CITIC Construction Investment | Core Recommendations in Medical and Healthcare this Week

《National rollout of long-term care insurance: driven by aging and policy, unlocking a new blue ocean for the silver economy》

China is actively advancing the long-term care insurance (LTCI) system. We conducted research and comparisons of LTCI policies in selected key overseas countries and believe that China’s LTCI policy design is relatively sound. The National Healthcare Security Administration is pushing hard; by the end of 2028, basic nationwide unified coverage is expected to be achieved. This is of great significance for people who are unable to care for themselves and for their family members. Based on our calculations, China’s total LTCI premium scale is expected to reach around RMB 180 billion within five years. In the long run, it will drive incremental demand for care services exceeding RMB 1 trillion, boosting domestic demand within related industries. We see investment opportunities in some companies related to home medical devices, medical equipment, and elderly care services.

2026 is the first year of nationwide promotion of China’s LTCI system, and nationwide coverage is expected to be achieved by 2028. On March 25, 2026, the General Offices of the CPC Central Committee and the State Council issued the “Opinions on Accelerating the Establishment of a Long-Term Care Insurance System.” In 2026, the LTCI system will shift from localized pilots to nationwide implementation. We estimate that in the initial stage of the system’s establishment, the total LTCI premiums nationwide will be about RMB 130 billion. When the system matures in around five years (in some provinces and for urban and rural residents, the LTCI premium rate increases to 0.3% after five years), it will grow to RMB 187 billion.

Judging from research experiences in countries such as those in Europe and the United States and Japan, under China’s social insurance-type policy, the proportion of people with disabilities who lack care is relatively small. Long-term care policies are categorized by their financing structure and coverage into: social insurance-type, social welfare-type, and social assistance-type. China belongs to the social insurance-type. Japan’s long-term care insurance system has been in operation for 25 years, offering lessons for China’s LTCI development. As aging deepens, China’s expected long-term care costs as a share of GDP are projected to rise. Similar to some overseas countries, China’s LTCI enrollees can choose independently among home care, community care, and institutional care, and the policy encourages home and community care.

China’s aging is accelerating, bringing demand for incremental care services at the trillion-yuan scale. We expect domestic long-term care market demand to grow from RMB 970 billion in 2024 to around RMB 2 trillion. The driving forces come from: 1) faster aging increasing the number of people with disabilities who need long-term care, and 2) as the share of elderly people rises and other factors, the care spending per disabled elderly person increases.

The release of the LTCI service catalog may benefit multiple sub-sectors of care. The “National Long-Term Care Insurance Service Project Catalog (Trial)” released in September 2025 clearly specifies 36 service standards, including 20 services in the living care category and 16 projects in the medical care category. As the population covered by LTCI expands and financing mechanisms improve, demand for long-term care services will accelerate. Medical care equipment, home-based elderly care services, and professional nursing institutions, among other sub-sectors, will directly benefit. As LTCI rolls out nationwide, it will help address the industry’s difficulties by promoting growth in elderly care beds (maintained at 5.18 million beds from 2022 to 2024), and improving occupancy rates (expected not to exceed 50% in 2024), thereby energizing the institutional elderly care market.

Risk disclosures: risks that policy advancement falls short of expectations; risks that listed companies’ performance benefits fall short of expectations; risks of intensifying market competition; risks of short supply at the industry supply side; risks from policy adjustments and compliance.

Report source

Report title (Securities Research Report): “National rollout of long-term care insurance: driven by aging and policy, unlocking a new blue ocean for the silver economy”

External release date: March 29, 2026

Report issuing institution: CITIC Construction Investment Securities Co., Ltd.

Analyst(s) of this report:

Yuan Qinghui SAC No.: S1440520030001

SFC No.: BPW879

Wang Zaicun SAC No.: S1440521070003

Wu Yan SAC No.: S1440524060003

Li Hongda SAC No.: S1440521100006

Liu Huibin SAC No.: S1440523050001

Hua Ran SAC No.: S1440525100002

He Juying SAC No.: S1440517050001

SFC No.: ASZ591

《Medical Device Industry Weekly》

The medical device sector had some adjustments in the prior period. This week, rebound came on Friday. We expect opportunities for low-position布局 (low-level entries) in high-quality individual stocks. This week, A-shares such as Jingren Biotech, Jiu’an Medical, Kangzhong Medical, and others saw relatively larger rebounds among certain companies with innovative drug and AI-related business setups. In Hong Kong shares, MicroPort Robotics and AiKang Health disclosed strong 25-year performance, with relatively larger increases. With the National Healthcare Security Administration pushing hard on the LTCI system, we like investment opportunities in home medical devices, rehabilitation medical equipment, and elderly/geriatric hospitals or service institutions. We recommend increasing allocation to the medical device sector in 2026. In the short term, we recommend focusing on opportunities for companies whose 2026 performance improves and where earnings and valuations are repaired. Many leading companies in sub-sectors of the medical device industry are expected to see accelerated growth in 26. Meanwhile, we also recommend paying attention to new technology directions such as surgical robots and brain-computer interfaces. In the long run, investment opportunities for the sector come from innovation, going overseas, and M&A integration. The sector’s innovation and internationalization capabilities have been recognized, and valuations are being rebuilt.

Summary: The inflection point for the medical device sector is approaching. In 2026, companies with improving performance have opportunities for performance and valuation repair. Focus on companies whose growth accelerates in 26 compared with 25. In the future, they are expected to achieve a “double uplift” in performance and valuation. For A-shares in the medical device sector, we recommend focusing on investment opportunities related to performance repair and going overseas. For Hong Kong shares, focus on the sector effects brought by the listing of multiple high-quality medical device companies, as well as layout opportunities as several leading companies in sub-sectors gradually release profits and offer relatively low valuations.

Long-term investment opportunities in the medical device sector come from innovation, going overseas, and M&A integration. The sector’s innovation and internationalization capabilities have been recognized, and valuations are being reassessed. After the medical innovation/drugs sector surged, the medical device sector has products featuring improvement-driven innovation and breakthrough innovation with global competitiveness being gradually recognized. A number of companies are also actively expanding a second growth curve and achieving high growth in overseas businesses, with valuations rising.

We recommend continuously tracking investment opportunities in innovative device sub-sectors with large market potential and low rates of domestic substitution, as well as thematic directions such as M&A restructuring, brain-computer interfaces, AI medical care, surgical robots, exoskeleton robots, and so on. We also recommend focusing on relevant catalysts in areas such as clinical trials, registration, volume ramp-up, and going overseas for innovative medical devices, such as products like PFA, RDN, TAVR, and others. There are many potential catalysts; stocks in certain directions may see gains of several times. In the future, AI medical care, brain-computer interfaces, and other new technology directions are also expected to become key focus areas for investors.

Risk disclosures:

Industry policy risk: the risk that research and design requirements change due to adjustments in industry policies; the risk that pricing changes; the risk that volume-based procurement policies change; and the risks that the scope and reimbursement ratios of medical insurance change. In particular, changes to central procurement and medical insurance payment policies can have a major impact on industry development expectations. Research and development (R&D) not meeting expectations risk: during the R&D process of new drugs and devices, there are risks such as uncertainty in clinical enrollment progress and uncertainty in efficacy and safety outcome data. Approval not meeting expectations risk: in the approval process, there is a risk that the approval timeline is extended due to factors such as requests for additional materials and changes in approval procedures. Macroeconomic environment volatility risk: global economic growth slows further, which may affect downstream demand. In addition, risks related to international relations, climate change, inflation, as well as exchange rates and interest rates must also be considered.

Report source

Report title (Securities Research Report): “Medical Device Industry Weekly”

External release date: March 29, 2026

Report issuing institution: CITIC Construction Investment Securities Co., Ltd.

Analyst(s) of this report:

Yuan Qinghui SAC No.: S1440520030001

SFC No.: BPW879

Wang Zaicun SAC No.: S1440521070003

SFC No.: BVA292

Zhu Hongliang SAC No.: S1440521080001

Zheng Tao SAC No.: S1440524060004

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