EB SECURITIES: Empower Business Health Insurance to Promote Payment Diversification - Medical Insurance Prepayment Eases Fund Pressure.

EB SECURITIES released a research report stating that the national unified medical insurance system platform and big data will empower commercial health insurance, promoting the diversification of payment methods. Recent medical insurance policies indicate that China's healthcare reform has entered a deep water zone, touching the deep structure of the payment system. The existing interests within hospitals and social structures will be reshaped. The gradual implementation of the prepayment system is expected to improve the overall account period of the industry chain, benefiting distribution enterprises more directly. The establishment of a diversified payment structure will open up new opportunities for innovative drugs and medical devices. Events: 1) On November 7, 2024, the National Medical Insurance Administration held a seminar on the development of commercial health insurance empowered by medical insurance platform data; 2) On November 11, 2024, the National Medical Insurance Administration Office and the Ministry of Finance issued a notice on the prepayment of medical insurance funds. EB SECURITIES main points are as follows: The national unified medical insurance system platform and big data will empower commercial health insurance, promoting the diversification of payment methods. The main payer in the domestic medical market is the basic medical insurance, while the development of commercial health insurance domestically has been relatively lacking due to the scarcity of medical data. The medical insurance system platform has the advantages of national unity, extensive coverage, standard regulations, and a large scale of medical insurance big data that is well-structured and updated quickly. By actively empowering commercial insurance to accelerate development and constantly improving the "1+3+N" multi-level medical security system construction, insurance companies are expected to gain real-time and comprehensive data support, enabling them to better design commercial health insurance products. This will increase insurance coverage for the people and promote the diversification of payment methods, opening up new payment channels in clinical medical scenarios, and expanding sales space for innovative drugs and medical devices. The medical insurance prepayment system improves the efficiency of medical insurance fund utilization and alleviates the funding pressure on medical institutions. Prepayment is the turnover funds that medical insurance departments advance to designated medical institutions for the purchase of medicines and medical consumables, etc., and cannot be used for non-medical expenses such as medical institution infrastructure construction, daily operations, debt repayment, etc. The centralized procurement of drugs and medical consumables is subject to the same medical insurance fund prepayment regulations. Designated medical institutions meeting the conditions voluntarily apply for prepayment to the comprehensive regional medical insurance department in early January of each year. After the medical insurance department review, the financial department determines the scope and scale of prepayment for medical institutions and, in principle, disburses the prepayment funds to designated medical institutions by the end of the first quarter of each year as stipulated. After the implementation of the medical insurance prepayment system, it is expected to effectively alleviate the financial pressure on the corresponding regional medical institutions, thereby improving the enterprise account payment status of their drug and consumable procurement channels, and facilitating the overall development of the cash flow chain of medical institutions-medical distribution-medical manufacturing. Investment advice: Recommend focusing on SINOPHARM (01099), Shanghai Pharmaceuticals Holding (601607.SH), CHINARES PHARMA (03320), Jointown Pharmaceutical Group (600998.SH), etc.; Recommend focusing on Jiangsu Hengrui Pharmaceuticals (600276.SH), INNOVENT BIO (01801), BEIGENE-U (06160), APT Medical Inc. (688617.SH), Shanghai Microport Ep Medtech (688351.SH), SCIENTECH (02291), Jiangsu Yuyue Medical Equipment & Supply (002223.SZ), Sinocare Inc. (300298.SZ), etc. Risk analysis: Risks of policy implementation falling short of expectations; risks of low public willingness to purchase insurance lower than expected.