Background: in the past six months, with the popularization of covid-19 vaccination and the further highlighting of the need to strengthen vaccination recently, the market has paid more and more attention to the production capacity of pharmaceutical glass bottles for storing and transporting vaccines, which has also paid more attention to the upgrading of pharmaceutical glass industry with the internationalization and quality upgrading of China Meheco Group Co.Ltd(600056) . This topic explores investment opportunities in the pharmaceutical glass industry from the perspectives of industry development trend, production technology and policy assistance.
China’s medicinal glass is in the transition stage from sodium calcium glass and low borosilicate glass to medium borosilicate glass, and the industrial upgrading is at the right time. According to industry data, China’s annual demand for borosilicate glass will increase several times in recent five years (see industry data, assumptions and projections on pages 12-13 of the text for details).
Driving factor 1: with the continuous improvement of people’s health awareness and the increasing aging of the population, the problem of drug storage safety is becoming more and more prominent. Drug glasses need to choose safer and more assured materials. Medicinal glass can be divided into sodium calcium glass, low borosilicate glass, medium borosilicate glass and high borosilicate glass according to the boron content. Today, China’s pharmaceutical packaging is still dominated by low borosilicate and sodium calcium glass, and the penetration rate of medium borosilicate glass bottles is only 7% – 8%. Due to the potential safety hazards of low borosilicate medicinal glass bottles, medium borosilicate glass bottles have been widely used in foreign countries. We believe that China’s pharmaceutical glass will gradually upgrade towards borosilicate glass.
Driving factor 2: driven by the approval policies of consistency evaluation and correlation review, the demand for borosilicate glass has increased. The consistency evaluation proposed that in order to ensure the consistency between the drug quality and the reference preparation, the quality and performance of the packaging materials and containers used for injection should not be lower than that of the participating preparation; The review and approval of association shall propose the approval of association between drugs and pharmaceutical packaging materials and excipients. Driven by the two policies, pharmaceutical manufacturers prefer to choose borosilicate glass products with better performance, especially the borosilicate products of pharmaceutical packaging materials companies whose brands are recognized by pharmaceutical manufacturers.
Driving factor 3: covid-19 vaccine strengthens the vaccination of needles, driving the rapid development of pre encapsulated syringes. Pre filling syringe is the drug packaging material that directly fills the syringe with drugs. It is a medium borosilicate drug glass product with more complex manufacturing process than ampoule bottle and Xilin bottle. It is the mainstream packaging material for storing vaccines. With covid-19 mutant repeatedly superimposed with factors such as cold temperature in winter, it is necessary to inoculate booster needles on the basis of the original vaccination procedure, which is expected to bring a new round of increase in the demand for pre potted syringes.
Medium borosilicate glass tubes depend on imports. Overcoming the medium borosilicate tube making process is the key to realize rapid replacement. CBSI pipe making process is still in the state of foreign monopoly, with Schott of Germany, Corning of the United States and neg of Japan accounting for nearly 80% of the global market share. There are many manufacturers of controlled bottles in China, but only a few have the ability to produce their own medium borosilicate glass tubes. Most manufacturers use imported medium borosilicate tubes and then process them into medium borosilicate tubes for bottle making. In order to realize the rapid replacement of medium borosilicate glass, it is necessary to break the monopoly of upstream imported medium borosilicate glass tubes and produce domestic medium borosilicate glass tubes with the same or better quality as imported glass tubes.
Investment advice
We are optimistic about companies that have bottle making technology, have a certain scale of pharmaceutical glass production, and have self-produced borosilicate glass tube technology and ongoing research and development of borosilicate glass tube process. We suggest paying attention to Shandong Pharmaceutical Glass Co.Ltd(600529) , Chongqing Zhengchuan Pharmaceutical Packaging Co.Ltd(603976) , Shandong Linuo Technical Glass Co.Ltd(301188) ; We are optimistic about the new round of rising demand for pre encapsulated syringes, and we suggest paying attention to Weigao shares.
Risk tips
The risk that the research and development of medium borosilicate glass tube technology is lower than expected; The risk that the recognition of domestic borosilicate medicine glass products is lower than expected; The risk of international giants setting up factories in China to compete with domestic manufacturers.
