Pfizer covid-19 drug, China’s EUA and ODAC, is expected to hit the bottom and rebound. Affected by the UVL list, the landing of ODAC meeting and other events, the pharmaceutical sector made many adjustments this week. This week, the CSI 300 rose 0.8%, the pharmaceutical and biological industry fell 2.7%, ranking 26th among 28 primary sub industries, of which the decline of medical services was the first, with – 11.10%. We believe that: ① the “UVL list” has limited impact on the fundamentals of YaoMing biology and cdmo / cro sector. It is suggested to focus on cdmo / cro with strong rebound foundation and the alternative opportunities of upstream domestic supply chain; ② The ODAC meeting has strong reference significance for China’s innovative drugs to go to sea. It is suggested to pay attention to China’s top innovative pharmaceutical enterprises, small and medium-sized biotechs with significant differences and clinical cros; ③ In addition, nmpa conditionally approved the listing of Pfizer covid-19 oral small molecule drug paxlovid in China this week, and continued to be optimistic about the opportunities of Pfizer related industrial chains and Chinese covid-19 R & D enterprises. At present, the premium rate of the pharmaceutical sector relative to all A-Shares (excluding the financial sector) has been at the lowest point since 2015. We believe that the short-term sentiment of the market has been released, the space for the sector to continue to make a significant correction is limited, and the current capital allocation is close to the “freezing point”, so we suggest to focus on it. In the follow-up, we suggest to grasp two directions: the fundamental improvement and valuation repair of the undervalued sector, such as traditional Chinese medicine, API, chain pharmacies, etc; High prosperity track after continuous adjustment, such as cdmo / cro, upstream of life sciences, medical services, vaccines, etc.
China’s first covid-19 small molecule was approved conditionally, and continued to focus on covid-19 therapeutic drugs and industrial chain investment opportunities. In February 11th, the National Drug Administration (NMPA) approved the Pfizer COVID-19 oral small molecule Paxlovid to treat patients with mild to moderate New Coronavirus pneumonia (COVID-19) with severe risk factors. We believe that the conditional approval of paxlovid not only reflects China’s urgent demand for covid-19 oral drugs, but also provides a reference for covid-19 therapeutic drug declaration in other clinical stages. We believe that the follow-up catalysis of covid-19 therapeutic drugs is expected to continue. It is suggested to focus on three logics: ① Chinese R & D and innovation enterprises with high progress, such as Shanghai Junshi Biosciences Co.Ltd(688180) ; ② Large overseas pharmaceutical enterprises create cdmo industrial chains of new drugs, such as Wuxi Apptec Co.Ltd(603259) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Porton Pharma Solutions Ltd(300363) , Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) , Zhejiang Ausun Pharmaceutical Co.Ltd(603229) ; ③ And generic API applications in other parts of the world, such as Aurisco Pharmaceutical Co.Ltd(605116) , Zhejiang Hisun Pharmaceutical Co.Ltd(600267) .
The influence of “unconfirmed list (UVL)” is limited. It is suggested to focus on cdmo / cro with strong rebound foundation and the alternative opportunities of upstream domestic supply chain. On February 7, the Industrial Security Bureau of the U.S. Department of Commerce issued an updated “unverified list (UVL)”, including Wuxi and Shanghai subsidiaries of YaoMing biology. On the second day, Yaoming biology’s official website stated that the reason for its inclusion was that the US Department of Commerce was unable to conduct routine inspection on the use of products purchased from the United States in time due to the covid-19 pneumonia epidemic in the past two years. It is expected that the company will be removed from the list after verification and inspection through temporary measures or with the improvement of the epidemic. ① There is no impact on the company’s businesses: the products purchased by the company in this list are mainly bioreactor control system and air fiber filter, which are mainly used in the capacity expansion stage. However, the two subsidiaries included in the list have completed the capacity construction, and there is no demand for importing relevant products for the time being, and other entities under expansion are not included in the list, Therefore, all businesses of the company will not be affected by this. ② Limited impact on the fundamentals of the cdmo / cro sector: affected by this event, the cdmo / cro sector fluctuates greatly. We believe that the UVL event is mainly due to the epidemic, which makes it inconvenient for the staff of the U.S. Department of Commerce to travel. For its normal implementation procedures, there is no need to over interpret, and the fundamentals of the sector are still strong. At present, the pessimistic expectation has been reflected in the stock price, with high cost performance, and the annual report forecast of relevant listed companies has performed well. With the release of the performance express / annual report in February, the rebound foundation of the sector has become stronger and stronger, so it is suggested to make a positive layout. Highlight Wuxi Apptec Co.Ltd(603259) , Yaoming biology, Pharmaron Beijing Co.Ltd(300759) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Hangzhou Tigermed Consulting Co.Ltd(300347) , Joinn Laboratories (China) Co.Ltd(603127) and so on. In addition, this incident has also brought enlightenment to the independent control of the supply chain of China’s pharmaceutical industry. We believe that the global supply chain tension under the covid-19 epidemic is expected to accelerate the import substitution. We suggest paying attention to Tofflon Science And Technology Group Co.Ltd(300171) , Truking Technology Limited(300358) , Sensong international, Suzhou Nanomicro Technology Co.Ltd(688690) .
The results of the ODAC meeting were released, and the short-term pain did not change the internationalization prospect of long-term innovative drugs. On February 10, FDA held an ODAC meeting (oncological Drugs Advisory Committee of FDA) to discuss the BLA application of Cinda biology and Lilly’s PD1 monoclonal antibody. The final committee voted that additional clinical trials should be supplemented before approval to prove the applicability of cindilimab in the American population and medical practice in the United States. We believe that although the results of the meeting make the road of listing sindelimab in the United States more bumpy, the process of the meeting has strong reference significance for China’s innovative drugs to go to sea: ① the project initiation and clinical design should take the clinical pattern as the first element, the project needs significant differentiation and faster promotion speed: the homogeneous target or track should be arranged in combination with its own advantages and disadvantages, When selecting the control group in clinical design, we should consider whether the current first-line therapy has changed. Once the project is approved, the speed is the first important; ② The clinical data of a single country may be difficult to support the successful approval of NDA / bla, and the international multi center clinical trials (MRCT) or trend: it may be difficult to apply to FDA for listing only based on the clinical data of patients in other countries, and the clinical data of new drugs in the future need to reflect the differences among patients; ③ Actively communicate with FDA to confirm the clinical endpoint: closely communicate with the review and approval personnel in the clinical and application process. We suggest paying attention to the head pharmaceutical enterprises with strong financial strength that can support multiple later MRCT, such as Jiangsu Hengrui Medicine Co.Ltd(600276) , China biopharmaceutical, Cinda biology, Baiji Shenzhou, etc; Small and medium-sized biotechs with significant project differentiation and outstanding clinical effects, such as Shanghai Junshi Biosciences Co.Ltd(688180) , kangfang biology, nuocheng Jianhua, etc. In addition, as a “water seller” of innovative drugs, the clinical cro has rich experience and extensive resources to promote MRCT cost reduction and efficiency, and help China’s innovative drugs go to sea. We continue to be optimistic, focusing on Hangzhou Tigermed Consulting Co.Ltd(300347) , Wuxi Apptec Co.Ltd(603259) , Pharmaron Beijing Co.Ltd(300759) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) .
Omicron became the mainstream strain, and enhanced vaccination was still effective. Omicron has spread rapidly since it was found. According to the data of who, Omicron has become the main strain, accounting for more than 90% in most countries. According to the research published by the national infectious diseases Medical Center (Huashan Hospital Affiliated to Fudan University) on emerging microbes & infections, the virus may still maintain a certain level of transmission after the third injection, but it will improve the group’s protection against Omicron and still have the potential to significantly reduce the proportion of severe cases.
Considering that the influenza trend of covid-19 epidemic is becoming more and more obvious, it is suggested to pay attention to covid-19 vaccine related development enterprises, including Chongqing Zhifei Biological Products Co.Ltd(300122) , Shenzhen Kangtai Biological Products Co.Ltd(300601) , Cansino Biologics Inc(688185) – u, Walvax Biotechnology Co.Ltd(300142) . In the long run, each vaccine head enterprise has a large amount of heavy varieties or is about to go on the market. Combined with the improvement of vaccination awareness under covid-19 epidemic, we expect that the vaccination rate of large varieties is expected to continue to increase and gradually approach the level of developed countries. The class II vaccine industry is expected to achieve a compound growth of 20% – 30% in recent 3-5 years. It is recommended that Chongqing Zhifei Biological Products Co.Ltd(300122) , Shenzhen Kangtai Biological Products Co.Ltd(300601) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) , Chengdu Kanghua Biological Products Co.Ltd(300841) , Hualan Biological Engineering Inc(002007) Changchun Bcht Biotechnology Co(688276) 。
Performance of key recommended stocks: key recommendations in February: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Wuxi Apptec Co.Ltd(603259) , Yaoming biology, Chongqing Zhifei Biological Products Co.Ltd(300122) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) , Pharmaron Beijing Co.Ltd(300759) , Hangzhou Tigermed Consulting Co.Ltd(300347) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Shenzhen Kangtai Biological Products Co.Ltd(300601) , Shanghai Junshi Biosciences Co.Ltd(688180) , Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) , Nanjing Vazyme Biotech Co.Ltd(688105) , Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) , Zhejiang Gongdong Medical Technology Co.Ltd(605369) , Zhejiang Starry Pharmaceutical Co.Ltd(603520) , Aurisco Pharmaceutical Co.Ltd(605116) ; This week, the average decline was 8.66%, underperforming the pharmaceutical industry by 5.93%.
One week market dynamics: Based on the analysis of the pharmaceutical sector from the beginning of 2022 to the present, the yield of the pharmaceutical sector is – 17.3%, the yield of CSI 300 in the same period is – 6.9%, and the yield of the pharmaceutical sector is 10.4% lower than that of CSI 300. This week, the CSI 300 rose 0.8%, the pharmaceutical and biological industry fell 2.7%, ranking 26th in 28 primary sub industries. The sub sectors of biological products and pharmaceutical business rose by 2.17% and 1.35% respectively. The sub sectors of chemical pharmacy, medical devices, traditional Chinese medicine and medical services fell, with the decline of medical services taking the lead, with – 11.10%; Chemical pharmaceutical and traditional Chinese medicine decreased slightly, 0.68% and 0.17% respectively.
Risk warning: the risk of policy disturbance, drug quality problems, and the risk of delayed information or untimely update of the public data used in the research report.
