According to a research report from China Securities Co., Ltd., various sub-sectors of the medical device industry are successively reaching an inflection point in their performance, driven by trends such as the optimization of bulk procurement policies, continuously improving equipment bidding data, and a gradual decline in channel inventory. Against the backdrop of continuously optimized procurement policies, the high-value consumables segment, in particular, is expected to see a recovery in both its valuation and earnings certainty. Furthermore, CSC is optimistic about the overseas expansion of domestic medical device companies, suggesting that firms with substantial long-term potential in their international operations may also undergo a valuation reassessment. CSC also highlights promising investment opportunities arising from technological innovation within the medical device sector, identifying areas such as AI healthcare, brain-computer interfaces, surgical robots, and exoskeleton robots as new technological directions likely to attract significant investor attention.
On January 14th, an article titled "The Sixth National Bulk Procurement of High-Value Medical Consumables Concludes Bidding with Further Optimized Rules; Mainstream Clinical Products Widely Selected" was published on the official WeChat account of the National Healthcare Security Administration. According to the disclosure, the bidding results for the sixth national centralized procurement of high-value medical consumables were determined in Tianjin on January 13th. This procurement round included 12 types of consumables across two major categories: drug-coated balloons and urological interventions. A total of 496 products from 227 enterprises participated in the bidding, with 440 products from 202 enterprises ultimately being selected. Major manufacturers with high clinical demand actively participated and were successfully selected, ensuring a rich and diverse product supply.
On January 14th, the National Joint Procurement Office for High-Value Medical Consumables released the "Public Notice on the Selected Results of the National Bulk Procurement for Drug-Coated Balloon and Urological Intervention Medical Consumables." According to the official announcement, the selected results were publicly displayed from January 14th to January 16th for scrutiny.
The sixth national bulk procurement of high-value consumables concluded bidding, with mainstream clinical products widely selected. The bidding results were determined in Tianjin on January 13th. This round involved 12 types of consumables from the drug-coated balloon and urological intervention categories. Out of 496 products bid by 227 companies, 440 products from 202 companies were selected. Specifically, all 42 products from 32 companies bidding in the drug-coated balloon category were selected, achieving a high degree of alignment with clinical needs while alleviating cost burdens for patients. For urological intervention consumables, 454 products from 195 companies were bid, with 398 products from 170 companies selected. The selection rate for drug-coated balloons reached 100%, while it was approximately 89% for urological intervention products. Mainstream manufacturers with significant clinical demand actively participated and were selected, guaranteeing a diverse supply.
Additionally, manufacturers of products with special functions, such as drug-eluting scoring balloons and pressure-sensing flexible ureteroscopic catheters, were also selected, effectively meeting the needs of specific clinical scenarios. Following the public notice period, the final results will be officially released soon, with implementation expected around May 2026.
The procurement rules were further optimized, embodying the principles of "stabilizing clinical use, ensuring quality, countering cutthroat competition, and preventing bid-rigging." This procurement round implemented the requirements of the Party Central Committee and the State Council for optimizing procurement policies. First, grouped competition ensured continuity in clinical use. Products were grouped for bidding based on the scale of hospital demand and national supply capability, ensuring the selection of clinically recognized products with strong supply capacity to stabilize clinical usage. The introduction of a multiple reactivation mechanism provided companies with more selection strategies, and the proposed selection rule design gave companies some price adjustment expectations. For instance, companies that qualified in the first round but were not selected under Rule 1 could gain selection by voluntarily reducing their bid to below 70% of the maximum valid申报价 and not exceeding 1.4 times the anchor price (Rule 2). Companies not initially qualified but with bids below 70% of the maximum valid申报价 could obtain selection资格 by further reducing their bid to no higher than 1.3 times the anchor price (Rule 3).
Second, full consideration was given to functional differences in special products. Acknowledging the prevalence of "micro-innovations" in the consumables field, price comparison coefficients were established based on clinical value for differentiated products with certain functional innovations, reasonably reflecting price differences and enriching clinical options. For example, within the peripheral vascular drug-coated balloon category, products longer than 150mm were price-compared with those 150mm and shorter at a specific ratio. For ureteral intervention guidewires, products with a PTFE (polytetrafluoroethylene)-coated core wire and a hydrophilic-coated soft tip were price-compared at a ratio against products entirely coated with PTFE or a hydrophilic coating.
Third, the selection rules were optimized to explicitly "counter cutthroat competition." The price difference calculation did not simply use the lowest bid; when the lowest bid was excessively low, 65% of the average bid of入围 products in the group was used as the benchmark for price difference control. According to the rules, the higher value between "65% of the average bid of入围 products in the same bidding unit" and "the lowest bid in the same bidding unit" is taken as the "anchor price." If a company's bid falls below the "anchor price" in its bidding unit (A), it must provide a justification statement explaining specific cost components, including manufacturing costs, period expenses, distribution costs, and taxes. This rule was triggered in 8 out of the 20 competition groups in this procurement, playing a crucial role in preventing individual companies' low bids from dragging down prices across the entire group.
Against the backdrop of optimized procurement policies, CSC is positive on mid- to long-term investment opportunities in the medical device sector. Trends including optimized bulk procurement rules, improving equipment bidding data, and declining channel inventory are leading various medical device sub-sectors to sequential performance inflection points. Within the high-value consumables segment, due to factors like varying implementation timelines of procurement policies, the inflection points for different companies will occur in an orderly sequence. By 2026, certain segments and companies—such as those in electrophysiology, peripheral interventions, urological interventions, and cardiovascular interventions, where procurement impacts may have been absorbed or new products could act as catalysts—are expected to reach operational turning points. With the continuous optimization of procurement policies, the valuation and earnings certainty of the high-value consumables sector are anticipated to recover.
Furthermore, CSC is optimistic about the overseas expansion of domestic medical device companies. Increasingly, investment opportunities within the medical device sector are expected to stem from internationalization. Several device companies are projected to maintain rapid growth in their overseas businesses in 2026, with the proportion of international revenue potentially surpassing domestic revenue. Companies with significant long-term potential in their international operations are also likely to undergo a valuation reassessment.
CSC also favors investment opportunities driven by technological innovation within the medical device sector. Sectors with numerous potential catalysts in a bull market could yield multi-bagger stocks. Reviewing the medical device sector performance during 2014-2015, concepts like M&A, precision medicine, and gene sequencing saw substantial stock price increases for many companies. Looking ahead, areas such as AI healthcare, brain-computer interfaces, surgical robots, and exoskeleton robots are poised to become key focuses for investors as new technological directions. Among these, brain-computer interfaces and AI healthcare benefit from considerable policy support, clinical breakthroughs, accelerating applications, and positive developments overseas, suggesting a richer catalyst environment.
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