Eli Lilly (LLY.US), Pfizer (PFE.US), and Johnson & Johnson (JNJ.US) have secured positions in China's first innovative drug catalog, opening new market channels and boosting sales prospects for high-cost advanced therapies. At the 2025 Innovative Drug Development Conference held in Guangzhou's Baiyun District, 19 innovative drugs were listed for commercial insurance reimbursement. These drugs, deemed too expensive for national insurance coverage, are recommended for inclusion in private health insurance plans. The medications cover a range of diseases, including cancer, Alzheimer's, and rare genetic disorders.
With China's aging population driving increased demand for treatments for conditions like cancer, diabetes, and dementia, integrating these drugs into insurance systems could alleviate the burden on national healthcare. A gradual shift toward commercial insurance reimbursement is also expected to allow domestic and international pharmaceutical companies to sell drugs at higher prices, improving profit margins. Historically, mandatory steep discounts under China’s national insurance system have suppressed pharmaceutical firms' profitability.
To qualify, drugmakers negotiated discounted prices with government officials, which will be offered to all private insurers. The list aims to expand the role of private insurance, which currently holds a minimal share in China’s innovative drug market. Analysts note that the catalog provides "a promising start for global pharmaceutical companies unable to meet the deep discounts required for national insurance but still seeking to improve drug accessibility for Chinese patients." Confidential pricing negotiations also help domestic firms maintain international pricing strategies.
Besides Lilly’s Kisunla and Eisai’s Leqembi (both for Alzheimer’s treatment), the list includes cancer drugs from Pfizer, Johnson & Johnson, and Bristol-Myers Squibb. Several domestic pharmaceutical companies also made the list, including five producing CAR-T cell therapies for cancer. BeOne Medicines (ONC.US) was the only company with two drugs included.
The government has not disclosed the average discount rate, though prior reports suggested reductions of 15%–50%—lower than the typical 60% required for the National Reimbursement Drug List (NRDL). According to Daiwa Capital Markets analyst Wilfred Yuen, the final selection—narrowed from 24 candidates—reflects regulators' cautious approach in the program's first year.
Yuen noted, "The ultimate impact will vary by product and company, as listed drugs target different demographics (children vs. elderly) and conditions (adult cancers vs. rare diseases)." China’s national insurance system, covering 95% of its 1.4 billion population, has long wielded strong bargaining power, securing deep discounts via the NRDL. Since 2016, the NRDL negotiation mechanism has steadily grown in influence—though only three companies have agreed to price cuts so far.
Multinationals like AstraZeneca (AZN.US) and Novartis (NVS.US) actively engage with the NRDL, while others avoid it, focusing on self-pay or private insurance clients—a niche market. The new catalog aims to broaden commercial insurance’s role in funding innovative drugs, but its impact on drugmakers' revenue and profitability remains uncertain.
Capital Securities analyst Wang Ruizhe stated, "Commercial insurance sales may not grow as rapidly as national insurance, and insurers may need further coordination with hospitals. Key uncertainties include which hospitals will accept commercial insurance, reimbursement procedures, and insurer adoption rates."
The initial catalog featured 121 drugs from both foreign and domestic firms before being refined to the final list. While this year’s selection may be too small to reshape the market, Macquarie Securities analysts, led by Tony Ren, project the list could expand to 300 drugs by 2027.
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