The NRDL/CIDL adjustment process started early, and UBS maintains its preferred approach to China healthcare
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The NRDL/CIDL adjustment process started early, and UBS maintains its preferred approach to China healthcare
UBS's weekly review shows that the A/H healthcare sector declined overall, but policy adjustments, innovative drug approvals, pharma partnerships, and financing activity continue to provide structural catalysts for the industry.
- From May 11 to 15, HSHCI/HSBIO fell 5.4%/5.3%, while the Shenwan Healthcare A/H indices fell 2.8%/3.6%, respectively.
- The 2026 NRDL and CIDL adjustment consultation drafts were released earlier than in 2025; the adjustment work is planned to be completed by the end of May, with results to be announced by the end of November.
- UBS preferred names include BeOne, WuXi XDC, JD Health, and 3SBio, and the charts list multiple Buy-rated names across sub-sectors.
- Drug-related events include Hengrui's collaboration with BMS on 13 pre-clinical projects, BeOne's sonrotoclax receiving accelerated approval in the U.S., and SBP's collaboration with GSK to commercialize bepirovirsen.
Report interpretation
Overview
This report is UBS's weekly review of the China healthcare sector, focusing on A/H share performance, progress in NRDL/CIDL policy adjustments, news on pharmaceutical and non-pharmaceutical companies, recent thematic reports, and industry charts. The report believes that the healthcare sector broadly pulled back this week, but innovative drug policy, the commercial insurance innovative drug list, pharma global collaborations, approval progress, and financing data remain key areas to watch going forward.
Core views
First, the A/H healthcare indices fell this week, with some H-share sub-sectors posting deeper declines, while A-share commercial and H-share traditional Chinese medicine segments relatively outperformed. Second, the 2026 NRDL/CIDL adjustment process is earlier than in previous years, and the overall rules largely continue the 2025 framework, with key changes including NRDL pre-application, an additional window after conditionally approved drugs convert to standard approval, application opportunities for drugs with the same generic name, and direct NRDL application for CIDL drugs. Third, UBS continues to emphasize structural opportunities in innovative drugs, CRO, online pharmacies, and selected pharmaceutical companies. Fourth, sector risks remain concentrated in VBP price cuts, intensifying competition, NRDL negotiation prices coming in below expectations, slower-than-expected consumption recovery, stricter regulation, and geopolitical disruptions.
Analysis framework
The report combines weekly market performance review, policy event interpretation, company news tracking, horizontal comparison across sub-sectors, stock-selection catalyst analysis, and industry financing/expert-call tracking.
Methodology notes
Use index and sub-sector price changes to measure short-term market sentiment and capital preferences.
The report compares HSHCI, HSBIO, the Shenwan Healthcare A/H indices, and healthcare sub-sector performance to identify relative strength and weakness during the week.
Track the adjustment timetable, application scope, and negotiation/renewal rules for the national reimbursement drug list and the commercial insurance innovative drug list.
The report compares the 2026 consultation drafts with the 2025 process, highlighting the earlier timetable and several changes to application windows.
Screen key names by combining valuation, earnings growth, product pipelines, approval progress, collaboration deals, and market-share changes.
The report lists preferred names such as BeOne, WuXi XDC, JD Health, and 3SBio, along with their potential catalysts.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- BeOneUBS preferred biotech name
- Strengths
- Rapid net profit growth, strong global position in hematologic oncology, and multiple 2026 solid-tumor candidates with proof-of-concept opportunities.
- Weaknesses
- Innovative drug R&D and commercialization involve clinical, approval, and competitive uncertainties.
- Comparison
- UBS believes its P/E multiple is attractive relative to Chinese pharmaceutical peers.
- Risks
- R&D failure, approval delays, and NRDL negotiation prices below expectations.
- WuXi XDCUBS preferred CRO/CRDMO name
- Strengths
- Benefiting from demand for bioconjugate drug R&D and commercial production, with visible revenue and profit momentum.
- Weaknesses
- Sensitive to external orders, global customer demand, and capacity utilization.
- Comparison
- UBS believes its PEG valuation is attractive.
- Risks
- Slower bioconjugate demand, intensifying competition, and geopolitical disruptions.
- JD HealthUBS preferred online pharmacy name
- Strengths
- Rising online drug penetration, market-share gains, and stable operating margins support revenue growth in 2026.
- Weaknesses
- The platform business may be affected by consumption recovery, regulation, and competition.
- Comparison
- UBS believes it has room to beat guidance and market expectations.
- Risks
- Intensifying online pharmacy competition, slower-than-expected consumption recovery, and policy changes.
- 3SBioUBS preferred pharmaceutical name
- Strengths
- Attractive valuation, potential milestone income from licensing, and data readouts provide catalysts.
- Weaknesses
- Earnings are sensitive to pipeline progress and the timing of license-income recognition.
- Comparison
- Listed as a UBS preferred name within the pharmaceutical sector.
- Risks
- Clinical data below expectations, uncertainty around licensing transactions, and NRDL pricing pressure.
- China healthcare sectorSector allocation and policy-tracking target
- Strengths
- Innovative drug approvals, commercial partnerships, financing recovery, and aging demographics provide long-term drivers.
- Weaknesses
- Short-term index pullback, with some H-share sub-sectors posting sharp declines.
- Comparison
- A-share commercial and H-share traditional Chinese medicine segments outperformed this week, while H-share medical devices and biopharmaceuticals were weaker.
- Risks
- VBP price cuts, intensifying competition, tighter regulation, and geopolitical risk.
Key data
- HSHCI weekly performance-5.4%Statistics cover May 11 to 15.
- HSBIO weekly performance-5.3%Statistics cover May 11 to 15.
- Shenwan Healthcare A-share index weekly performance-2.8%Ranked 17th among A-share industries.
- Shenwan Healthcare H-share index weekly performance-3.6%Ranked 26th among H-share industries.
- NRDL/CIDL adjustment progressAdjustment work planned to finish by the end of May, with results announced at the end of NovemberThe timetable is materially earlier than the 2025 schedule, when work started in July and results were announced on December 7.
- Hengrui and BMS collaboration13 pre-clinical projectsUBS holds a positive view on the Co-Co model.
- WuXi AppTec convertible bondRmb6.78bnZero-coupon convertible bond issuance plan.
- Takeda's FY26 sales guidance for FRUZAQLAUS$460m, YoY +25%Above UBS expectations.
Impact & implications
The earlier policy timetable means that companies related to innovative drugs and the commercial insurance innovative drug list may face a faster approval, access, and negotiation cadence, and the market needs to track application eligibility, list conversion, and renewal price impacts earlier. The sector remains under short-term pressure, but companies with global collaborations, innovative drug approvals, clear earnings growth, and attractive valuations may still outperform.
Risks
- VBP price cuts larger than expected.
- Intensifying industry competition.
- NRDL negotiation prices for innovative drugs below expectations.
- China's consumption recovery slower than expected.
- Regulatory announcements and enforcement stricter than expected.
- An unexpected rise in geopolitical tensions affecting company operations.
- Drug approvals, clinical trials, and commercialization progress falling short of expectations.
What to watch
- The final 2026 NRDL/CIDL adjustment rules and the results due at the end of November.
- The implementation details of NRDL pre-application, direct NRDL application for CIDL drugs, and the rules for moving from negotiation to the regular list.
- Progress on Hengrui's collaboration projects with BMS and the implementation results of the Co-Co model.
- BeOne's commercialization progress after sonrotoclax was approved in the United States.
- Approval and clinical-data progress for innovative-drug pipelines at Kelun, SBP, Hansoh, CSPC, and others.
- China healthcare financing activity, VC/PE, IPO, and refinancing trends.
- Capital rotation across A/H healthcare sub-sectors and the realization of catalysts for preferred stocks.