channels for innovative drugs to reach primary care and the essential drug system and improving their accessibility. Finally, regarding commercial insurance, the recently released national health "15th Five-Year" plan proposes to "promote the deep integration of commercial health insurance with health management and encourage the supply of new health insurance products covering health interventions, special medical needs, and innovative drugs." Projections estimate that by 2030, commercial health insurance could contribute an additional 300 billion yuan in payments to China's healthcare industry, primarily directed towards covering innovative drugs and devices, thereby enhancing their affordability.
Regarding the centralized procurement of drugs and medical consumables, the 11th national bulk procurement round in 2025 involved 55 drug varieties. The 6th national bulk procurement round for high-value medical consumables covered 14 varieties across two major categories: drug-coated balloons and urological interventions. According to an official announcement, the volume reporting phase for the 12th national drug bulk procurement concluded on the afternoon of July 16. By noon that day, approximately 45,000 medical institutions had submitted procurement demand data, involving over 530 pharmaceutical companies for 65 procurement varieties. On average, 15 companies received demand for each variety, with 5 varieties attracting over 30 companies each. The variety with the most participating companies had 54.
What are the key policy focuses for the bulk procurement program from an industry perspective? Chen Zhu noted that the industry is primarily focused on the final procurement outcomes. Under the current principles of "stabilizing clinical use, ensuring quality, preventing bid-rigging, and countering excessive competition," attention is on optimizing both the "volume" and "price" dimensions of the results. For the 12th procurement round, new mechanisms have been introduced in the volume reporting rules. For example, if a product's bid price falls more than two standard deviations below the average bid price for inclusion, it will not be used as a reference for price correction, its allocated procurement volume proportion will be reduced to zero, and the company will not occupy a spot in the list of selected suppliers. This mechanism is designed to institutionally weaken the incentive for ultra-low-price competition.
On July 15, the A-share market showed significant divergence, with the healthcare and biotechnology sector experiencing a surge of limit-up gains. Discussing the profit situations and channel smoothness for different types of pharmaceutical companies halfway through 2026, Chen Zhu provided insights based on performance forecasts for 63 key covered pharmaceutical companies. Overall, performance expectations are relatively stable, with many pharmaceutical and medical device companies achieving rapid growth or turning losses into profits in the second quarter or first half of 2026. The pharmaceutical sector continues to demonstrate the high certainty of its essential nature. Coupled with sustained high growth in domestic biopharmaceutical financing data, the imminent catalyst of key data readouts for core pipelines of domestic innovative drugs starting in Q3 this year, the accelerated realization of international value for assets with global potential, and policy reforms gradually returning to a market pricing system guided by clinical value and demand, it is believed that innovative pharmaceutical companies and global pharmaceutical industry chain enterprises are poised for steady earnings growth over the next 3 to 5 years.
Comments