Industry trends:
On January 19, 2022, Guangdong Pharmaceutical Trading Center issued the document on centralized volume procurement of diclofenac and other drugs of Guangdong alliance, which will carry out centralized volume procurement of diclofenac and other 276 drug alliance regions. Compared with the 153 varieties planned in the opinion draft, the official draft has been expanded to 276 varieties, including chemical drugs, Chinese patent drugs and biological products. In addition, blood products and recombinant human growth hormone are included in the scope of centralized collection for the first time.
Market observation:
The pharmaceutical and biological sector fell 6.83% (ranking 28 / 31) last week and 14.94% (ranking 30 / 31) year to date. The overall market has been depressed recently, and the main line is relatively vague.
Strategic perspective:
Indeed, in the strategy report Tianfeng Securities Co.Ltd(601162) : medicine and Biology – individual stock opportunities under policy disturbance released at the end of November 2021, we predicted that the “track stock strategy” needs to be revised to a certain extent and put forward the idea of individual stock selection of “cost performance strategy”, but the adjustment range of absolute leading companies in the industry in recent months still exceeded our expectations, The investment expectation for the pharmaceutical industry has changed from “obtaining a relatively satisfactory income” on New Year’s day to “striving for a return” during the Spring Festival.
In the short term, we believe that the industry is still in a relatively chaotic stage, and the core contradiction is still that the trading structure of the CXO sector with the highest attention in the industry is relatively crowded (it has been improved compared with the previous period), while the sectors other than CXO have not formed a consensus for the time being.
However, from the medium and long-term perspective, as a field with relatively rigid demand, we believe that the long-term development space of the industry is still broad. From the medium-term perspective, we have three judgments on the pharmaceutical industry:
① the impact of medical policies will be gradually clear: at present, the main medical policies concerned by the market are medical insurance negotiation, volume procurement and medical services. Generally speaking, in addition to the observation of medical services, the medical insurance negotiation has basically formed a systematic path, and the market expectation is relatively sufficient. After the volume procurement of growth hormone and other varieties of Guangdong alliance is completed, It will also gradually become clear.
② some leading companies have entered the cost performance stage: the performance certainty of leading companies in some subdivided industries is high. With the stock price adjustment has gradually entered the cost performance stage, we believe that the pharmaceutical industry is currently in the stage of overall growth shift, and the performance certainty of leading companies is precious.
③ the impact of population aging has just begun: judging from the current population development trend, China’s population will enter the overall negative growth in 2022, the population peak starting in 1962 will enter the retirement stage in 2022, and the impact of population aging has just begun, whether it is financing or medical needs.
Suggested stock selection ideas in the near future (in order):
1) traditional Chinese medicine: Hubei Jumpcan Pharmaceutical Co.Ltd(600566) , Beijing Tongrentang Co.Ltd(600085) , Jianmin Pharmaceutical Group Co.Ltd(600976) , Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) (attention recommended);
2) CXO: Wuxi Apptec Co.Ltd(603259) , Hangzhou Tigermed Consulting Co.Ltd(300347) , Pharmaron Beijing Co.Ltd(300759) (attention recommended), Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Porton Pharma Solutions Ltd(300363) ;
3) medical devices: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , minimally invasive Siasun Robot&Automation Co.Ltd(300024) (H), minimally invasive medical (H), Xiangyumedicalco.Ltd(688626) ;
4) pharmaceutical: Huadong Medicine Co.Ltd(000963) , Yifan Pharmaceutical Co.Ltd(002019) , Jiangsu Hengrui Medicine Co.Ltd(600276) , Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) (attention recommended);
5) medical services: Ningbo Sanxing Medical Electric Co.Ltd(601567) , Topchoice Medical Co.Inc(600763) , Xi’An International Medical Investment Company Limited(000516) , Aier Eye Hospital Group Co.Ltd(300015) , haijiya medical (H)
Risk tips: the risk of policy changes such as medical insurance / centralized purchase, the risk of repeated epidemic, and the risk of enterprise business strategy changes
