HEALTH CARE：PACE OF LOCAL POLICY ROLLOUTS IN LINE WITH EXPECTATION
We tracked the specific implementation measures of thetwo-invoice system in the 11 provinces piloting thecomprehensive health care reform. In late April, the NationalHealth and Family Planning Commission required the setup of atimetable and the development of specific measures for therollout of the two-invoice system by the end of June.
Pace of policy rollouts in line with expectation; awaitpolicy moves in Shanghai and Jiangsu. 1） Among the 11pilot provinces, seven have officially rolled out theimplementation plan, including Fujian, Anhui, Shaanxi,Chongqing, Qinghai, Sichuan and Hunan. Zhejiang has rolled outa draft for comments; Shanghai, Jiangsu and Ningxia have notunveiled their plans. 2） Among others, four have rolled out theirplans, including Liaoning, Gansu, Hainan and Heilongjiang; InnerMongolia has issued a draft for comments.
Local policies consistent with the national plan;all-around implementation expected in 2018. 1） Thepolicy of Chongqing regards domestic general agents asproducers, while that of Anhui, Hunan, Chongqing, Gansu andZhejiang considers marketing authorization holders asproducers. 2） Qinghai and Shaanxi incorporate medical suppliesinto their plans. 3） Local implementation will start from July 1,2017 at the latest. 4） The transitional period will be 3~6 months.5） Gansu plans to adopt a phased implementation.
The drug price information monitoring system isexpected to be improved.
Bellwethers and companies with a large share of directsales to hospitals will benefit from the potential industryconsolidation in 2017.
Valuation and recommendation
We favor SPH-A/H. Maintain earnings forecasts for thecompanies in our universe. Risks: Policy rollouts disappoint.
□ .Y.a.n.y.i.n. .Z.H.U./.P.e.n.g. .Z.O.U./.J.i.n.g. .Q.I.A.N.G .中.国.国.际.金.融.股.份.有.限.公.司