Open Source Securities: Policy Support Combined with the Revival of Investment and Financing, the Turning Point of the Innovative Drug Industry Chain may have arrived

Open source securities released a research report stating that in terms of policies, the country has continuously strengthened its support policies for the innovative pharmaceutical industry, constructing a full-chain support system. In terms of investment and financing, the global investment and financing trend has significantly improved in the past six months, with a continuous improvement in monthly investment and financing in the domestic market. The BD transactions in the domestic innovative drug pipeline have been hot, and various local governments have also set up funds to support the development of the biopharmaceutical industry. The bank predicts that with the gradual implementation of policies supporting the development of innovative drugs across the entire industry chain, as well as the gradual warming up of domestic and foreign investment and financing in innovative drugs, the upstream and downstream of the innovative drug industry chain will continue to benefit, and the warming trend is already evident. The main points of Open Source Securities are as follows: Continuous strengthening of policy support, constructing a full-chain support system for innovative pharmaceuticals Since 2024, the country has continuously strengthened its support policies for the innovative pharmaceutical industry, constructing a full-chain support system from expanding payment channels, adjusting the dynamic catalog, to ensuring clinical applications. The National Medical Insurance Bureau plans to release the first edition of Category B drug catalog in 2025, opening up new payment pathways for high-value innovative drugs through a synergistic model of "basic medical insurance + commercial insurance", which is expected to shorten the return period of innovative drugs and enhance research and development enthusiasm. The combination of policies has significantly shortened the market access period for innovative drugs, is expected to build a multi-level guarantee system, and continue to enhance the enthusiasm of domestic innovative drug companies for research and development. Significant improvement in the global investment and financing trend, continuous improvement in monthly investment and financing in the domestic market In January 2025, the total amount of investment and financing in the global medical and health industry showed a significant overall warming trend. According to data from Dynamic Orange, in January 2025, the total amount of investment and financing in the global medical and health industry was approximately $80.04 billion, an 88.7% year-on-year increase and a 100.5% month-on-month increase; there were about 194 investment and financing events, a 27.3% year-on-year decrease and a 26.8% month-on-month increase. The monthly investment and financing in the domestic medical and health industry continued to improve, and the number of new drug IND applications decreased slightly month-on-month. According to data from Caijing Venture Capital, in January 2025, the financing amount in the domestic Chinese medical and health industry was approximately 5.304 billion yuan, a year-on-year decrease of approximately 23.57%, a month-on-month increase of 14.11%, and a continuous improvement in monthly comparison since Q4 2024. Meanwhile, the down payment for pipeline BD transactions in China and the number of pipeline BD transactions have increased year by year, from $284 million/64 in 2018 to $5.623 billion/275 in 2024. BD transactions continue to be hot, providing a new path for rapid financing for domestic innovative drug companies and realizing the value of the innovative drug pipeline, and providing financial support for the continuous advancement of core pipelines and the opening of a new round of early research pipelines. Open up financing channels for the innovative drug industry in the primary and secondary markets, and accelerate the integration of innovative resources with capital as the link Since 2023, many innovative drug companies have raised funds through private placements, convertible bonds, and placements, providing financial support for the continuous advancement of core innovative drug pipelines within the companies. Local governments in China have established biopharmaceutical industry funds to accelerate the integration of innovative resources with capital as the link, becoming another force driving the high-quality development of the industry. Since 2023, local governments have successively established billion or even billion-level industrial investment funds, attracting social capital to early-stage research and development, clinical transformation, and other high-risk links through market-oriented operation mechanisms, driving the reshaping of China's biopharmaceutical innovation ecosystem with "capital + policy". Risk warning: risks of policy fluctuations, market fluctuations, geopolitical risks, etc.