1. Thinking this week: interpret the "14th five year plan" and implement the "manufacturing power"
On January 30, 2022, nine departments of the state jointly issued the "14th five year plan" for the development of pharmaceutical industry, which put forward the development goals of the industry in the next five years and the long-term goals of 15 years. The 14th five year plan clearly highlights key development tasks and implements the strategy of building a strong manufacturing country.
About manufacturing - modern, stable and controllable, high-end, intelligent and green. Comprehensively improve the modernization level of the pharmaceutical industry chain, realize the stability and controllability of the supply chain, promote the high-end, intelligent and green industry, build new advantages in international competition, improve the pharmaceutical supply guarantee system, and better meet the diversified and multi-level health needs of the people.
Objectives of "pharmaceutical manufacturing": ① steady growth of economies of scale. During the 14th Five Year Plan period, the average annual growth rate of operating revenue and total profits of the pharmaceutical industry remained above 8%, the proportion of added value in all industries increased to about 5%, and the concentration of leading enterprises in the industry further increased. ② The industrial chain and supply chain are stable and controllable. The advantages of large-scale and systematization of pharmaceutical manufacturing have been further consolidated. Breakthroughs have been made in a number of key common technologies for industrialization, and positive results have been achieved in making up for weaknesses in key fields. A number of key enterprises with leading and driving ability of industrial ecology in subdivided fields have been cultivated. ③ Manufacturing level system improvement. The development level of green, digital and intelligent enterprises has been significantly improved, the safety technology and management level have been effectively improved, and the ability of production safety risk management and control has been significantly enhanced.
In the key tasks of the plan, ① "improving the stability and competitiveness of the industrial chain" is mentioned. It is clearly proposed to enhance the advantages of the industrial chain, encourage enterprises to continuously strengthen the advantages of systematic manufacturing, consolidate the advantages of API manufacturing, create the integration advantages of "API + Preparation", and encourage the development of biotechnology industrialization. ② "Promote the upgrading of pharmaceutical manufacturing capacity system", the specific requirements are (1) improve the quality management level and product quality of drugs and medical devices in the whole life cycle; (2) Promote the development of high-end, intelligent and green pharmaceutical industry; (3) Promote the integration of new generation information technology and manufacturing systems such as Internet, big data, blockchain and artificial intelligence, and improve the quality, efficiency and core competitiveness of the whole industry.
We believe that the key words of this strategic industrial planning are "innovation" and "manufacturing". These include the guarantee of manufacturing and supply of innovative drugs and the green, intelligent and high-end innovation and upgrading of manufacturing. It confirms the main line of "grasping manufacturing and welcoming innovation" proposed in our annual strategy in 2022.
2. China's biweekly resumption
China: volume fell, and the valuation has been lower than the historical center. From January 24, 2022 to January 28, 2022, the sector fell 6.91% in the last week before the medical Festival, underperforming the CSI 300 index by 2.40pct; The pharmaceutical outsourcing sector fell 6.81%, outperforming the pharmaceutical sector by 0.31pct. Since the beginning of 2022, the pharmaceutical sector has fallen by 15.23%, underperforming the CSI 300 index by 7.61 PCT, and the pharmaceutical outsourcing sector has fallen by 18.53%, underperforming the CSI 300 index by 10.91 PCT.
In terms of individual stocks, in the last week before the festival, except for the cumulative rise and fall of Joinn Laboratories (China) Co.Ltd(603127) (+ 0.29%), the other stocks fell significantly. Among them, viabio fell 22.17% in a single week due to the fluctuation of MPP authorization, and Pharmablock Sciences (Nanjing) Inc(300725) fell 17.86% due to the lower than expected financial report. We believe that the performance of CXO in 2022 is related to the switching of market valuation, covid-19 epidemic, the disturbance of the industrial chain to the market and the disclosure of performance forecast. It is suggested to continue to pay attention to the new trend of covid-19 industrial chain and the performance disclosure period may exceed the expected target.
Overseas differentiation is obvious, focusing on the performance exceeding the expected target. From January 24, 2022 to February 4, 2022, overseas leading outsourcing companies rose by 1.08% in total, underperforming the MSCI medical health index by 1.04pct. From the perspective of individual stocks, the differentiation has been obvious in the past two weeks. Icon and syneos led the rise of the sector, with a cumulative rise of 4.34% and 2.84%. Codexis and Samsung biology led the decline, falling 9.28% and 6.90% respectively. We believe that since the beginning of the year, overseas CXO companies have fluctuated significantly due to the tightening of capital liquidity, the disclosure of annual reports and the covid-19 epidemic.
Industry dynamics follow-up: Samsung acquired bioepis and catalyst enhanced CGT.
3. Industry boom tracking
The prosperity of domestic innovative drug ind application continues, and the number of domestic biological drug ind applications significantly exceeds that of imports. According to CDE data, after entering 2020, the total number of domestic innovative drug ind applications began to surpass the import data. As of February 6, 2022, there were 73 ind of class 1 chemical drugs and 72 ind of biological drugs in China; The number of imported class 5.1 chemical drugs is 9, the number of imported class 1 chemical drugs is 21, and the number of imported biological drugs is 19.
CXO investment and financing trends: Pryce submits registration and Taimei technology submits prospectus.
4. Investment suggestions
It is emphasized that the improvement of supply side capacity will lead to the simultaneous increase of volume and price of front-end cro and the enhancement of global participation of back-end cdmo. We recommend focusing on: Hangzhou Tigermed Consulting Co.Ltd(300347) , Wuxi Apptec Co.Ltd(603259) , Joinn Laboratories (China) Co.Ltd(603127) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Pharmaron Beijing Co.Ltd(300759) , Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) , Porton Pharma Solutions Ltd(300363) , Fangda holdings, Pharmablock Sciences (Nanjing) Inc(300725) , Shanghai Medicilon Inc(688202) .
