Due to the pricing mechanism, the current financial status of the hospital is the profitability of medicines, consumables, and inspection items, and the hospital service items are basically loss-making. The current payment method is that the medical insurance pays the hospital according to the project, and pays each medicine, each check, and each set of consumables to the hospital. Therefore, the hospital and the doctor have the incentive to open more medicines, do more inspections, and use more expensive consumables. Medical services do not constitute power per se.

"The reform of the medical insurance payment system will face more opportunities for high-quality generic drugs," said U.S. U.S. pharmaceutical industry analyst Ji Xu on the 15th at the "UBS Greater China Conference."

Seasonal sequence I predict that the domestic payment system reform will be divided into three steps. First, the total amount of prepayments that will be pushed gradually will enable the hospitals to display their supernatural powers. The substitution of imported medicines and high-value consumables has already taken the lead and will gradually spread in the future. At the same time, the cancellation of drug additions and the increase in service prices have further adjusted the hospital's profit orientation, and the profitability of drugs has weakened.

Second, the prices of medical service items will be fully adjusted at the end of 2013, which is expected to increase the profitability of medical services generally, and ordinary consumables and detection reagents will be converted into cost items.

Third, after 2014, single-disease payouts and simple DRGs (grouped by disease diagnosis) are expected to be universally implemented, which will gradually evolve toward comprehensive DRGs, combine total control, and reduce the driving force for spending on medicines, consumables, and equipment, and will gradually become popular.

Through the changes and impacts of the aforementioned health insurance payment model, UBS Securities has determined that generic drugs or consumable manufacturers with certain brands, certain technologies or quality advantages will gain market opportunities.