Core view:
The overall valuation is in a reasonable range, and the industrial data has achieved restorative growth. In the past year, the overall decline of pharmaceutical biology was 22.33%, 7.81 percentage points lower than the CSI 300 index, and ranked 31 among the 31 Shenwan industries. Among the sub sectors, only API and traditional Chinese medicine rose, with an increase of 19.10% and 12.45% respectively, while other biological products fell the most, with a decrease of 45.50%. As of January 26, 2022, the PE (TTM) of shenwanyi pharmaceutical industry is 30.30 times, and the latest premium rate relative to Shanghai and Shenzhen 300 is 125%, which is at the historical low level of the industry and in the middle and upper reaches of Shenwan's 31 first-class industries. In terms of industrial data, according to the data of the National Bureau of statistics, from January to November 2021, enterprises above Designated Size in the pharmaceutical manufacturing industry realized an operating revenue of 2.61 trillion yuan, a year-on-year increase of 20.90%, an increase of 20.83% compared with the same period in 2019, and a two-year compound growth rate of 9.92%; The total profit was 540.35 billion yuan, a year-on-year increase of 70.80%, an increase of 90.08% compared with the same period in 2019, and the two-year compound growth rate was 37.87%.
The global epidemic prevention and control situation is still grim, and vaccine and drug research and development have brought industrial technological breakthroughs. In November 2021, the Omicron variant was found in South Africa, which quickly spread all over the world, with up to 3.8 million new cases in a single day. The epidemic broke out again in France, the United States and other places. The global covid-19 vaccination has been accelerated on a large scale. As of January 23, 2022, 99.10 doses of covid-19 vaccine have been vaccinated worldwide, and the vaccination proportion (number of complete vaccinations / total global population) has exceeded 50%. The research and development of covid-19 vaccines and drugs has brought important technological breakthroughs to medicine. For example, the listing of covid-19 mRNA vaccine has made mRNA technology get unprecedented attention, leading to major changes in the vaccine industry. Covid-19 epidemic has brought a new test to the R & D ability of enterprises, accelerated the introduction and application of new technologies, promoted the iterative upgrading of China Meheco Group Co.Ltd(600056) industry technologies, and improved the innovation and R & D ability of Chinese enterprises.
The industry policy direction is clear and innovation is the main direction. The medical insurance catalogue has entered the era of dynamic adjustment. The annual dynamic adjustment will make room for more new drugs and good drugs to be included in the medical insurance catalogue by transferring out drugs with low clinical value, negotiating to reduce the obviously high drug prices in the catalogue, and negotiating the expired drug prices in special negotiations, so as to continue to promote the "cage for birds" of the medical insurance fund. At the same time, the annual negotiation timely included high-value innovative drugs into the medical insurance catalogue, and accelerated the large-scale production of innovative drugs in the way of "quantity for price"; The continuous in-depth purchase of drugs with volume and the implementation of centralized purchase of high-value consumables have forced Chinese enterprises to innovate and transform to greater profit space and promote the upgrading of China Meheco Group Co.Ltd(600056) industrial structure.
Domestic innovative drugs have entered the golden harvest period and gradually opened the road of internationalization and upgrading. With an endless stream of incentive policies, the reform of the examination and approval system, and the continuous increase of investment in talents and R & D, China's innovative drugs have ushered in the spring of development. After years of rapid development, China has established a local innovation ecosystem. In order to seek greater R & D returns, enterprises have begun to adopt licenseout+ independent development mode to integrate with the international market and open up the era of internationalization. In addition, the development of innovative drugs in China has experienced from scratch and blind homogeneous competition, and has entered a new upgrading stage, gradually transforming from meto to better / best and first class. In the process of industrial upgrading, in the future, whether in the Chinese market or overseas market, pharmaceutical enterprises need to make differentiated and clinically valuable innovations in terms of targets and indications. Only enterprises with real innovation strength can gain a foothold in the industry.
Investment strategy:
The overall development of the industry is good, the traditional generic pharmaceutical industry continues to be under pressure, and innovation is still the main theme of development. The research and development of innovative drugs in the world and China is booming, and new discoveries, new technologies and new fields are emerging to accelerate the rapid development of industry and industrial chain. We have excavated the following tracks for investors' reference. It is suggested to actively pay attention to the marginal changes of industrial policies, the changes of product competition pattern of relevant enterprises and the value of R & D pipelines.
McAb: domestic products are on the market, and the Chinese market will usher in a period of rapid development. At present, the research and development of monoclonal antibodies in China is quite popular, with many participants, especially in the field of PD-1 monoclonal antibodies and popular target star monoclonal antibody analogues. Domestic monoclonal antibodies have entered the stage of fierce competition. We believe that enterprises with strong R & D technical strength, rich pipelines, reasonable gradient, rapid progress, large production scale, good cost control ability and prominent differentiation advantages are more competitive. We suggest paying attention to Jiangsu Hengrui Medicine Co.Ltd(600276) , Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) , Shanghai Junshi Biosciences Co.Ltd(688180) .
Vaccine: domestic heavy varieties have been listed one after another, and the prosperity of the industry has continued to improve. China's vaccine industry will be in a state of high prosperity for a long time: (1) class II vaccine is the main profit source of the industry. It is self funded vaccine with low penetration rate and huge market space in the future. Moreover, this kind of vaccine does not occupy the medical insurance fund, so it is less likely to be included in volume procurement; (2) The industry supervision will be further upgraded, and the concentration will continue to improve. In the future, it will develop in a large-scale and intensive manner; (3) The iterative upgrading of vaccine technology has been accelerated, and heavy products have been listed one after another. Domestic innovation has become the supporting point to promote the sustainable growth of the industry market. We suggest paying attention to Chongqing Zhifei Biological Products Co.Ltd(300122) , Shenzhen Kangtai Biological Products Co.Ltd(300601) , Walvax Biotechnology Co.Ltd(300142) and other high-quality vaccine leading enterprises with listing (including agency), heavy research or exclusive products, production and R & D strength.
Car-t therapy: leading cancer treatment into a new era, China's research and development is hot. Car-t therapy is a new type of biological drug product, which has excellent curative effect in the field of cancer, especially blood tumor. China is one of the leading countries of car-t R & D in the world, and the market can be expected in the future. Due to the complexity of car-t manufacturing process, long production cycle and lack of standardized supervision, it is still a highly personalized treatment. China's industrialization is facing many challenges, such as supervision (industrial chain, transportation, etc.), patient payment accessibility, production standardization, treatment control, clinical effectiveness and so on. In the future, with the increasing improvement of industry supervision and the continuous improvement of technical level, the industrialization process of China's cellular immunotherapy industry will gradually start. We suggest paying attention to enterprises with rapid research progress, excellent clinical data, high degree of industrialization and strong commercialization ability.
Life research reagents: the scale of China's market is expanding rapidly, and the proportion of domestic products will gradually increase. Although China's biological research reagent market started late, driven by relevant national policies and downstream industries, with the continuous investment and rapid development of life science research, the market scale expanded rapidly. In the future, with the rapid development of China's biological industry and the continuous improvement of technical level, the market share of domestic biological research reagents may continue to increase, and the market concentration of the industry will continue to increase. It is suggested to pay attention to domestic high-quality listed companies Sino Biological Inc(301047) , Acrobiosystems Co.Ltd(301080) , Nanjing Vazyme Biotech Co.Ltd(688105) .
CXO: innovative drug R & D promotes rapid development, and the industry concentration is expected to increase. Benefiting from the global and Chinese R & D boom of innovative drugs, the industry continued to grow at a high speed. China's CXO industry presents a multi, small and scattered pattern, with low market concentration. In the future, with the promotion of industrial policies and the improvement of China's drug quality standards, the concentration of China's CXO industry is expected to be further improved. We suggest paying attention to industry leaders and market segments, such as Wuxi Apptec Co.Ltd(603259) , Pharmaron Beijing Co.Ltd(300759) .
Risk tips:
Industry policy risk, drug safety risk, R & D risk, performance failure risk, medical accident risk, covid-19 epidemic risk.
