CITIC Securities; "Dual Catalogue" makes its first appearance, entering a new stage in multi-level medical supplementary insurance system.

CITIC Securities stated that the National Medical Security Administration released the "Announcement on the Preliminary Examination of Drugs and Related Information on the Adjustment of the Drug Catalogue for National Basic Medical Insurance, Maternity Insurance, Work-related Injury Insurance, and Commercial Insurance Innovative Drug Catalogue by 2025". We believe that the debut of the Commercial Insurance Innovative Drug Catalogue is of landmark significance, beneficial for the development of commercial insurance and expansion of the payment end, and more conducive to the construction of a multi-level medical security system and innovation in the pharmaceutical industry. This time, the introduction process of the basic medical insurance and commercial insurance innovative drug catalogues is relatively fast, with drug variety and quality exceeding expectations, and a wide range of categories included, demonstrating the National Medical Security Administration's new definition of "innovation". Continuing our investment strategy viewpoint for the second half of 2025, embracing innovation-driven and the reform of internationalization + independent controllability + out-of-hospital marketing model will be a relatively more certain layout direction in the second half of the year. Considering that besides overseas achievements in the innovative drug sector, there is also strong support from domestic policies, we believe that the era of true innovation and true internationalization in the pharmaceutical industry will bring returns, and is expected to drive the sector steadily upward. It is recommended to layout around the three areas of "innovation-driven and internationalization + independent controllability + out-of-hospital marketing model reform" in the second half of the year, especially focusing on the most beta-effective innovative drug sector.