The changes in the plan focus on innovation internationalization, supply side reform of APIs and traditional Chinese medicine
The 14th five year plan points out that “the average annual growth rate of operating revenue and total profits of the pharmaceutical industry will remain above 8%, and the proportion of added value in all industries will increase to about 5%. During the 13th Five Year Plan period, the added value of the pharmaceutical industry above designated size increased by 9.5% annually, 4.2 percentage points higher than the overall industrial growth rate, and the proportion in the total industrial added value increased from 3.0% to 3.9%; The operating revenue and total profit of Enterprises above designated size increased by 9.9% and 13.8% respectively. Since the scale of the industry has reached more than 3 trillion yuan, the growth rate of more than 8% in the 14th five year plan is not low, which is higher than the market expectation. Previously, due to factors such as centralized procurement and medical insurance negotiation, the market was pessimistic that the growth rate of the pharmaceutical industry would be the same as that of GDP.
Innovation, international sales first mentioned in the 14th five year plan, “The level of industrial chain modernization has been significantly improved, the supply guarantee system of pharmaceutical machinery has been further improved, internationalization has moved towards high-end in an all-round way, and international development has been accelerated in an all-round way. Pharmaceutical exports have maintained growth; a number of world-famous brands have been cultivated; and a number of large pharmaceutical companies with global layout of R & D and production and high proportion of international sales have been formed.”. From the reference to medical insurance in the plan, it is recognized by the medical insurance bureau. In the future, the competition of Chinese pharmaceutical enterprises must be the global market. Only China’s BIC / FIC is difficult to win the recognition of CDE and medical insurance.
Breakthroughs have been made in the “going out” of traditional Chinese medicine and proprietary Chinese medicine. Guided by clinical value, we will carry out the research and development of new traditional Chinese medicine in various ways, such as the combination of disease and syndrome, special disease and syndrome drugs, and focus on the research and development of traditional Chinese medicine compound preparations based on ancient classic and famous prescriptions, as well as the transformation of traditional Chinese medicine preparations in medical institutions into new traditional Chinese medicine; Carry out the secondary development of Chinese patent medicine and develop large varieties of traditional Chinese medicine. There will be several bigpharma in traditional Chinese medicine, and the peak sales of single products will exceed the large varieties of chemical and biological drugs.
Intermediates and APIs will undergo supply side reform similar to chemical industry. The plan points out that the green production and layout of API still need to be solved. In terms of internationalization, the upgrading of export structure is slow, and the international competitive advantage of high value-added products is not strong. APIs should be developed in the context of the national dual carbon policy, and a number of centralized production bases of high-standard APIs should be built in areas with resource and environmental carrying capacity. Strictly implement the access standards for environmental protection, safety and energy conservation, benchmark the international leading level, and carry out cleaner production audit, evaluation and certification. The 13th five year plan requires specific indicators, and the 14th five year plan requires the international leading level. Combined with the policy of the previously issued notice on the implementation plan for promoting the high-quality development of API industry, we believe that the concentration of raw material enterprises is expected to be greatly improved.
The rebound is imminent, focusing on covid-19 oral medicine, consumption growth and deep value
The United States and Europe are about to open up. We believe that covid-19 oral drugs are eliminating the false and preserving the true. Oral drugs are still one of the most important means to reduce the severe rate and mortality. First, pay attention to the advent of covid-19 oral drugs in China; Second, the upstream intermediate industry chain driven by Pfizer specific drug paxlovid. Consumption growth and deep value are the key words we repeatedly mentioned in January.
Focus on the company
Traditional Chinese medicine: resource-based, Jianmin Pharmaceutical Group Co.Ltd(600976) , Tianjin Zhongxin Pharmaceutical Group Corporation Limited(600329) ; (category) OTC consumer goods, China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Inner Mongolia Furui Medical Science Co.Ltd(300049) ; Traditional Chinese medicine bigpharma, Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) , Shandong Buchang Pharmaceuticals Co.Ltd(603858) , etc. Consumer medical care: Jiangsu Yuyue Medical Equipment And Supply Co.Ltd(002223) , Yantai Zhenghai Bio-Tech Co.Ltd(300653) etc. Covid-19 oral drug related: Shandong Jincheng Pharmaceutical Group Co.Ltd(300233) , Shanghai Junshi Biosciences Co.Ltd(688180) etc. Large pharmaceutical enterprises: Huadong Medicine Co.Ltd(000963) etc. Innovation and overseas industrial chain: Truking Technology Limited(300358) , Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) etc. Others: Humanwell Healthcare (Group) Co.Ltd(600079) , Sichuan Kelun Pharmaceutical Co.Ltd(002422) etc.
Risk tip: uncertainty risk of China’s epidemic control policy, systemic risk caused by the Fed’s interest rate hike, etc
