HK Stock Market Move | High-risk concept stocks in the CRO sector lead the gains, the implementation of the Category B medical insurance catalog is expected this year, and domestic innovative drugs are expected to open up payment space.

Concept stocks related to CRO are leading the gains. As of the time of writing, WuXi AppTec (02359) rose by 6.36% to HK$55.2; GENSCRIPT BIO (01548) rose by 5.64% to HK$9.93; WUXI BIO (02269) rose by 5.9% to HK$19.02; and Pharmaron Beijing (03759) rose by 4.66% to HK$13.92. In terms of news, a person in charge of the National Medical Insurance Administration announced that the first version of the Class C medical insurance catalog will be released by 2025. The Class C catalog, as a supplement to the basic medical insurance drug catalog, focuses on drugs that, while temporarily unable to be included in the medical insurance catalog due to exceeding the "basic protection" function, have high levels of innovation, significant clinical application value, and significant patient benefits. CICC International points out that the Class C catalog may prioritize drugs that have passed formal review and expert evaluation in previous national negotiations, but were ultimately not included in the basic medical insurance catalog, such as CAR-T, ADC, etc., providing opportunities for domestic innovative drugs to expand payment space. China Securities Co., Ltd. stated that overseas investment and financing have gradually recovered since the end of 2023, downstream demand remains positive, domestic investment and financing bottoming out, and downstream demand still needs to recover. Benefiting from the overall competitiveness of the domestic CXO industry chain, industry impact from geopolitics is currently limited. Prices in the domestic preclinical and clinical CRO sector are stabilizing, with operational trends expected to gradually improve. The demand for commercialization of CDMO enterprises is stable, with the impact of large orders already eliminated since the start of Q4 2024. In recent years, with the rapid development of ADC, peptide drugs, and other fields, there has been a rapid increase in related CXO demand, and subfields such as small nucleic acids and CGTs are also expected to experience rapid growth. In the long term, we still have a positive outlook on the development potential and growth space of the CXO sector.